WHEN: Today, Wednesday, October 21st
WHERE: CNBC's "Squawk on the Street"
Following is the unofficial transcript of a CNBC interview with Ferrari Chairman Sergio Marchionne on CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET) today. Following are links to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000435836, http://video.cnbc.com/gallery/?video=3000435838, http://video.cnbc.com/gallery/?video=3000435856, http://video.cnbc.com/gallery/?video=3000435855 and http://video.cnbc.com/gallery/?video=3000435854.
All references must be sourced to CNBC.
CARL QUINTANILLA: YOU MENTIONED MR. MARCHIONNE HAS MADE HIS WAY TO POST9 AS FERRARI DEBUTS HERE AT THE BIG BOARD JUST MOMENTS AGO. LAST TRADE $57.83. PHIL LEBEAU JOINS US AS WELL. PHIL, GOOD MORNING. SERGIO, GOOD MORNING TO YOU. PHIL, YOU WANT TO KICK US OFF?
PHIL LEBEAU: WELL, LET'S START WITH THE MAIN QUESTION, AND YOU TALKED ABOUT IT A LITTLE BIT, YOU KNOW EVERYBODY IS CONCERNED THAT YOU'VE GOT SUCH AN EXCLUSIVE BRAND AND THAT YOU'RE GOING TO DILUTE IT OVER TIME AS YOU GROW. I KNOW YOU HAVE HEARD THIS QUESTION MANY TIMES, BUT HOW DO YOU REASSURE PEOPLE YOU CAN GROW YET KEEP THAT EXCLUSIVITY?
SERGIO MARCHIONNE: THE OBJECTIVE AND WE HAVE REITERATED THIS POSITION THROUGHOUT THE ROAD SHOW IS THAT WHAT IS AT THE HEART OF THE BRAND IS THIS INTIMATE RELATIONSHIP BETWEEN US AND THE CUSTOMER BASE. WE HAVE 60% OF THE PEOPLE THAT BUY OUR CARS EVERY YEAR ARE RETURNING CUSTOMERS, AND, THEREFORE, IT WOULD BE ALMOST SUICIDAL TO TRY AND EXPAND VOLUMES TO THE DETRIMENT OF THAT RELATIONSHIP. SO ONE OF THE THINGS THAT WE'VE DONE, WE'RE GOING TO CLOSE THE YEAR AT ABOUT 7,700 CARS. WE'RE GOING TO GET TO ABOUT 9,000 BY THE END OF THE PLANNING PERIOD. AND WE THINK THAT'S JUST AVAILABLE FROM THE UTILIZATION OF TWO CARS, ONE IS THE CALIFORNIA T, THE OTHER IS THE FF, WHICH I THINK PROBABLY NEED MORE SPACE IN THE MARKET AND I THINK FROM SIMPLE GEOGRAPHIC COVERAGE OF THE REST OF THE WORLD. IT'S A BIG WORLD. WE ONLY HAVE 204 POINTS OF SALES. WE ONLY HAVE 180 SALESMEN THAT REALLY COVER THAT NETWORK. I THINK THE POTENTIAL IS MUCH LARGER, HIGH NET WORTH INDIVIDUAL. THE POPULATION KEEPS ON GOING UP.
QUINTANILLA: WHERE ARE THOSE HIGH NET INDIVIDUALS GOING TO COME FROM?
MARCHIONNE: THEY'RE EVERYWHERE. I MEAN, TO BE PERFECTLY HONEST, THERE'S A LARGE NUMBER OF THEM HERE IN THIS COUNTRY. THEY'RE IN THE MIDDLE EAST OR IN ASIA. THEY'RE EVERYWHERE.
QUINTANILLA: AND RIGHT NOW THEY'RE BUYING WHAT INSTEAD?
MARCHIONNE: THEY'RE BUYING CARS THAT I THINK THAT ARE NOT AT PAR WITH THE FERRARI. I DON'T WANT TO MAKE DEROGATORY REMARKS ABOUT THE COMPETITION, BUT IF YOU HAVE TO WAIT OVER 12 MONTHS TO GET A CAR, PEOPLE HAVE A TENDENCY IN SOME CASES TO GO SOMEWHERE ELSE.
