Ferrari breaks partnerships with certified Chinese dealerships, leading many in the industry to speculate its future in the country

Gasgoo.com (Shanghai April 11) - The recent decline in the ultra-luxury and sports car segments in China is forcing many manufacturers to modify their marketing strategies. Ferrari's Shanghai based sales company, Ferrari-Maserati Automobile International Trading Company, also known as Ferrari-Maserati China, abruptly terminated sales and after-sales cooperation agreements with two dealerships owned by the Shenzhen-based Jiahong Trading Development Company, Beijing Business Today reported today. Reports have also surfaced that Ferrari-Maserati China has broken similar agreements with two other dealerships. Many analysts believe that these reports are a sign that Ferrari-Maserati are looking to reduce its sales and marketing operations in the country, which is something the other 20 plus certified dealerships in China should be aware of.

Earlier this month Ferrari-Maserati China sent a legal letter to Jiahong terminating it is exclusive partnership agreement with two of its 4S dealerships, located in Zhengzhou, Henan and Dongguan, Guangdong. The two parties originally signed a cooperation agreement in December 2011, soon after which the two dealerships, Zhengzhou Ferrari and Dongguan Ferrari, began operation. According to sources from Jiahong, the two dealerships successfully completed their sales targets last year, with Dongguan Ferrari even exceeding its goal.

When asked to comment on the termination of the agreement, Jiahong made the following statement: "Ferrari-Maserati China previously voiced concerns about whether or not Jiahong is planning to sell competing brand [automobiles]. Although Jiahong denied the claim, the manufacturer remained unconvinced, saying that if Jiahong did not admit [to this], Ferrari-Maserati China would nullify the certification given to the 4S dealerships." It added that the two dealerships had not had enough time to reap the rewards of the expensive investments made in them. Fearing that they would be unable to supply new customers with cars following termination of the agreement, both dealerships have offered to redirect customers to other Ferrari dealerships, which has led both of them to see their own sales drop.

When asked to comment on the matter, Ferrari-Maserati China replied that all of its activities in China, including dealership partnerships and management, are completely in line with the country's rules and regulations. It added that the recent case with Jiahong was the result of a carefully made commercial decision, and that the manufacturer was continuing to communicate with the dealership in order to ensure that the issue is appropriately resolved.

Some analysts attribute Ferrari-Maserati's decision to end partnerships with its dealerships to the declining state of the Chinese luxury automobile market. According to statistics, Bentley, Ferrari and Lamborghini sales in China all fell last year. Although Bentley managed to achieve global sales growth of 19 percent in 2013, its sales in China fell three percent. By comparison, its Chinese sales increased 100 percent and 23 percent in 2011 and 2012, respectively. Lamborghini's Chinese sales fell 16.7 percent from 2012 to 2013, while Ferrari's fell approximately 33 percent during the same time period.

Jia Xinguang, independent industry analyst, attributes the recent pressure luxury automobile manufacturers in the country are facing to government policies targeting luxury automobiles. He believes that it will be difficult for these manufacturers to achieve positive growth this year. Beijing Yayuncun Automobile Market's Lamborghini dealership was unable to sell a single new car during all of 2013, with a source from the dealership saying that they started experiencing sales declines in the segment as early as 2012. Wang Cun, marketing director for Sinomach Automobile Trading, predicts that the luxury automobile segment will face issues with slow growth and inventory pressure this year.