Ferrari reports significant profit increase despite tariff threats

In the first quarter of 2025, Ferrari, the luxury carmaker based in Maranello, Italy, reported a substantial increase in their net profit of 412 million euros ($466.3 million), marking a 17% rise compared to the same period in the previous year. This upswing in earnings was largely attributed to strong demand for personalized vehicles, as the company adjusted to changing market conditions and customer preferences. CEO Benedetto Vigna mentioned that the first quarter had seen double-digit growth in all key financial metrics, which was remarkable given the limited incremental shipments year on year. Despite the positive financial outlook, Ferrari expressed concerns regarding the introduction of U.S. tariffs on automobiles imported from the European Union. These tariffs pose a potential risk to profitability this year and could lead to a decrease of around 50 basis points in the margins. In light of these trade policies, Ferrari previously indicated plans to increase prices on certain models by approximately 10%, which could affect sales and profitability as well. This increase in prices could amount to an additional $50,000 on a typical Ferrari vehicle. The automotive industry is currently facing challenges due to volatile trade policies initiated by U.S. President Donald Trump, especially regarding tariff decisions that impact European car manufacturers. Many European luxury carmakers have experienced declines in quarterly profits as a result of tariffs, prompting some to revise or suspend their financial forecasts. however, Ferrari retained its 2025 profit guidance, aiming for earnings before interest, taxes, depreciation, and amortization (EBITDA) of at least 2.68 billion euros ($3.1 billion) with a margin of at least 38.3%. Investment analysts, including those from Morgan Stanley and Bernstein Research, have commended Ferrari for its strong earnings performance and confidence in its financial forecasts. Despite an underwhelming sales performance in China, where sales were limited to only 10%, the U.S. market remains a robust source of revenue, accounting for approximately 25% of Ferrari's overall sales. As the order book extends out into 2026, analysts predict that Ferrari is well-positioned for continued growth despite external pressures from trade tariffs.