Ferrari

Ferrari reported revenue growth of 8% in the second quarter, with an impressive gross profit margin of 52.6%, back at all-time highs, and an all-time high operating margin of 31.2%, supported by a stronger-than-usual mix of special series sales and higher-than-expected personalization.

Why it matters: The strength of the brand and its loyal customer base is reflected in this result, with volumes 4% lower in the second quarter, with a number of planned model changeovers, implying price and mix growth of 12%. Special series models contributed 16% to sales volumes compared with the mid-single-digit contribution we have seen over the last few years. While our forecast expected an increase in contribution from these higher-value vehicles, it was not to the extent reported. Personalization continues to deliver ahead of expectations. Personalization revenue as a percentage of revenue was guided by management to reduce to 19% from 20% achieved over the last few years. We think this outperformance will maintain its contribution at 20%.

The bottom line: Given the higher-than-expected personalization revenue, we raise our fair value estimate marginally to EUR 358 per share from EUR 337 per share for wide-moat Ferrari. We forecast revenue from personalization by making an assumption on the growth of average personalization spend per vehicle. We expect spending per vehicle to slow to midsingle digits on average. This result reflects that there is still more growth to be had and possibly personalizations can be maintained at 20% of revenue for longer. Our operating profit forecast for the full year was already ahead of management's guidance, in line with the company's general trend of surprising on the upside by single digits.

Coming up: Little disclosure was provided on the order book for Ferrari's battery-electric vehicle, Luce. Luce orders are in line with expectations and are coming from both repeaters and new clients.

Our fair value estimate for wide-moat Ferrari is $416 per share. We use a 10-year explicit period in our discounted cash flow model to incorporate our view that EBIT margins will continue to rise incrementally over an extended period.

Management has an excellent record of delivering just above its guidance. This is only possible because demand for Ferrari's products exceeds supply, so management can carefully match annual deliveries with its targets. Management set out clear targets for 2030 at its 2025 capital markets day. These targets imply a 5% revenue and 5% diluted EPS compound annual growth rate. Over the last five years, management has consistently beaten guidance.

We project average revenue growth of midsingle digits per year over our 10-year explicit forecast period, with volume and price contributing around 1% and 6%, respectively.

Our volume growth forecast is aligned with Ferrari’s horizontal growth strategy, which drives total volume growth by product range expansion, keeping the number of vehicles produced per model per year limited to maintain the brand’s exclusivity. Over the short term, we are also cognizant of the group’s capacity limitation of 15,000 vehicles by 2026. Since 2019, the first year to see a step change in the number of models available, Ferrari has launched around three new vehicles per year. If we assume that Ferrari can maintain a product launch run rate of four new models per year, the average range model is kept on the market for five years and the average special series, Icona, and track cars are kept on the market for two years, total volume will grow at a CAGR of around 1% per year while ensuring that exclusivity per model is maintained (at just over 1,000 vehicles per model per year).

We view model mix change as a key driver of growth in average revenue per unit sold. We consider the contribution of high-value Icona or supercar models and the penetration of personalization in our price growth forecast. Sales of the new supercar will begin in the fourth quarter of 2025. We project it to reach peak sales volumes in 2027, driving strong price growth in that year. We also expect the Ferrari Luce, its first electric vehicle, to be priced to reflect its significant step change in innovation, thus positively contributing to the mix. The penetration of personalization reached 20% in 2025. Its guidance for penetration of personalization has been reduced slightly to 19%.

2024 was the first year in which Ferrari did not earn revenue from the sale of engines to Maserati (EUR 127 million or 2% of group revenue in 2023). This will be replaced by engine sales to TWG Global and General Motors from 2026. There is also speculation that Ferrari’s “heritage” payment from F1 could have a more restrictive capping mechanism in the future. We have not included this in our forecasts. We still view Ferrari’s lifestyle activities as too marginal to forecast explicitly.

There is operational leverage to be gained on what we assume to be relatively fixed costs for expensed R&D and general and administrative costs. This supports EBIT margin expansion from 29.5% in 2025 to above 30% by 2030, in line with management’s guidance. Diluted EPS should grow faster, at around 10% on average to 2030, supported by a continued reduction in the share count of approximately 1% due to share buybacks.

Capital expenditure, exclusive of R&D expensed through the income statement, is forecast at around 12% on average, in line with management’s guidance and below its historical average of around 15% of revenue.

We use a discount rate of just under 8%. With almost all capital being equity, this largely reflects our relatively low cost of equity of 8.2% based on Ferrari’s below-average sensitivity to economic cycles, a wide moat, and low execution risk. Our cost of debt assumption is 4.1% based on low financial leverage and Ferrari’s strong credit quality.

A status symbol, flair for Italian design and lifestyle, F1 success, and superior vehicle performance are the aspirational descriptions associated with the Ferrari brand. Maintaining this brand image is Ferrari's key strategic priority. With an average return on invested capital of over 30% since its IPO, and financial metrics that more closely reflect the moaty luxury sector than automotive peers, we believe Ferrari has a wide intangible asset moat, evidenced by its brand rankings, superior margins, premium pricing, industry-leading residual values, and customer loyalty.

Brand Rankings

Ferrari has ranked as the strongest brand globally in three of the last seven years, among an elite group consistently scoring AAA+ by Brand Finance (including Google and Coca-Cola). In terms of brand value relative to revenue size, Ferrari has ranked in the top 10 global luxury brands since 2018—one of only two luxury car brands alongside Porsche.

