As President-elect Donald Trump renews his calls for high tariffs on imports from China, Canada and Mexico, the global auto industry braces for potential supply chain disruptions and rising costs. However, Ferrari, the iconic Italian luxury automaker, appears uniquely positioned to weather the storm, even as other manufacturers face growing challenges.
Trump's proposed measures include a 10% tariff on all goods entering the United States from China and a 25% tariff on imports from Canada and Mexico, triggering concerns across industries that rely heavily on global trade. While European automakers have yet to be directly targeted, analysts suggest it may only be a matter of time before the spotlight falls on the European Union's auto sector.
Despite the growing uncertainty, Ferrari appears largely insulated from the fallout. Known for its exclusive, high-performance vehicles, the Italian automaker produces all of its cars at its historic factory in Maranello, Italy. Unlike many global automakers with production facilities spread across different regions, Ferrari's singular approach to manufacturing allows it to maintain its brand identity and avoid the complexities of moving production to evade tariffs.
“For Ferrari, tariffs will not push it to produce cars in the United States. It all happens in Maranello,” noted Morningstar equity analyst Rella Suskin in a discussion with CNBC. Suskin explained that Ferrari's customer base is less sensitive to price increases than traditional brands. “Whether it is a 10%, 20% or even 30% tariff, Ferrari could easily pass those costs on to consumers,” he added, citing the high-income demographic that typically buys Ferrari vehicles.
Ferrari's ability to absorb potential tariffs stems from the exclusivity of its brand and the premium nature of its product. Luxury car buyers are less likely to be put off by incremental price increases, a sentiment echoed by Tom Narayan, global automotive analyst at RBC Capital Markets. Narayan stressed that Ferrari's pricing power allows it to take on challenges that could have a significant impact on competitors.
The Italian automaker's resilience is further underlined by its strong market performance. Ferrari shares, listed on the Milan Stock Exchange, have risen more than 34% this year, outpacing rivals such as Renault and Mercedes-Benz. Analysts attribute this growth to Ferrari's ability to maintain high demand for its vehicles while remaining independent of market volatility affecting mass-market automakers.
“Ferrari does not need to make cars in the United States,” said Anthony Dick, automotive analyst at Oddo BHF, in an email to CNBC. “From a branding perspective and for industry reasons, establishing a local supply chain in the United States does not appear feasible for the company.”
Ferrari's ongoing commitment to manufacturing exclusively in Italy not only preserves the legacy of its brand, but also eliminates the need for large capital investments required to establish production facilities abroad. This strategy stands in stark contrast to that of many automakers who have diversified their manufacturing operations to mitigate potential trade barriers.
For other European luxury car makers, however, the impact of US tariffs could be more pronounced. Porsche, for example, faces a different set of challenges than Ferrari. The German automaker, owned by Volkswagen, builds its vehicles in Germany and may struggle to pass on the full cost of the high tariffs to customers.
“Porsche's situation is a little more complex,” Suskin explained. While a 10% tariff might be manageable, a higher tariff, such as 30%, might be difficult to absorb without impacting demand. Unlike Ferrari, Porsche's parent company, Volkswagen, has some manufacturing capacity in the United States, but creating a dedicated Porsche production line would require significant capital expenditures.
Porsche shares have reflected these challenges, falling about 26% this year. Analysts have pointed out that the company's reliance on German manufacturing, combined with its larger customer base than Ferrari, could make it more vulnerable to changes in U.S. trade policy.
Meanwhile, Ferrari's focus on exclusivity and its ability to command premium prices have set it apart from the rest of the industry. Analysts such as Thomas Besson, head of automotive research at Kepler Cheuvreux, agree that Ferrari's unique market position allows it to overcome economic difficulties with relative ease. “Time will tell, but for now Ferrari seems well equipped to handle these challenges,” Besson told CNBC in an email.
Trump's tariff proposals have already had repercussions on the global auto market, with shares of several automakers falling in response to the news. Many U.S. and European manufacturers rely heavily on component suppliers and assembly plants in Mexico, making them particularly vulnerable to cross-border trade disruptions. Even automakers that are not immediately affected by Trump's policies, such as those in Europe, remain wary that future measures could hit their businesses.
Despite these broader concerns, Ferrari's strong brand identity and its ability to cater to an affluent, less price-sensitive customer base give the company a significant advantage. Its ongoing commitment to Italian manufacturing ensures that it remains a symbol of exclusivity and tradition, qualities that resonate strongly with its clientele.
As the global auto industry continues to grapple with tariff uncertainties, Ferrari's strategy appears to protect it from the worst fallout. While the company continues to thrive, its approach stands in stark contrast to the challenges facing other automakers, reinforcing its status as a unique force in the luxury automotive market.
