Enzo Ferrari lived for racing. At ten years old, his father took him to see the 1908 motor race, Circuito di Bologna. In his 1960 autobiography, Enzo remembered what a lasting impression that race created in his mind.

In 1929, Enzo formed his first company, Scuderia Ferrari (the “Ferrari Stable."), which operated as a team of racing drivers and technical assistants for Alfa Romeo. Enzo’s second company, Ferrari S.p.A., was formed in 1947 to manufacture race cars.

                                   1908 Circuito di Bologna Postcard

During the 1950’s, Enzo invested heavily in engineering faster race cars. He never wanted to produce or sell road cars, but the increased costs of designing new race cars forced the issue. In its first ten years, Ferrari S.p.A’s production of road cars averaged less than 40 cars per year. With the costs of racing increasing, Enzo increased production every year, and by 1963, the year he almost sold the company to Henry Ford, produced nearly 600 cars. And in 1976, the year Ferrari of Los Gatos opened for business, annual production hit 1,400.

No One Believed in the North American Market

The Ferrari sales team focused their efforts to sell their road cars in Europe and the Middle East. Executives at Ferrari were sure no market existed in North America for their cars. After all, how could Americans understand the real value of a Ferrari? They reasoned that Americans would never pay a premium price for a vehicle only driven on weekends when the weather was good.

The Ferrari marketing team convinced Enzo that the market in North America was too small. Sure, there were a few movie stars and celebrities that were rich and willing to spend money on status symbols, but that was not enough to justify substantial investment in the North American market. And, management reminded Enzo, movie stars loved to visit Italy as his guest to buy their cars, and this was something he enjoyed also.

Wanting to learn more, Enzo decided not to ignore the American market. He contacted his friends Bill Harrah and Luigi Chinetti and asked for help entering the US market with his road cars. He split North America in half and appointed his friends as West and East coast distributors. He gave them the following instructions, “Set up as many dealers as you like, charge them for a minimal amount of spare parts, and sell them one Ferrari for demonstration purposes, at a discount, of course.."

Successful Car Dealers Make a Fortune by Not Selling Ferraris

The Ferrari factory didn’t expect to sell cars in North America, “Why try,." they reasoned. Even though signing up successful dealers turned out to be easy, their expectations were correct. These dealers didn’t need Ferrari sales–nor did they make many. They were already making enough money selling other makes of cars and didn’t push Ferrari sales to customers.

That begs the question: Why did they sign up to become Ferrari dealers if they didn’t need the Ferrari brand to make money? Here’s the simple answer: being a Ferrari dealer fed their egos. There was prestige associated with the Ferrari name, and, as Ferrari dealers, they could drive back and forth to work in the demo car.

Even Vern Keil, manager of Harrah’s West Coast organization, Modern Classic Motors, told Richard and Brian, “…this is a business for older, wealthy people, who don’t need to make more money selling Ferrari’s.." It seemed everyone shared the opinion that Ferrari’s were not going to sell in North America.

That made the timing right for someone with a fresh approach and a different opinion about the North American Ferrari market. Enzo never liked to follow the crowd, and neither did Brian. They both wanted to try different things. It was time for their dreams to connect and create a different–and unexpected–outcome.

In the next post, find out how Ferrari of Los Gatos became the “Go To Guys.."

Remember the first time you went to a car race or saw and heard a Ferrari? Please share the memory in a comment below.