Ferrari (NYSE:RACE) Has Big Plans for Its Future

Ferrari (NYSE:RACE) Has Big Plans for Its Future

Ferrari (NYSE:RACE) Has Big Plans for Its Future

$RACE

Ferrari’s (NYSE:RACE) new CEO, Louis Camilleri, unveiled a new business plan on 18 September that includes reviving iconic models and embedding in them its F1 technology.

Thus, significantly expanding Ferrari’s electric-gasoline hybrid powertrain offering and affirming plans to introduce a FUV (utility vehicle) that conforms to the iconic brand’s performance marks.

Mr. Camilleri laid out his ambitions for a company he took over only in July following the death of CEO and chairman Sergio Marchionne.

“Our objectives are ambitious, but they are based on a meticulously constructed model pipeline, our enviable pricing power and appropriate investment levels,” Mr. Camilleri said.

Under this 5-year plan, Ferrari is planning to launch 15 new models, targeting revenues of around $5.8-B by Y 2022. Mr. Camilleri refused to set production forecasts beyond this year’s 9,000 units but made clear the Supercar maker was targeting an expanding pool of wealthy customers for growth, especially in China.

The plan also forecasts profit margins of 38% reaching the marks of super luxury maker Hermes, a goal of Mr. Marchionne, who died suddenly in July.

Ferrari’s plan envisions models aimed at new buyers, namely the FUV dubbed Purosangue, or ‘Thoroughbred’, in a bid to reassure doubters concerned with brand dilution, and vehicles meant to reward loyal buyers, in particular the Icona series that revives the great models from the past.

The 1st in the Icona series, the open-cockpit Monza SP1 and SP2 sports cars, will be based on the classic open-top “barchetta” racing model of the 1940’s and 1950’s with revved-up F1 technology.

Ferrari is billing it as the most-powerful road car in the company’s history.

Ferrari also said that fewer than 500 of the Monza SP sports cars will be produced and sold only to eligible Ferrari clienti, whose  Pricing will be announced next month at the Paris Auto Show.

The Icona series will remain an exclusive area of Ferrari’s business, representing under 5% of shipments, while other special 1-off series in the tradition of the brand’s 1st hybrid LaFerrari will comprise another 5% of sales.

Traditional sports cars will tally 50%+ of sales, and GT segment, which includes the Purosangue, will come in at 40%.

The Purosangue is expected to be especially attractive to the Chinese market, but will not be launched until the final year of the plan so the anticipated returns won’t be apparent during the current planning cycle.

Ferrari plans for 60% of its supercars to have hybrid engines by Y 2022, which will pave the way for the company to exceed a 10,000-unit cap on small car manufacturers that includes emissions concessions.

Providing a look into of Ferrari’s broader plans to expand its luxury profile, buyers of the Monza SP series will receive a racing jumpsuit by Italian high-end luxury brand Loro Piana that will also help protect drivers against the elements. And leather goods maker Berluti is making a leather-clad helmet-goggle combo and driving shoes for the Monza pilots. I expect that the series is sold out already

Mr. Marchionne had a plan to transform Ferrari into a luxury goods company beyond Supercars in a bid to capture higher margins.

And Mr. Camilleri said that plans for that transition were not yet ripe, but that the Loro Piana and Berluti collaborations give a hint at the future strategy.

“I am ever more convinced that there is considerable value to be generated from this arm of the business,” Mr. Camilleri said. “Indeed, significant value is already being extracted from the Ferrari name, but not nearly enough is accruing to us as the owners of the Ferrari brand.”

Symbol Last Trade Date Change Open High Low Volume
NYSE:RACE 141.82 26 September 2018 2.78 139.84 142.52 139.78 404,055
HeffX-LTN Analysis for RACE: Overall Short Intermediate Long
Bullish (0.35) Bullish (0.46) Bullish (0.36) Neutral (0.22)

 

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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