Ferrari appeared unfazed by Trump’s tariff threat

Ferrari is considered a special case in the European car sector although many car giants are under pressure due to the threat of US tariffs.

President-elect Donald Trump has vowed to impose steep tariffs on China, Canada and Mexico in one of his first acts in office, threatening to shake up the supply chain of the auto industry and raise investor concerns about higher costs.

Trump’s proposed measures include an additional 10% tariff on all Chinese products coming into the US and a 25% tariff on all goods coming from Canada and Mexico.

Auto sharing is in the news because it could have significant consequences for US and European manufacturers, many of which have built factories and depend on auto parts suppliers based in Mexico.

The fact that Europe was not mentioned in Trump’s first tariff announcement will be considered welcome news for EU policymakers, although the 27-nation bloc may worry that it is only a matter of time before Trump turns his attention to the region’s automotive sector.

Ferrari, however, is expected to be shielded from most of the fallout.

“For Ferrari, it’s an exception where the tariffs are, they’re not going to start production in the U.S. It’s all happening in Maranello, Italy,” Rella Suskin, an equity analyst at Morningstar, told CNBC via video call.

“The problem with Ferrari is that if it’s 10%, 20% or 30% (tariff) then it might be easy to give that price to the consumer, just because it’s the target customer and the car is expensive.”

In an effort to raise US revenues, Trump has previously promised to impose tariffs of 10% or 20% on all goods coming into the country, raising concerns among various sectors that depend on key trade such as cars.

For Morningstar’s Suskin, even US tariffs of up to 30% on all goods coming from Europe may not stop customers from buying Ferraris. “It doesn’t make sense but that’s the way it is,” he added.

A Ferrari spokesperson was not immediately available for comment when contacted by CNBC.

Tom Narayan, global auto analyst at RBC Capital Markets, echoed that sentiment, saying Ferrari appeared to be in a position to raise prices if Trump delivered on his promise to introduce higher tariffs.

Most analysts and investors perceive the Italian automaker as unique among its European peers in this regard, according to Thomas Besson, head of automotive sector research at Kepler Cheuvreux.

“Time will tell but it could be true,” Besson told CNBC via email.

Ferrari has been on a tear this year, outperforming rival carmakers in Europe. Shares of the Milan-listed company have risen more than 34% year-on-year, higher than the likes of France’s Renault or Germany’s Mercedes-Benz Group.

“We don’t expect Ferrari to set up production in the US,” Anthony Dick, auto analyst at Oddo BHF, told CNBC via email.

“For the brand, but also (and more importantly) industrial reasons because it requires the group to set up a local supply base which is not suitable for us,” he said.

“It is not clear at this stage how the tariffs will impact demand, but one can reasonably assume that Ferrari customers are less price sensitive than most,” said Dick, who is noting that competing luxury car groups will face the same tariff treatment.

The prospect of additional US duties may be a “greater obstacle” for Germany PorscheKepler Cheuvreux which Besson said.

Like Ferrari, which manufactures cars in Italy, Volkswagen-owned Porsche has traditionally built luxury models in Germany.

“Porsche is a little different,” Suskin told Morningstar.

“They can offer a 10% rate but a larger (rate), such as 30% may be more difficult to pass on to customers,” he continued.

“They can raise the Volkswagen parent company that has spare capacity in the US, but there will be some (capital expenditure) that will have to be invested in creating a Porsche-specific production line.”

Porsche shares are down about 26% year-to-date.

A Porsche spokesperson was not immediately available for comment when contacted by CNBC.