Ferrari vs. Facebook

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Ferrari vs. Facebook
by pete on May 5, 2015
At the 2015
edition of the Shanghai Motor Show, held from 22 – 29 April, attracted 813,000 visitors plus some
10,000 journalists to see the latest Ferrari. But is it possible that the Facebook Generation no longer
needs or even wants such a vehicle?
Why Ferrari will not be beaten by Facebook (but watch out for Apple!)
By Gijsbert­Paul Berk
No, Facebook does not compete in Formula 1 races and has neither announced any intentions of building
fabulous sports cars. Nevertheless Facebook, as the world’s leading social networking service, is fast
becoming serious competition for the magic Italian carmaker and other auto manufacturers. This is why!
Last December Sergio Marchionne, the Chief Executive of Fiat­Chrysler group which owns Ferrari,
hinted at the possibility to raise cash for his company with an IPO (Initial Public Offering) to sell 10% of
Ferrari to interested shareholders. Based on the actual turnover and profit margins, independent financial
analysts have calculated that Ferrari has a market value of between 5 billion and 9 billion Euros. The
difference is explained by the fact that some consider Ferrari simply as a car manufacturer and others as a
luxury brand, a segment in which shares fetch a premium. As everyone knows the value of shares also
depends on the expectations of investors concerning future profits.
Who needs one anyway?
For many
generations automobiles were a symbol for freedom to travel and meet friends and family. But Internet
and ‘social networking services’ provide the Z generation with alternatives.
Launched only 11 years ago, Facebook now has an estimated market value of nearly 225 billion USD
(roughly 193 Euros). That is at least nearly 22 times the market value of the valiant Italian carmaker,
officially established in 1947 but whose origins go back to 1929, when founder Enzo Ferrari established
the Scuderia Ferrari in Modena. However, that is not all.
Another thought provoking fact is that a high percentage of students in the 17 to 23 years age group, are
no longer very interested in owning a car. At least that is the conclusion of surveys in several countries in
industrialized Western world.
‘Dolce Vita’ in
the last century: Then nearly all students wanted a simple car for daily transport. But many dreamed of
owning a Ferrari or similar sporting machine later in life.
The young respondents give several reasons for this. Financial considerations are an important element.
Understandable: Over the last decennia the fees for studies and housing have gone up and cars have
become relatively more expensive to buy, maintain and insure. The days are long gone when a student
could cheaply purchase an old Ford, VW Beetle or Citroën 2 CV and keep these simple machines
running with a set of spanners and screwdrivers. Today, even ten­year­old models have technically
sophisticated fuel injection systems and electronic components that cannot be maintained or repaired so
easy anymore.
Then there are other practical considerations. Most cities and campus sites have restricted space, so even
parking a car poses problems and often cost a lot of money. Besides, why should one want to own a car?
Many countries subsidize the bus and train fares for students. And when you urgently need to transport
things you can borrow a car from family or friends or hire one.
But there is another important reason why the ambitions and priorities of what the media describe as the
Z generation (born from the late 1990s up to the mid 2000s) differs fundamentally from previous
generations. For the so­called Baby­Boomers (born between 1943 up to the early 1960s) automobiles
were a symbol of freedom. Having a car offered the possibilities to travel and to give a lift to nice
looking girls, or to go to a drive­in cinema to watch the latest movie picture together.
Remember?
Cars such as this Ford Hot Rod coupe used to be the dream of many Baby Boomers in their student
years. The attractive looking girl was of course part of the fantasy.
Thanks to the Internet, smartphones, tablets and of course Facebook and other ‘social networking
services’ nowadays one can establish friendships all over the world, share photos and experiences with
soul mates everywhere and chat and enjoy the same music. And all this without bothering to move from
your armchair or bed.
Of course these virtual involvements can never replace the exhilarating feeling of the wind through your
hair that a fast open roadster used to offer or the pleasure of a ‘stolen’ kiss on the rear seat of a jalopy.
So, many of the generation growing up today will never experience these sensations. But, if one does not
know what one is missing, one does not miss it.
There is little doubt that Internet, the use of cloud communication and the Social media will continue to
further influence our daily life. One can only hope that these technologies will not completely destroy
more fundamental and natural inter human relations. Or the pleasures and satisfaction that driving a sport
scar on a winding road can offer.
Fortunately today there are a lot of developing countries in which the wealth is improving and the
number of middle and high incomes growing. The car industry considers these countries as prospective
growth markets. Sales results show that this is also the case for exclusive luxury brands. So perhaps, on a
worldwide scale Ferrari will not soon be beaten by Facebook.
But what about Google or Apple?
While the Facebook crowd may not be an immediate threat to Ferrari, It is certain that in the future cars
will become interconnected and will use more of the technologies that Google and Apple are developing.
One of the most interesting automobiles today in my opinion is the Tesla.
