Ferrari launches the USD 4 million F80 super sports car! All 799 units already sold! $RACE (+0.35%)
The carmaker Ferrari (RACE) combines the automotive sector with the luxury sector and the brand, known for its eye-catching red racing color "Rosso Corsa", makes the competition look cheap. Its major competitive advantage over other car manufacturers is its low exposure to the weakening Chinese economy, where sales of Western vehicles continue to decline.
Weak consumer spending in China reduces demand for luxury goods
High inflation and the associated cost of living have recently caused demand for luxury goods and expensive sports cars to fall significantly. Luxury goods manufacturers such as LVMH Moet Hennessy Louis Vuitton and Gucci owner Kering have fallen 21% and 45% respectively this year as weak consumer spending in China curbs their sales. Ferrari shares have also suffered a 13% fall since the end of August, but are still up 28% year-to-date. The question is whether the sports car manufacturer will be caught up in the same problems as its competitors.
Ferrari less dependent on China than other car manufacturers
The Italian carmaker is still far superior to clothing, jewelry and perfumes and its exposure to China's weakening economy is rather limited. China, Taiwan and Hong Kong accounted for only 8% of Ferrari deliveries in the first nine months of 2024, while Mercedes delivers over 35% to the region. Accordingly, the 22% decline in China deliveries is already offset by single-digit growth in other regions. Ferrari also believes that China has yet to really get to know the Ferrari brand in order to understand the true value of the million-dollar cars. In addition, sales are hampered by the high taxation of super sports cars and the escalating trade dispute and possible tariffs on imported vehicles.
All 799 of the USD 4 million F80 super sports car already sold
However, company founder Enzo Ferrari believes it is important not to produce his cars in excess, but to always keep supply well below demand. Since entering the Chinese market in 1992, the company has always delivered fewer cars than the market demands in order to maintain the uniqueness, reputation and value of the Ferrari brand. In addition, the Maranello-based company's latest car, the USD 3.8 million F80, should provide a significant earnings boost for Ferrari shares, with analysts estimating a price increase of up to 30%. Even though the share is currently very highly valued and is trading at 53 times its expected earnings in 2024, some investors are using the recent decline as an opportunity to enter the market. In October, Ferrari presented the new F80 model, proving once again that it is capable of turning dreams into reality. The F80 reaches a top speed of almost 350 km/h and accelerates from 0 to 200 km/h in less than six seconds. Its engine runs on technology used in Formula 1. The limited order book of 799 units is already full and delivery of the first models is planned for the end of next year. Analysts expect sales of the model, which costs almost USD 4 million, to result in a further 10% increase in profits to €8.89 per share in 2025. The exact increase will depend on the margin of the F80, which Enrico Galliera, Ferrari's chief marketing and commercial officer, says will be "the best offering" among Ferrari cars.
Ferrari has the highest profit margin per vehicle in the automotive industry
Ferrari is known for having the highest margins in the automotive sector for its largely hand-built sports cars. The profit per car is just under €69,000, which corresponds to a margin of 24.6%. Only Porsche comes closest with a margin of 18.4% and €16,780. BMW, Mercedes and Audi are all below 10%. The red-hot demand for the super sports car demonstrates Ferrari's unique pricing power in its class and highlights its loyal customer base. With a value of almost USD 4 million, owning the super sports car probably remains a pipe dream for many, but buying Ferrari shares is not.
