{"id":74625,"date":"2020-05-08T09:32:38","date_gmt":"2020-05-08T13:32:38","guid":{"rendered":"https:\/\/thatdope.com\/rides\/ferrari-sales-and-other-luxury-cars-beat-estimates-as-global-car-sales-plummet\/"},"modified":"2020-05-08T09:32:41","modified_gmt":"2020-05-08T13:32:41","slug":"ferrari-sales-and-other-luxury-cars-beat-estimates-as-global-car-sales-plummet","status":"publish","type":"post","link":"https:\/\/thatdope.com\/rides\/ferrari-sales-and-other-luxury-cars-beat-estimates-as-global-car-sales-plummet\/","title":{"rendered":"Ferrari sales and other Luxury Cars beat Estimates as Global Car sales plummet"},"content":{"rendered":"
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As the economy teeters along the cusp of the next Great Depression, the luxury automotive segment appears to be enjoying an uptick in consumer spending. Ferrari just reported better than expected earnings earlier this week, on Monday 4th May, causing the Maranello carmaker\u2019s shares to jump almost 7%.<\/p>\n

The luxury carmaker shut its factory in March as the coronavirus ravaged the brand\u2019s Italian home but total shipments of Ferrari supercars increased 5% to 2,738 during the month-long furlough. Better-than-expected earnings \u2013 $1.02 billion, better than the projected $852 million caused Ferrari\u2019s share prices to surge, making the Italian luxury carmaker\u2019s market value worth more than mass market consumer car manufacturers Ford and General Motors.<\/p>\n

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\u201cThe unexpected and sudden nature of the impacts of the pandemic are hitting the autos sector hard, with unprecedented levels of uncertainty around prospects for meaningful global recovery,\u201d said Colin Couchman, executive director, global autos demand forecasting at IHS Markit.<\/p>\n<\/blockquote>\n

The news comes amidst tempered expectations as factories resume production in China with business data firm IHS Markit forecasting lowered expectations as new COVID-19 safe work requirements makes it impossible to return to previous operational capacity, especially in a market of weaker consumer demand. From January through March, Chinese carmakers endured their weakest quarter as the lockdown shuttered factories, dealerships and kept consumers at home.<\/p>\n

According to the China Association of Automobile Manufacturers, demand started to return in March, an improvement from February\u2019s 79% drop but sales were still down 43% compared to the year before. While nearly all dealers across mainland China are back to work, and there are signs of an encouraging uptick in showroom traffic, consumer confidence remains fragile, quarterly sales declined year on year to 3.7 million vehicles with concerns on secondary impacts from the global contagion, which could further disrupt the recovery.<\/p>\n

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Germany-based automotive manufacturer, Daimler, is set to develop its next generation of Smart electric cars in China following a joint venture with Geely. Under the agreement, the next generation of Smart cars are set to be assembled at a Chinese plant, with sales expected to begin in 2022.<\/p>\n<\/div>\n

IHS Markit most recent analysis projects Global light vehicle sales down 22% to 70.3 million units for 2020 in the wake of covid-19. Likewise, regional forecasts have also been impacted substantially, and impacts are being felt as facilities across key regions remain closed, while recovery gets underway in others.<\/p>\n

Global light vehicle sales down 22% due to pandemic, luxury cars should be down as well<\/h2>\n

Over in North America, the US is expected to lead global automotive declines with a 26.6% fall in domestic vehicle sales, the lowest volume since the industry recovered from the 2008 Great Recession.\u00a0 Speaking to CBC news, Dennis DesRosiers of DesRosiers Automotive Consultants said that April sales of Canadian automobiles fell by nearly 75%, the second straight month of double-digit declines after March sales fell by 48% as the epidemic took hold across Canada.\u00a0 DesRosiers added that the auto industry had weathered economic storms such as the energy crisis of the 1970s, and the financial meltdown of 2008, but that there was a fundamental difference between those events and the coronavirus crisis.<\/p>\n

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\u201cConsumers were still driving. If you\u2019re not driving, your vehicle is just sitting there in the driveway and so you don\u2019t need to replace it. Until we start driving again, it\u2019s going to be very difficult to get people into showrooms.\u201d \u2013 Dennis DesRosiers, Automotive Consultants<\/p>\n<\/blockquote>\n