The Tesla is not
only today’s most desirable electrical automobile but in all respects high­tech on wheels.
According to Maarten Steinbuch, a Professor at the Eindhoven University of Technology (TU/e) in the
Netherlands, who drives a Tesla, the car is in fact a smartphone on wheels. Its systems are permanently
monitored by the After Sales Department of the manufacturer. Not long ago the was a film on the French
TV about how the Tesla cars are built and I was very impressed by its construction and the way they use
dedicated and programmable robots, that can alternatively be used for welding or spraying paint. At the
AutoRAI in Amsterdam Steinbuch with a group of his students presented an innovative project for an
electric propelled so­called ‘modular’ car. The idea being that during the lifetime of the car one can
systematically replace or update components and even body panels, in the same way as is done nowadays
with airplanes by the aviation industry. I have suggested to them that they should involve a group of
economy students as well to produce an economic feasibility study, in order to find out if their technical
ideas can commercially be put into practice.
Last
performance? The eye­catching Pininfarina Sergio supercar based on Ferrari mechanical components
was last exhibited at the Geneva Motor Show in March. Then it was announced that eight units would be
produced, all with a different color scheme. Since then it is known that the Indian industrial
conglomerate of Mahindra and Mahindra is preparing to take over the illustrious Turin coachbuilding
company. Mahindra produces automobiles, agricultural equipment and already has a subsidiary in Italy.
And, as our editor points out, the hi­tech industry may play an even larger role in the traditional car
industries such as Fiat. FCA’s Marchionne has been suggesting that the future of automobiles, including
the entire FCA (Fiat Chrysler Automobiles) may lie with companies like Google or Apple.
According to a story in the Detroit Free Press, “Marchionne may have signaled a desire to sell the car
company or merge with a partner, even one like cash­rich Apple or Google, as he criticized the industry
for spending too much on product development, expenses that sap value for customers and shareholders.
‘I’ve always been intrigued by the notion of having technology disrupters show up in the marketplace
and change the paradigm,’ Marchionne said. ‘If they show up and they are truly successful, with their
cash piles and know­how, they could fundamentally hurt this industry.’ Marchionne also suggested that
he is not signaling that FCA is for sale. Nevertheless, he opened the door for unconventional partnerships
or mergers across industries with companies such as Apple or Google.”
One of the Google test cars, a Lexus, reveals its secrets. It must be said that up till now
Google has done more to promote the idea of driverless cars than any of the major car
manufacturers. In the future, Google plus FCA or GM would hasten the arrival of hi tech
transportation.
When asked whether he would consider approaching Apple or Google about forming strategic
partnerships, Marchionne said, “The answer is that it is possible.”
And where would that leave us? Imagine Google owning FCA or GM. Would such a merger create new
transportation options for the Facebook crowd? Reader’s opinions are most welcome!
Tagged as: ferrari and facebook, fiat and apple, fiat and facebook, Fiat and google, Fiat Chrysler
Automobiles, future of transportation, hi tech cars
{ 2 comments… read them below or add one }
Don Falk May 8, 2015 at 3:37 pm
The situation that existed 50 to 60 years ago had little parallel in the automotive situation today. In
the deep dark past, domestic cars were generally poorly designed with abysmal handling. The
“sporty” ones were very fast in a straight line, but had awful brakes. chevrolet (GM) had
independent front suspension, and an overhead valve engine. Ford introduced Independent front
suspension in 1948, but it was 1954 before an overhead valve engine was introduced. Only
Crosley, a miniature car, had a tiny overhead cam engine. Smooth ride was emphasized over
handling, and week shock absorbers were not especially good at damping suspensions. European
cars were coming into the U.S. at low prices, because Europe was recovering from wwII, which
limited the market for cars. In that era, on one used car lot (somewhat exotic), I had a choice of a
1938 BMW 328 roadster, a Maserati A6GS coupe, or a
1954 Alfa Romeo 1900C cabriolet. The BMW had side curtains, the Maser A6GS, was reputed to
be delicate, so I bought the Alfa. These cars, many years later, are probably worth approximately
$100K each, but then any one could be bought for under $2,000. All of these cars had superior
engineering, interesting designs, and exotic appearance, and were designed to perform on the
street. Compare that to the availability of Subaru WRX/STI, Mitsubishi rally cars, and more
modestly, Honda SI. All with outstanding speed and handling, at 1/3 to 1/6 the price of a
“Supercar”. Not only is the cost prohibitive, also the gain in performance can not be realized,
legally, on any road. – Don Falk (age 78 owned many exotics and drove them daily on a limited
income)
david simoes­brown May 9, 2015 at 4:52 am
an intriguing thought. no reason why not really and it might overcome the conservatism of car
companies that are often better at following than truly innovating. There’s a book called what
would google do? that you might find interesting.
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