JIM CRAMER: SERGIO, YOU HAVE DONE A REMARKABLE JOB WITH THE COMPANY AND, BY THE WAY, ALSO WITH CHRYSLER, WITH JEEP. BUT WOULD YOU WANT TO SELL THE REST OF YOUR STOCK HERE, WHICH I KNOW YOU'RE ALLOWED – FREE TO TRADE IN 2016?
MARCHIONNE: I THINK THIS STOCK IS GOING TO BE DISTRIBUTED TO ALL S.P.A. SHAREHOLDERS AT THE BEGINNING OF JANUARY NEXT YEAR. WE'VE DONE THIS 10% PLACEMENT TO BRING DOWN THE DEBT OF S.P.A. THE REST OF THE POSITION IS GOING TO BE GIVEN TO OUR SHAREHOLDERS ON A – JUST FOR FREE.
CRAMER: FREE?
MARCHIONNE: WE WILL BE DISTRIBUTING ALL THE STOCK OUT TO OUR SHAREHOLDERS IN THE BEGINNING OF JANUARY.
CRAMER: CAN YOU MAKE – LET'S SAY YOU HAVE APPROXIMATELY 7,200 UNITS. CAN YOU EVER MAKE – CAN YOU DOUBLE THAT AND WILL THEY BUY THEM IN CHINA GIVEN THE FACT THAT THE COMMUNIST PARTY IS TRYING TO CRACK DOWN ON CONSPICUOUS CONSUMPTION?
MARCHIONNE: NO. I THINK DOUBLING THAT NUMBER IS NOT WITHIN THE REALM OF THE POSSIBLE. I THINK WE NEED TO MAINTAIN, LOOK, THIS COMPANY WAS FOUNDED ON ONE SIMPLE PRINCIPLE. YOU ONLY PRODUCE ONE CAR LESS THAN THE DEMAND FOR THE VEHICLE. YOU JUST DON'T EXCEED THAT EQUATION. AND SO WE NEED TO GROW THE DEMAND SIDE BEFORE WE TRY AND SUPPLY IT AND IT REALLY DESTROY THE EXCLUSIVITY OF THE BRAND. IT'S A VERY CAREFUL WALK AND A VERY, VERY TIGHT RELATIONSHIP BETWEEN US AND THE DEALER BODY.
LEBEAU: YOU ARE GOING TO BE THE CHAIRMAN.
MARCHIONNE: I AM.
LEBEAU: YOU ARE THE CHAIRMAN OF FERRARI, BUT THERE ARE A LOT OF PEOPLE WHO ARE SAYING ULTIMATELY YOU WILL BE THE MAN WHO MAKES THE CALLS WHEN IT COMES TO FERRARI. AND YOU WILL ESSENTIALLY BE THE CEO. WHO WILL BE THE CEO OF FERRARI OVER TIME?
MARCHIONNE: WE HAVE A CEO IN PLACE NOW. AMEDEO FELISA WHO I SHOULD ACTUALLY THANK HIM PUBLICLY FOR ALL HE HAS DONE OVER THE LAST – YEARS. THE CARS THAT YOU SEE OUT THERE ARE HIS STEPCHILDREN AND HE HAS BEEN AT THE HEART OF THE TECHNICAL DEVELOPMENT OF FERRARI FOR A LONG PERIOD OF TIME. HE'S THE BEST ENGINEER I HAVE KNOWN MY WHOLE LIFE. AND I THINK WE OWE HIM A LOT BECAUSE HE HAS CONTINUED TO REFINE THE BRAND AND PUSH THE TECHNILOGICAL AND TECHNICAL LIMITS OF THESE VEHICLES TO PLACES WHERE NOBODY ELSE WOULD BE ABLE TO GO.
LEBEAU: BUT OVER TIME, YOU HAVE NO INTEREST IN BEING CEO?
MARCHIONNE: NO, BUT IT DOESN'T MATTER. I THINK THAT ONE OF THE THINGS THAT I DID OVER A YEAR AGO WAS TO MAKE SURE THAT WE HAD AN ADEQUATE SUCCESSION MECHANISM TO DEAL WITH THE EVENTUAL HANDOVER TO OTHER PEOPLE. AMADEO IS 69. AND AS MUCH AS I LOVE HIM, I THINK HE'S EVENTUALLY GOING TO GET TIRED. WE ALL GET TIRED. I THINK WE HAVE TO MAKE SURE THAT SOMEBODY CAN PICK UP THE BATON FROM HIM.
