Ferrari, the renowned Italian luxury car manufacturer, has announced its intention to raise prices on some of its vehicles in the United States by up to 10% in light of President Donald Trump's recent imposition of auto tariffs. The decision comes as Ferrari's profit margins face potential pressure, although the company has reaffirmed its financial outlook for the year, calming concerns among investors and leading to a 2.6% increase in Ferrari's stock value.
As the first European automaker to openly address Trump's latest trade actions, Ferrari emphasized the impact on its operations given that the US market represents a significant portion of its sales. With all vehicles manufactured in Maranello, Italy, Ferrari is preparing to make adjustments to deal with the new trade landscape.
Ferrari pointed out a potential 50 basis-point reduction in its Ebit and Ebitda margins due to the tariffs, pledging to absorb the increased costs for specific models by raising prices by up to 10%. This move could result in a significant price hike for customers in the US, where Ferrari vehicles range from $250,000 to over $3.5 million. Despite the anticipated increases, sales in the US have been strong, with a 6% rise in 2021 to 3,452 cars.
President Trump's recent proclamation to levy a 25% tariff on auto imports has further escalated trade tensions, prompting Ferrari to take action. In response, Ferrari plans to fully absorb the increased costs for select models while raising prices for others. Analysts from Bernstein believe that loyal Ferrari customers will continue to purchase despite the higher prices, citing the brand's ability to retain and even increase in value over time.
For existing Ferrari owners in the US, any vehicles imported before April 2 will not be subject to the price adjustments. Moreover, Ferrari, which separated from Fiat nearly a decade ago, is gearing up to introduce its first fully electric model later in 2021, demonstrating the company's commitment to innovation and sustainability in the face of changing trade dynamics.