Ferrari: Back in pole position
It is abundantly clear that if you are in the business of selling cars, you want to be flogging dreams to the wealthy rather than trying to compete with the Chinese at the price-conscious end of the market.
Five years ago Volkswagen’s market capitalisation was four times that of Ferrari, but that’s all changed and Maranello’s finest is now worth more than Volkswagen, even though the people’s carmaker churns out 700 times as many cars.
The key driver of the market is the structural shift away from the internal combustion engine towards electric vehicles (EVs), which is where the Chinese are dominating, accounting for around 60% of global EV sales last year. Their quality has improved dramatically over the past few years, but their real competitive advantage is on price, aided by plenty of state support and a dominant position in much of the supply chain.
Chinese EV exports were up by 48% in the first four months of this year, led by more established brands such as BYD as well as the likes of Jaecoo, whose model 7 surprised many by becoming the best-selling car in the UK in March.
Now Ferrari has got into the EV game with the launch of the Luce, much to the horror of its traditional fan base, which has been quick to point out that its design borrows less from the 250 GTO than it does from the Nissan Leaf. It is certainly rapid, doing 0-100km/h in 2.5 seconds. It is also reassuringly expensive, with a price tag starting at $640,000. Ferrari is confident it will sell.
Durex: Rubber hits the road
The leading condom brand has announced a 5% drop in sales in China in the first quarter as it seems the Chinese Communist Party is extending its tentacles into the boudoirs of the nation.
The problem is that China is approaching something of a demographic crisis, with birth rates at a record low of less than half the number 10 years ago and the overall population falling in 2025 for the fourth year in a row. The state abandoned its one-child policy in 2016 and bumped up to three children in 2021. Last year it started paying a state subsidy to parents of young children.
Now it’s gunning for contraceptives, removing a long-standing VAT exemption and introducing tighter controls on marketing, leading to Douyin banning the livestream marketing of condoms last October.
There’s also bad news from Karex, the world’s largest condom manufacturer, which makes an impressive 5-billion units a year and manufactures for brands like Durex. The Malaysia-based firm relies on a number of raw materials derived from oil, and it has said it may have to raise prices by as much as 30% if disruptions from the Iran war continue.
Karex CEO Goh Miah Kiat makes an interesting case for the condom as a defensive play in wobbly market conditions, arguing that if you’re uncertain about the future the last thing you need is an extra mouth to feed.
Durex continues to innovate, opening a research & development centre in Shanghai that has produced a condom dosed with hyaluronic acid, which is apparently excellent for adding moisture to the skin and preventing signs of ageing.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.