CloseI just posted up a new article on Ferrari & McLaren's 1st half and business development and strategies:
https://karenable.com/ferrari-mclaren-1sthalf-2022/
Thoughts?
Comments?
Can McLaren turn things around?
The problem with McLaren is that there is not enough difference among their products, ever since the first 12C rolled off the line, outside of a handful of bespoke ultra exclusive models, every single car can be traced right back to the 12C. All basically variants, instead of actual different models.
It's basically the same tub, same engine, same gearbox. There are some modifications but it's still the same item boiled down to the basics. At least they have begun to install V6s instead of V8s. And hybrid systems now.
It isn't a bad strategy to start off with, Aston had successfully used one platform, the VH, for the longest time. But at least in Aston's case, each variant is very difference than the next, consumers can tell the difference. Some would bring Porsche into the discussion with the 911. But that's where the argument fails. while each of the 911 variants starts off with the same body in white, there are enough content, engine tuning, suspension tuning differences to make them each their own. That same 911 platform also spawn the Cayman/Boxster models, something most don't realized is 1st cousins to the 911s.
The ugly front styling didn't help. It literally pushes potential customers out the door. Which also means they are missing out on the good attributes of a Mclaren. They are vey easy to live with day to day, steering is excellent and power is way more than adequate, even on the entry model. Very good comfort inside and quite decent cargo room.
What they should have done earlier is to invest in a cheaper platform, for their entry level cars, Like Lamborghini. Before the Urus, Lamborghini only had 2 models, on 2 different platforms. They never merged. While one can argue the Huracan platform was shared with Audi, there is no arguing it's still cheaper even without the sharing as compared to the Aventador platform. The 'low end' model is a great sale success, thus bringing in the money needed. Over at Mclaren, their entry models had the most success also, but because of the expensive platform, they don't quite have the luxury of great margins. McLaren only really relies on specialty models and their hyper big margins to bring in real money, this strategy just doesn't work. Prime example would have been the P1. It was a souped up 12C, an educated guess on the BoM pegged the cost of producing one at ~$400k, thus it generated ~a million dollar profit for each car sold. But since it wasn't sold at a great number so the total profit from that car was only ~350mil or so, drop in a bucket for McLaren's expansion ambition.
At least they did the smart thing and dropped the entry level cars with tiny margins. The 720 is now the entry level car. Which is a good thing as there is a decent profit margin there.
What's funny is that in their short existence, they have already retired the 12C, 12C Spider, 650S, 650S Spider, 675LT, 675LT Spider, P1, 540C, 570S, 570S Spider, 600LT, 600LT Spider, 570GT and the 620R. That's 14 models/variants in a little over 10 years. They were banking on customers keep upgrading and buying new cars to keep their business going, something that cannot be counted on. Especially not in an economic downturn. McLaren cars are 'toys', first thing people cut when the going gets tough.
With them keep changing their offerings so quickly, it kills the secondary market, customers aren't keen to getting burn year after year. One reason they can't quite keep long term customers, unlike say Ferrari, Porsche and even Lamborghini and Aston.
What they needed to do is to stabilize their offerings, create more separation among their products into clear segments and pray for a quick turnaround of the world's economy. They can't continue down this suicidal path.
Nick, it was just common sense.
When McLaren first made the 12C, it was a great car already, just needed some refinements. And it was also during the boom years. McLaren figured that with easy money they can keep rolling out new variants/models and their customers will keep buying them. So instead of refining one model, they just keep pumping them out like there is no tomorrow. Everyone knows boom years don't last, well except the peeps at McLaren.
When they first started, there aren't 'existing' 'current' McLaren customers, everyone jumped over from some other brands to try them. They never created a warm and fuzzy environment for owners to stay with the brand. With quick model turnovers, the residue value drops like a stone, no owner, no matter how wealthy, like that. Dealerships network tried to help, they did their hardest to develop good relationships with their customers, but the factory aren't playing in the same ball park.
Their business case was simply, too ambitious. For their own good.
