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Ferrari traffic jam? Production to jump 30%

With Ferrari's coming initial public offering, it's about to become easier for supercar aficionados to get their hands on one of its exclusive vehicles.

In a move that could frustrate some owners and collectors, the high-end automaker said in an SEC filing that it plans to increase production by 30 percent — from around 7,000 cars to 9,000 annually — by 2019.

Ferrari said its decision is in response to "growing demand in emerging markets and from demographic changes as the size and spending capacity of our target client grows."

The new Ferrari 488 Spider at the 2015 IAA Frankfurt Auto Show September 16, 2015 in Frankfurt, Germany.
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The new Ferrari 488 Spider at the 2015 IAA Frankfurt Auto Show September 16, 2015 in Frankfurt, Germany.

But it also highlights the difficult balance it has to strike between public shareholders and owners after the IPO.

Though the strategy will help boost revenue and profit after the IPO, it is also likely to rankle some Ferrari owners and collectors, who have long relied on the company's tight production numbers to maintain the values of their preowned cars and the prestige of owning a prancing horse.

Unlike most vehicles, preowned Ferraris can often sell for close to the same price, and sometimes more, than new Ferraris. That's because the waiting list to buy certain new models can stretch to more than a year, meaning part of the value of preowned Ferraris is avoiding the wait.

Simon Kidston, founder of Geneva-based collectible-car advisory and research company Kidston, said it "remains to be seen whether by ramping up production, the secondhand values start to soften."

"Ferraris do hold their value quite well compared to Aston Martins or Maseratis or Bentleys," he said.

Increased production will likely have less of an impact on collectors, who shy away from normal production models, Kidston said.

In its filing, Ferrari said it will "maintain a reputation of exclusivity and scarcity among purchasers of our cars and deliberately monitor and maintain our production volumes and delivery wait times to promote this reputation."

The automaker also said it will preserve its pricing and reputation for technology and craftsmanship by making special limited-edition cars and supercars like the LaFerrari, priced at $1.2 million or more.

Kidston said values for those special Ferraris, which are made by the hundreds rather than thousands, will continue to hold up because of their rarity.

"The LaFerrari and the FXX, cars like these that give the Ferrari brand its halo effect, will still be popular and hold their value," he said.

"Those cars are like Patek Philippes. You buy them to hold for the next generation. They're an investment not a plaything. But no collector would buy a normal production Ferrari as an investment."

Ferrari later this month is scheduled to price 17.2 million shares it will offer to the public, equal to about 9 percent of the company, as part of its planned spinoff from Fiat Chrysler. The automaker said it expects the offering price for the shares to fall between $48 and $52, valuing the company at as much as $9.8 billion.

That planned price reflects Ferrari's assertion that it is more comparable to a luxury company than carmaker, with a price-earnings multiple far higher than other car companies.

In its filing, Ferrari said that for the quarter ended Sept. 30, it expects to report revenue of between 720 million euros and 730 million euros ($820 million and $830 million), up 9 to 10 percent over last year, and adjusted EBITDA of between 210 million euros and 215 million euros, up 19 to 22 percent over the same quarter in 2014.

Ferrari also said in its filing that it plans to expand the brand through theme parks, retail stores and licensing deals for sportswear, watches, electronics and other accessories.

"We believe our success in these activities demonstrates the value of Ferrari as a true global absolute luxury brand," the company said.