In fact, DesRosiers believes the coronavirus pandemic will hammer luxury car sales, which has seen high growth for the last decade, explaining that, \u201cOne of the reasons that was doing so well is because we had a lot of what I like to call \u2018pretend\u2019 luxury buyers, people who aspire to have a luxury vehicle but can\u2019t afford one.\u201d<\/p>\n

However, the data indicates a different assessment when it comes to luxury cars with Tesla reporting sales of 10,160 vehicles in China for March 2020, its highest ever monthly sales in the world\u2019s largest car market. Like Ferrari and Bugatti, luxury sports cars are having unanticipated recoveries from a bout of high profile revenge spending initiated by bored high net worth individuals.<\/p>\n

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Based on Bugatti legacy, Type 57<\/p>\n<\/div>\n

Speaking to South China Morning Post, China Passenger Car Association\u00a0secretary general Cui Dongshu, said Tesla sold 30% of the electric vehicles in the Chinese mainland with data showing that Elon Musk\u2019s brand selling 2,620 luxury EVs in January and 3,900 units in February. Tesla, which aims to produce 150,000 Model 3 sedans from its Shanghai factory.<\/p>\n

Why Ferrari attracts Investor Confidence: Impressive Margins<\/h2>\n

Motor1.com studied a 2019 Fiat Group World report which found that Ferrari earned a 23.2% operating margin on each of 10,131 cars it should that year, which works out to be $94,474 per Italian supercar and that \u201cFerrari achieved its impressive margins through adopting new technologies, adapting to market changes, and marketing its vehicles.\u201d Fiat Group World is a non-official site tracking Fiat Chrysler Automobiles and global car trends.<\/p>\n

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In an industry where profit margins are around 5-10%, the report also makes a comparative study on how much more profitable Ferrari was compared to other carmakers: BMW would need to sell 30 vehicles to equal the earnings of one sold Ferrari, while Mercedes would have to sell 67 new cars. In the mass market segment, you\u2019d need to sell 908 Fords and 928 Nissans to match.<\/p>\n

Ferrari\u2019s market capitalisation hovered around $30 billion but end of trading on Monday amidst a backdrop of reduced earnings forecast for 2020 as CEO Louis Camilleri told investors that while there have been \u201cseveral cancellations\u201d of car orders in the U.S. and Australia, \u201cthere are no red lights flashing in any geography\u201d, while warning of continued weakness from its Formula One business and other segments.<\/p>\n

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IHS Markit Economics and Country Risk team issued a global economic forecast update indicating a 2020 slide into a global recession with real GDP growth down about 3%, and very sharp reduction in near-term demand\/supply followed by a slow recovery.<\/p>\n

Michelle Krebs, senior analyst for Cox Automotive told CNN that \u201cThe three things that most determine car sales are credit, employment and consumer confidence. All are working against car sales.\u201d It appears that for the moment, the appetite for luxury consumption is still upbeat with high confidence among the affluent who are not as affected by credit availability and employment.<\/p>\n<\/p><\/div>\n

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As the economy teeters along the cusp of the next Great Depression, the luxury automotive segment appears to be enjoying an uptick in consumer spending. Ferrari just reported better than expected earnings earlier this week, on Monday 4th May, causing the Maranello carmaker\u2019s shares to jump almost 7%. The luxury carmaker shut its factory in March as the coronavirus ravaged the brand\u2019s Italian home but total shipments of Ferrari supercars increased 5% to 2,738 during the month-long furlough. Better-than-expected earnings […]<\/p>\n","protected":false},"author":1,"featured_media":74626,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[9],"tags":[176,18],"yoast_head":"\nFerrari sales and other Luxury Cars beat Estimates as Global Car sales plummet<\/title>\n<meta name=\"description\" content=\"As the economy teeters along the cusp of the next Great Depression, the luxury automotive segment appears to be enjoying an uptick in consumer spending.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/thatdope.com\/rides\/ferrari-sales-and-other-luxury-cars-beat-estimates-as-global-car-sales-plummet\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Ferrari sales and other Luxury Cars beat Estimates as 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