SSO.:I just posted up a new article on Ferrari & McLaren's 1st half and business development and strategies:
https://karenable.com/ferrari-mclaren-1sthalf-2022/
Thoughts?
Comments?
Can McLaren turn things around?
Great analysis. Bottom line is Ferrari has a car now for every Ferraristi. I do think you overplay the foresight/ success of the FF/ GTC Lusso. I thought they were great, but many were force fed to ladder climbers. The Purosangue on the other hand would appear to be a complete home run even before launch and despite the current macroeconomic headwinds. The SF90 is a so so product but the 296 GTB is superb to drive. Your Mclaren product analysis bias remains, you just can't shake it off 
, but the financial analysis is spot on as ever. I have not driven an Artura - have you?
GT-Boy:McLaren seems to be missing the huge (and very profitable) lifestyle and customer experience opportunity. I'm told that Ferrari customer events are world class.
Porsche had been running theirs in Europe, so is AMG, ran by an agency that used to do Porsche's event also.
McLaren' stopped due to Covid as SSO said.
But another reason being they just don't have enough of a customer base to do events. Even Porsche ran into the same problem. They ran the 918 Spyder Circle events for the longest time. But out of 800 or so owners, only about ~250 actually know about the program and registered. Out of those, only about 100 or so ever do at least one event. Of that 100, perhaps 40 did multiple. Cut that down to around 10 for actual regulars. It's just not sustainable. For the year 2020 they opened up the program to GT owners, not just 918 owners, to expand the potential customer base. But covid hits. Lucky Porsche deemed the program a success and keep it going.
crayphile:SSO.:I just posted up a new article on Ferrari & McLaren's 1st half and business development and strategies:
https://karenable.com/ferrari-mclaren-1sthalf-2022/
Thoughts?
Comments?
Can McLaren turn things around?
Great analysis. Bottom line is Ferrari has a car now for every Ferraristi. I do think you overplay the foresight/ success of the FF/ GTC Lusso. I thought they were great, but many were force fed to ladder climbers. The Purosangue on the other hand would appear to be a complete home run even before launch and despite the current macroeconomic headwinds. The SF90 is a so so product but the 296 GTB is superb to drive. Your Mclaren product analysis bias remains, you just can't shake it off
As SSO posted, Ferrari's planning and execution have been superb. It is the strongest automotive brand, for a reason besides its history.
I am curious about the management shake-up upon the current CEO's takeover, since the present success is a result of the now former team of executives. Do you happen to have a view about this?
Ziggy:As SSO posted, Ferrari's planning and execution have been superb. It is the strongest automotive brand, for a reason besides its history.
I am curious about the management shake-up upon the current CEO's takeover, since the present success is a result of the now former team of executives. Do you happen to have a view about this?
Still plenty of the old execs in place. Vigna seems like a very good hire.
Ziggy:crayphile:SSO.:I just posted up a new article on Ferrari & McLaren's 1st half and business development and strategies:
https://karenable.com/ferrari-mclaren-1sthalf-2022/
Thoughts?
Comments?
Can McLaren turn things around?
Great analysis. Bottom line is Ferrari has a car now for every Ferraristi. I do think you overplay the foresight/ success of the FF/ GTC Lusso. I thought they were great, but many were force fed to ladder climbers. The Purosangue on the other hand would appear to be a complete home run even before launch and despite the current macroeconomic headwinds. The SF90 is a so so product but the 296 GTB is superb to drive. Your Mclaren product analysis bias remains, you just can't shake it off
As SSO posted, Ferrari's planning and execution have been superb. It is the strongest automotive brand, for a reason besides its history.
I am curious about the management shake-up upon the current CEO's takeover, since the present success is a result of the now former team of executives. Do you happen to have a view about this?
He just made a few changes, most of the team stayed in place. In these situations a lot of it is personality and fit with the new boss. Net net, there will always be a few who leave. What you haven't seen is any sort of large exit of execs from 2-3 layers down which is key.
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