QUINTANILLA: WE'VE BEEN TALKING ABOUT THESE UNBELIEVABLE RUN RATES AND UNIT SALES HERE IN THIS COUNTRY AND THEN WE ALSO WATCH THE LABOR NEGOTIATIONS. WHAT DO YOU SAY TO PEOPLE WHO SAY THE UNIONS DESERVE A PIECE OF THIS EXTRAORDINARY YEAR?
MARCHIONNE: I AM TOTALLY IN LINE WITH THE FACT THAT I THINK WEALTH DISTRIBUTION FOR CARMAKERS NEEDS TO BE REDIMENSIONED TO ALLOW LABOR TO TAKE A PIECE OF THAT WEALTH DISTRIBUTION. YOU'RE PREACHING TO THE CONVERTED. I'M NOT THE GUY WHO IS THE DIEHARD. THE PROBLEM IS THAT YOU NEED TO CREATE TRUE ENDURING WEALTH IN ORDER TO ALLOW THAT TO HAPPEN AND YOU CAN'T INSTITUTIONALIZE COSTS.
CRAMER: SERGIO, WHEN YOU MAKE A CAR IN MEXICO, IT'S $5 AN HOUR, HEALTH CARE PAID. REALLY GOOD WORKFORCE. WHY SHOULD ANYONE MAKE A CAR IN THE UNITED STATES?
MARCHIONNE: BECAUSE I THINK THAT THE LEVEL OF TECHNICAL SKILLS THAT ARE SEEN IN THIS COUNTRY, ESPECIALLY WITH THE AMOUNT OF ENGAGEMENT OF UAW, IS DISPLAYED IN TERMS OF THE RESURRECTION OF MANUFACTURING PUTS THEM IN A UNIQUE POSITION TO DO A VARIETY OF THINGS. THEY CAN'T DO ALL THINGS, BUT CERTAINLY, THERE'S A LARGE CHUNK FOR THE AUTOMOTIVE SPACE WHERE I THINK THEIR SKILLS CAN COME TO BEAR.
DAVID FABER: ONE THING THAT'S MADE IN THIS COUNTRY IS A TESLA. I KNOW YOU HAVEN'T BEEN THAT BIG A FAN PERHAPS IN THE PAST.
MARCHIONNE: NO, I'M A PHENOMENAL FAN OF ELON MUSK. I THINK HE'S THE GREATEST. HE'S A DISRUPTER AND I THINK HE IS A GREAT MARKETER. AND I LOVE HIM.
CRAMER: DID YOU SAY GREAT MARKETER?
MARCHIONNE: MARKETER.
CRAMER: YEAH. LIKE SHOWMAN.
MARCHIONNE: NO, I THINK HE'S A GREAT MARKETER.
FABER: WHAT ABOUT AN ELECTRIC CAR FOR FIAT?
MARCHIONNE: WE DO HAVE AN ELECTRIC CAR.
FABER: AND WHAT ABOUT THE THREAT THAT THAT REPRESENTS. AND BY THE WAY, LET ME GO A STEP FURTHER, DO YOU THINK APPLE IS GOING TO MAKE A CAR?
MARCHIONNE: YES.
FABER: YOU DO. WHY?
MARCHIONNE: BECAUSE I THINK THE SPACE IN WHICH THEY CAN EXHIBIT THEIR SKILLS. I MEAN, IT'S SOMETHING THAT – THE QUESTION THAT YOU ASKED IS NOT SURE THAT I ANSWERED IT PROPERLY. ARE THEY GOING TO GET A CAR MADE OR ARE THEY GOING TO BUILD A CAR? THOSE ARE TWO SEPARATE QUESTIONS. I DOUBT IT VERY MUCH THAT THEY WILL SET UP INFRASTRUCTURE TO MANUFACTURE CARS. THEY WILL RELY ON SOMEBODY. THEY HAVE NOT APPROACHED US IN CASE YOU ARE WONDERING.
FABER: THEY HAVEN'T. BUT COULD FIAT CONCEIVEABLY BECOME THE FOX CON FOR CARS?