Pricing Power

Pricing power is reflected in Ferrari's industry-leading gross margins and rising EBIT margins that more closely resemble the luxury goods sector than autos, with gross margins of around 50%. McLaren is loss-making, Aston Martin averages 31%, Tesla and Porsche average around 20%, while wide-moat luxury peers average in the high 60s. In 2025, Ferrari and Lamborghini generated EBIT margins of 30% and 24%, respectively, close to LVMH and Richemont at 22% and 21%, while Porsche targets midteens margins.

Ferrari also commands the highest average revenue per unit: in 2025, it sold 13,640 vehicles averaging EUR 523,883, versus Lamborghini, which sold 10,747 vehicles at EUR 297,000, and Bentley, which sold 10,313 units at EUR 252,000.

Residual Values

Of the 74 cars ever sold for more than $10 million, Ferraris account for more than half, and eight of the top 10 most expensive auctioned cars are Ferraris.

Rising residual values reduces the total cost of ownership, a consideration among collectors. The K500 Classic Cars Index market average has risen fivefold since 1994 versus indexes for pre-1958 and post-1958 Ferraris, which have risen approximately eight and six times, respectively. Hagerty shows how Ferraris depreciate less in a car’s early years: a Ferrari 488 Pista declined less than 10% three years after being sold, versus 22% for a McLaren 720S and 17% for a Lamborghini Aventador.

Ferrari reinforces residual values through its service ecosystem. It is the only luxury car brand to include a seven-year complete service plan with every purchase, extendable through year 15, with maintenance kits to year 20 to preserve a car's performance, culminating in Classiche certification. The K500 Classic Cars Index shows Classiche Ferraris values increase over time. Bugatti, Rolls-Royce, and McLaren offer three- to four-year programs, while Bentley Motors and Lamborghini offer service plans as optional after-sales selections.

Customer Loyalty

On average since 2015, 65% of Ferraris have been sold to existing clients (84% in 2025), with 35% of buyers owning at least one Ferrari. By contrast, Lamborghini reports 70% of its customers are new to the brand. High residual values, lifetime service programs, exclusive owner events, and invitation-only access to special series vehicles create a self-reinforcing ecosystem for Ferrari loyalists.

Drivers of Brand Strength

Exclusivity

Ferrari's strategy is to sell fewer cars than the market demands. Its two-year order book preserves the perception of exclusivity. Special series cars are restricted to existing loyal customers, reinforcing retention.

Despite volume growing from 7,664 to 13,640 over the last 10 years, exclusivity per model is preserved at around 1,000 units per model per year, versus around 2,500 for Lamborghini and 3,000 for Bentley.

Innovation

Ferrari's brand is driven by more than perception; it rests on tangible technological leadership: It was first to bring innovation to the underbody for road cars, first to innovate the rear shape for superior aerodynamics, and invented the electrohydraulic gearbox now used in all racing cars.

Ferrari is a product development leader, launching over three models per year on average, versus 1.7 for Lamborghini, 2.1 for McLaren, 0.6 for Bentley, and 0.4 for Rolls-Royce, key to the success of its horizontal growth strategy and consistent flow of brand excitement.

Ferrari believes in powertrain neutrality, launching its first hybrid in 2013—the hypercar LaFerrari, its most powerful production vehicle—a strong message that superior vehicle performance is not lost among EVs. In 2025, 42% of its volume was hybrids.

Ferrari’s in-house design center has won the Red Dot Best of the Best design award nine out of the last 13 years (others have won it at most twice), and the Car Design Award for production cars three times since 2016 (the only brand to win it more than once).

Heritage and F1 Success

Ferrari is the only F1 team to have competed every year and remains the most successful, with 16 Constructors' Championship titles (McLaren 10, Williams 9) and 250 race wins (McLaren 204, Mercedes 139). It is also the only team guaranteed a share of F1 income irrespective of performance, given its significance to the series.

Hagerty notes that Ferrari and Lamborghini depreciate less than British peers Aston Martin, McLaren, and Bentley—a premium attributed to Italian design heritage.

Marketing Investment

Ferrari does not use traditional advertising; F1 investment (research and development expensed) serves as its primary public marketing, averaging 10% of revenue. All other marketing is for its targeted customer base; it hosts exclusive events and experiences. Ferrari's combined selling and marketing expense ratio of 17% in 2025 is well below LVMH's 37% and Richemont's 26%, yet it earns a Brand Finance AAA+ score versus AAA for Louis Vuitton and AAA- for Cartier. Spending far less than luxury peers while posting superior brand scores and comparable margins is compelling evidence of the brand's inherent strength.

Ferrari launches an Icona or supercar model every three to four years, coupled with a step change in pricing, supporting stable annual pricing growth.

The Ferrari F1 team improves its performance, increasing the contribution of this revenue stream to the group, as well as driving brand value to new heights.

Ferrari’s strong geographic diversification, with limited exposure to China, supports the continuation of resilient results relative to most of the luxury sector. Richemont, LVMH, and Kering have at least 20% of sales sourced from China.

Range extension is pushed too far. The differentiation between new models becomes thinner, and the overall exclusivity of the brand falls with too many Ferraris on the road. Pricing power is reduced.

Poor adoption of EV-powered Ferraris, expected to be launched at higher price points to cover the large upfront R&D, drives a decline in ROICs.

Volume growth is kept tight, thus operational leverage is reduced slowly. A mismatch between market expectations, valuations, and bottom-line growth causes share price volatility.