AUTONEWS

US tariffs won't significantly impact Ferrari's sales and profits

Italian luxury sports car maker Ferrari will not suffer a major hit to its sales and profits in the US, regardless of what new tariff regime President Donald Trump ultimately imposes, analysts say.

Britain's Aston Martin, which is facing financial difficulties and generates a third of its sales in the US, looks a bit more vulnerable. The US accounts for about 25% of Ferrari's sales.

The announced changes to the US tariff regime, temporarily set at 25%, have been greeted by many commentators in Europe as "Smoot-Hawley Act version 2.1". This refers to the tariffs imposed in the 1930s. Those tariffs triggered a global trade war and halted trade. This is believed to have further prolonged the Great Depression.

EU denies tariffs are unfair...President Trump has said he wants to level the playing field and stop what he calls unfair treatment of the United States by some trading partners. The 25 percent tariff plan on cars is an initial offer in his bid to change what he sees as unfair trade practices, particularly by the European Union. He wants to correct the disparity in current tariffs – 2.5 percent in the United States versus 10 percent in the EU. He also wants to eliminate non-tariff barriers, often hidden parts of European regulations that discriminate against American cars and other products. That suggests the negotiations will be long and complicated. The EU denies its tariffs are unfair.

For Ferrari, the impact of a 25 percent tariff (up from the current 2.5 percent) will be limited. HSBC Global Research pointed out that the tariffs are calculated on the basis of import value, not the final selling price.

“Moderate price increases largely cover the profit losses.”

Given that the Ferrari Purosangue SUV starts at around $408,000, these price increases will not have much of an impact.

Investment bank UBS said that increased US tariffs will weigh on Ferrari’s global profits, but unfavorable exchange rates will also play a role, and it cut its EBITDA (earnings before interest, taxes, depreciation and amortization) estimate for 2025 by 0.8 percentage points to 37.7%.

Ferrari fills up its order book...Investment research firm Bernstein maintained its “Outperform” rating on Ferrari, with a target price of $575 on the stock. Ferrari increased its profit last year to 2.56 billion euros ($2.67 billion). That’s a slight increase from 2023’s EBITDA of 2.28 billion euros ($2.37 billion).

Ferrari said its order book is full until 2026. All 799 of the 3.6 million euro ($3.75 million) F80 supercars have already been sold.

Aston Martin was forced to raise additional funds last month – $162 million from its chairman Lawrence Stroll and by selling his stake in his Formula 1 team. This was done to cover growing losses and cushion the impact of US tariffs, according to Reuters. Stroll has invested around £600 million ($777 million) in Aston Martin since he took over the company in 2020.

Stroll has increased his stake to 33% and is considering increasing it to 35%. This has fuelled speculation that he may be planning a full takeover of the company.

Aston Martin reported an adjusted pre-tax loss of 255.5 million pounds ($330 million) for 2024, compared with a loss of 171.8 million pounds ($222 million) the previous year. The company has faced reduced demand in key markets such as China. Aston Martin has implemented cost-cutting measures, including a 5% reduction in its global workforce, with the aim of saving around 25 million pounds, according to Reuters.

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