MARCHIONNE: WELL, I'M NOT SURE THAT I LIKE THE PARALLEL WITH FOX CON GIVEN THE MARGIN DISTRIBUTION. BUT IGNORING THAT ISSUE, I THINK THAT THIS INDUSTRY IN GENERAL NEEDS TO OPEN UP TO DISRUPTERS. WHETHER IT'S THE GOOGLE CAR, THE APPLE CAR, THIS NOTION THAT WE'RE SEEING NOW WITH AUTONOMOUS DRIVING, ASSISTED DRIVING. IT'S GOING TO CHANGE THE TRADITIONAL NATURE OF CARMAKING. IT'S GOING TO CHANGE THE NATURE OF CARS IN THE MARKETPLACE, AND IT'S GOING TO CHANGE THE DEMAND/SUPPLY EQUATION. ALL THESE THINGS WILL HAPPEN IN THE NEXT FIVE TO TEN YEARS, AND I THINK WE NEED TO BE READY FOR THAT TO HAPPEN.
QUINTANILLA: ARE YOU TALKING LIKE TRANSMISSION OR INTERFACE, USER INTERFACE, BOTH?
MARCHIONNE: EVERYTHING.
QUINTANILLA: EVERYTHING.
MARCHIONNE: I THINK THESE CARS WILL BE COMPLETELY REVOLUTIONIZED. AND I THINK WE'RE HERE FOR FERRARI, BUT FERRARI HAS LEARNED ABOUT HYBRIDS IN THE FORMULA 1 CIRCUIT. IT NOW HAS A HYBRID IN ONE OF THE CARS THAT IS OUTSIDE, THE FERRARI, WHICH IS THE MOST EXPENSIVE CAR WE MAKE, IT'S OVER $1.5 MILLION, BUT WE DO RUN HYBRIDS. HYBRIDS ARE GOING TO CONTINUE TO BE THE MAINSTAY OF THE AUTOMOTIVE INDUSTRY IN THE NEXT PHASE OF DEVELOPMENT. I DON'T THINK YOU COULD – YOU CANNOT DO WITHOUT THEM. NOT FULL ELECTRIC.
LEBEAU: ARE THE TRADITIONAL AUTOMAKERS, AND I'M TALKING ABOUT THE BIG THREE, HAVE THEY BEEN LAPPED BY THE TECHNOLOGY COMPANIES OUT IN SILICON VALLEY IN TERMS OF INNOVATION? NOT IN TERMS OF UNDERSTANDING WHERE THE MARKET IS GOING, BUT IN TERMS OF THE REAL INNOVATION THAT IS HAPPENING IN SILICON VALLEY.
MARCHIONNE: I THINK WE HAVE BEEN LATE TO THE PARTY. NOW, DO I THINK IT'S NOT A RECOVERABLE DELAY? THE ANSWER IS NO. I MEAN, TO BE PERFECTLY HONEST, AS MUCH AS I REITERATE MY AFFECTION FOR ELON, THERE'S NOTHING THAT ELON DOES THAT WE CANNOT DO AS CARMAKERS. WE JUST CANNOT MAKE THE BUSINESS MODEL WORK AT THAT SCALE.
CRAMER: SERGIO, I RECENTLY TRIED TO BUY A JEEP FOR MY DAUGHTER. GEEZ, 55 Gs? I MEAN, YOU CAN COMMAND THAT.
MARCHIONNE: YES.
CRAMER: AND THAT IS BECAUSE – WHAT HAS CHANGED TO MAKE IT SO THAT THIS – I MEAN, YOU WERE PRICED OVER LEXUS.
MARCHIONNE: YEAH.
CRAMER: HOW?
MARCHIONNE: BECAUSE JEEP IS JEEP. THERE'S ONLY ONE JEEP IN THE WORLD. THERE'S ONLY ONE FERRARI IN THE WORLD. THERE'S SOME UNIQUE BRANDS THAT REALLY DESERVE PREMIUM PRICING BECAUSE OF THE UNIQUENESS. JEEP REPRESENTS A WAY OF LIFE. IT'S NOT JUST A CAR. IT'S LIKE FERRARI. I'M SURE THAT THE PRICING EQUATION IS SOMEWHAT DIFFERENT FOR A JEEP, THANK GOD, BUT IT'S A UNIQUE BRAND AND I THINK IT NEEDS TO BE TREATED WITH RESPECT. I THINK THE PRODUCTS THAT WE PUT INTO THAT BRAND AND HOW WE NURTURE THAT PRODUCT PORTFOLIO NEEDS TO BE VERY CAREFULLY MANAGED. I HAVE NO DOUBT THAT THIS IS A BRAND THAT CAN RUN 2 MILLION CARS A YEAR. IN EUROPE, IN FIRST NINE MONTHS OF THIS YEAR, WE SOLD MORE CARS THAN WE SOLD IN THE WHOLE OF 2014. OF JEEPS. IN A MARKET THAT'S RELATIVELY FLAT OR BENIGN, BUT JEEP HAS DONE IN NINE MONTHS WHAT IT DID IN 12 MONTHS THE YEAR BEFORE.
