Even wealthy luxury car buyers may be stopped in their tracks due to new Trump auto tariffs.
And that could spell trouble for sports car legend Ferrari (RACE), JPMorgan autos analyst Ryan Brinkman warned. The earnings implications of this round of tariffs “are worse for Ferrari,” Brinkman wrote in a note Thursday ahead of the opening bell.
“While Ferrari was not impacted by earlier proposed tariffs on Canada and Mexico, … Italy along with all other countries are subject to the new round of tariffs as laid out in yesterday’s executive order,” Brinkman explained. “Ferrari critically derives upward of ~40% of its global sales from the US, which also happens to be its higher margin market.”
He added, “While Ferrari demand may prove amongst the least elastic to moderate changes in price (such as the +7% price increases implemented in the UK after Brexit), Ferrari purchases are arguably amongst the most discretionary also, and so we could envision some buyers electing to delay taking delivery.
Brinkman slashed his price target on Ferrari to $460 from $525, but he kept an Overweight rating on the stock.
Ferrari shipped 13,752 cars in 2024, up 1% year over year. Net sales and operating profits rose 12% and 17%, respectively. The Americas region led the way for Ferrari last year, with shipments up 5% year over year.
Whether that momentum continues deep into 2025 is now in question.
Trump said Wednesday the US will impose 25% tariffs on imports of cars and car parts, which will take effect on April 3. The measures will apply to finished cars, trucks, and certain auto parts.
“This will continue to spur growth that you’ve never seen before,” Trump said from the White House about the new tariffs.
Investors and Wall Street don’t appear to agree, given the response in stock markets and from analysts early on Thursday.
The tariffs could raise automakers’ production costs and stunt consumer demand through higher prices. About half of all vehicles sold in the US are imported.
Ferrari stock fell 2% in premarket trading, extending a 3% year-to-date slide.
Shares of the Big Three US automakers, which build vehicles abroad, also dropped in premarket trading. General Motors (GM) and Ford (F) were down 7% and 3%, respectively, while Europe-focused Stellantis (STLA) fell 2%.
Japanese automakers Toyota (TM) and Honda (HMC) US-listed stock slid 2% each.
Brinkman went onto cut estimates and price targets on Ford and General Motors, citing “increased potential for material earnings risk from draconian auto tariffs that now seem likelier than ever to be imposed as soon as April 3.”
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