Schooled in the world of Italian politics and used to winning on the track in the decidedly European arena of Formula One, Ferrari (RACE) is not about to lose out to MAGA tariffs.
The luxury carmaker says it is working out “countermeasures” to handle potential U.S. tariffs on European automakers that are looking increasingly like a certainty.
Tariffs on the Way
“Whatever they charge us with, we’re charging them,” President Donald Trump said Wednesday in response to the European Union’s retaliatory measures against the U.S. imposing a blanket 25% levy on imports of steel and aluminium. Now the stage is set for the White House to press ahead with its plans, announced in mid-February, to place tariffs “in the neighborhood of 25%” on car imports.
“We are ready with some countermeasures,” Ferrari CEO Benedetto Vigna told CNBC’s Robert Frank at CONVERGE LIVE in Singapore. He said the carmaker was in a “scenario planning phase” and is waiting for the official announcement on the tariff rate.
European automakers are in flux as they await news on tariffs. First, Trump imposed tariffs of 25% on Mexico and Canada, which has a profound effect on the auto industry due to integrated supply chains and heavy reliance on production in Mexico in particular. For the moment, as long as automakers whose vehicles comply with the United States-Mexico-Canada Agreement, or USMCA, are exempt until April 2nd. At that point, Trump has promised to impose reciprocal tariffs on other nations, including the 25% levy talked about specifically for the auto industry around the world.
For the time being, Volkswagen (VWAGY) and Chrysler-maker Stellantis (STLA) have said they are exempt under the terms of USMCA. But come April 2nd, the entire industry could be facing tariffs, which is set to have a big impact on the profits of automakers, including Ford (F) General Motors (GM).
Ferrari Less Exposed than Others
“We are watching what’s going to happen in the next month, next weeks … we are on the same boat in terms of tariffs,” said Vigna in Singapore. But analysts have pointed out that Ferrari is not like other European carmakers. One, it cannot shift manufacturing to the U.S. to counter tariffs as it makes all its cars exclusively at its Maranello plant in Italy. Two, it can probably easily pass on the extra cost due to the nature of its buyers.
It comes after Ferrari reported a 21% jump in net profits last year and forecast core earnings to rise by 5% this year. A focus on personalization as customers added their own touches to vehicles helped drive profits up and is another factor in RACE being able to improve margins – or absorb tariffs – without the necessity to expand production significantly.
Meanwhile the company is gearing to launch its first full-electric vehicle, the Ferrari Elettrica, on October 9th. It will be one of six new models slated to roll off the Maranello factory lines this year. Meanwhile, Reuters reported earlier this year that Ferrari held talks with lawmakers in Rome to change measures in the government’s capital markets bill so it could bring its registered office back to Italy from the Netherlands.
Is RACE a Good Stock to Buy?
On TipRanks, RACE has a Moderate Buy consensus based on eight Buys, seven Holds and one Sell rating. The average RACE price target of $511.20 implies about 13% upside.
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