QUINTANILLA: ARE YOU DONE TRYING TO CONVINCE MARY BARRA TO DO WHAT YOU WANT HER TO DO?
MARCHIONNE: I DON'T THINK I EVER TRIED TO DO ANY PARTICULAR ACT WITH MARY BARRA. I THINK WE'VE HAD AN EXCHANGE IN WRITING, WHICH HAS COME TO AN END. THE THESIS THAT WE PITCHED, AND WHICH I HAVE BEEN RELATIVELY PUBLIC ON, DOES NOT CHANGE. I SAW THE RESULTS THIS MORNING FROM GENERAL MOTORS AND I COMPLIMENT THEM ON THEIR ACHIEVEMENTS. BUT THE UNDERLYING THESIS THAT WE PRESENTED IN TERMS OF CAPITAL CONSUMPTION IS AN ISSUE THAT WILL NOT GO AWAY. IT WON'T GO AWAY BECAUSE REGARDLESS OF HOW WELL WE PERFORM, WE'RE NOT TALKING ABOUT PERFORMANCE AT A PEAK OF THE CYCLE IN THE CROSS SECTOR. WE'RE NOT GOING TO BE HERE FOREVER. WE WILL GO THROUGH A DOWNTURN AND WHEN WE GO THROUGH A DOWNTURN, WE WILL NOT BE ACHIEVING MARGINS OF THIS CALIBER. I THINK THE QUESTION ABOUT BEING ABLE TO SAVE CAPITAL REMAINS ON THE TABLE.
LEBEAU: WHICH THEN RAISES THE QUESTION, WHEN DO WE SEE MAJOR CONSOLIDATION WITHIN THE AUTO INDUSTRY? ARE WE TALKING WITHIN TWO YEARS OR FURTHER OUT?
MARCHIONNE: NO. I THINK THERE'S A GREAT CHANCE THAT YOU SEE SOMETHING IN THOSE 24 MONTHS. AND IT'S NO USE TO ME TRYING TO HYPOTHESIS WHO THE MARRIAGE OF PARTNERS ARE, BUT IT WILL HAPPEN.
LEBEAU: AND WILL FIAT CHRYSLER BE PART OF THAT CONSOLIDATION MOVE?
MARCHIONNE: I HAVE NO DOUBT WE WILL TRY AND PLAY A ROLE. WHETHER WE ARE SUCCESSFUL IN GETTING IT DONE OR NOT I CAN'T TELL.
CRAMER: VERY IMPRESSIVE TURN THAT YOU HAVE DONE. JUST WANTED TO TELL YOU THAT. I HAVE ALWAYS FELT IF I EVER GOT TO MEET YOU.
MARCHIONNE: THANK YOU.
CRAMER: I MEAN, YOU JUST DID IT AND I JUST THINK IT'S IMPORTANT SOMETIMES TO SIT BACK AND SAY, CONGRATULATIONS WHAT YOU'VE DONE.
MARCHIONNE: THANK YOU.
QUINTANILLA: DID YOU RECENTLY SELL ONE OR CHANGE THE MODEL THAT YOU OWN OF FERRARI?
MARCHIONNE: NO.
QUINTANILLA: WHICH ONE DO YOU HAVE?
MARCHIONNE: MOST OF THEM. BUT I'M A FERRARI COLLECTOR.
CRAMER: HAVE YOU SEEN JAY LENO'S SHOW YET?
MARCHIONNE: YEAH.
CRAMER: WHAT DO YOU THINK?
MARCHIONNE: YEAH. DOES A GOOD JOB.
QUINTANILLA: SERGIO, THANK YOU FOR COMING IN AND CONGRATULATIONS ON A GOOD START. PHIL, THANKS TO YOU AS WELL.
MARCHIONNE: THANKS.
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