F1: Ferrari (NYSE:RACE) to Increase Racing Budget This Season

F1: Ferrari (NYSE:RACE) to Increase Racing Budget This Season


Ferrari (NYSE:RACE) plans to increase its F1 budget this season in a move to end the championship win drought, in a move that emphasizes its brand’s Grand Prix success.

The iconic Italian supercar manufacturer has not won a title since its constructors’ championship success in Y 2008, and Kimi Raikkonen claiming its last drivers’ crown in Y 2017.

“While our F1 performance last year was the best one since we won the constructors’ championship in 2008, we fell short of our ambition to raise the winners’ cup,” Ferrari Chairman and CEO Louis Camilleri told analysts and investors in a conference call last Thursday.

“Our objective going forward remains the same as it has always been, to win.

“In 2019 we project an increase in spending which partially reflects this ambition, but also includes the development expenditures required to address the new tactical regulations that will form part of the envisaged Concorde agreement that should come into force in 2021.”

Ferrari, Red Bull Racing and MercedesAMG have reservations over how F1 owner Liberty Media’s planned Y 2021 revolution will work, particularly the practical application of cost-capping elements like limiting team spending.

CEO Camilleri has softened Ferrari’s stance from the quit threats made by his predecessor, the late Sergio Marchionne.

The confirmation that the Maranello Outfit is preparing more spending in Y 2019, with some focus on Y 2021 changes, is a further indicator that an F1 exit is not on the cards.

Ferrari’s position is that its success in F1 and its expenses are 2 of the Key influential factors in the overall performance of the company.

If it does not spend appropriately it risks poorer results, a smaller share of prize money, a tougher challenge of finding new and/or renewed sponsorship and an overall detraction from the Aristocrat’s brand’s value.

The F1 program is “the core element of our marketing effort”, which means Ferrari is able to avoid traditional, ultra-expensive advertising activities because of what F1 does to the “prestige, identity, and appeal of the Ferrari brand”.

While its high research and development costs are mainly those incurred for its F1 program, Ferrari acknowledges they are “fundamental” to the development of its road-car range.

However, a prolonged period without success, let alone not participating at all in F1, would have a direct, adverse effect on Ferrari’s overall business.

Ferrari is the Aristocrat of of world’s automotive sector and the world’s strongest brand.

SymbolLast TradeDateChangeOpenHighLowVolume
RACE127.224 February 2019+0.09126.01127.22125.79415,468

HeffX-LTN overall technical outlook for RACE is Bullish to Very Bullish in here there is very little resistance here and none above 140.26.

Stay tuned…

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