Ferrari expects to limit unit sales losses in 2020

Ferrari executives say they expect the automaker's global deliveries in 2020 to fall by between 4 percent and 15 percent from 2019 sales of 10,131 vehicles because of the coronavirus crisis. 

Finance chief, Antonio Picca Piccon, told analysts on Monday that the supercar maker lost about 2,000 units of production when its factories were shut down for nearly two months, but that much of the losses could be recouped by the end of the year. 

Total sales losses would be 400 to 1,500 units, depending on how the automaker’s orders develop and the pace of production until the end of the year. Ferrari unveiled five new models last year, with deliveries set to start for four of them in 2020.

CEO Louis Camilleri said that Ferrari manages its orders carefully, in part by analyzing the health of economic sectors its customers work in.

"The commercial team did a phenomenal job at analyzing geographies, industrial sectors and ultimately, our customers and clients and who is participating in what industrial sector, which in turn gave us a sense of the vulnerabilities and opportunities," Camilleri said.

Ferrari’s unit sales losses would be significantly less than many analysts are forecasting for the global auto market.

IHS Markit’s latest projections are calling for a 22 percent decline in global vehicle sales, with a drop of 25 percent in Europe, Ferrari's largest regional market. On Monday, Ferrari cut its 2020 profit forecast due to disruption caused by the coronavirus pandemic, which it said would mainly hit second-quarter results.

Camilleri told analysts that there had been few order cancellations in 2020, although he said the full scope would not be known for some time. He also said that the introduction of some future models would be delayed by a number of months because of the virus crisis.

Picca Piccon said that much of the production losses could be recouped by the end of the year. The lockdown imposed by the Italian government to fight the coronavirus pandemic forced Ferrari to close its Maranello and Modena plants starting March 14. Production activities restarted on Monday and the plants will return to full production by Friday.

How much of Ferrari’s lost production will be recovered will depend on flexibility in manufacturing, and also on the desire to end 2020 with a strong order book, executives said. “That will dictate the pace of deliveries in 2020,” Camilleri said. 

Picca Piccon said that Ferrari can use all available production flexibility, working Saturdays and shorter summer holidays from now to the end of the year, in order to recover at least 50 percent of lost production volume. That might not be needed, however, in a scenario where the order intake takes time to build up over the coming months as coronavirus restrictions are lifted more slowly.

Camilleri told analysts that more than 50 percent of Ferrari dealerships remained closed, and that the used car market is also essentially shut down with very little to no trading at all. Many customers own multiple Ferraris and will often trade in or sell one to buy another.

He said that the number of canceled orders, mostly in the U.S. and Australia, was “nothing alarming” so far and that "new orders have actually started to trickle in again.” Camilleri warned, however, that in the 2008-09 crisis iu took "some months" for all cancellations to flow through.

In China, which came out of its virus lockdown first, showrooms and repair shops have reopened and Ferrari is back in business and taking orders, Camilleri said.

He said that it might be difficult to compare 2020 and 2019 sales volumes until the second half of this year, as uncertainty over Chinese emissions regulations led to significantly higher deliveries in the first half of last year. Ferrari is counting on the SF90 Stradale plug-in hybrid and future Purosangue SUV to drive sales in China. 

Camilleri said Ferrari has had few supply chain problems, even though many of its  suppliers are in the areas of Italy hardest hit by the pandemic. “We had to increase our inventories in terms of both materials and components” because of the coronavirus crisis, Camilleri said, “and we will continue to increase our inventories to ensure that we have enough flexibility.”

Of the five new Ferrari models presented in 2019, only deliveries of the F8 Tributo have already started and their ramp-up contributed to a 4.9 percent increase in shipments in the first quarter, Picca Picon said.

Deliveries of the remaining four models will ramp up in the second half of the year, he said. Deliveries of the F8 Spider and the 812 GTS will start by June 30; the SF90 Stradale will arrive after the summer, while the Roma coupe will go on sale at the end of the year.

Camilleri confirmed that two new models will be unveiled this year with deliveries starting in 2021, although their introduction has been delayed by three or four months by the virus crisis, he said.

He said that a reduction in capital expenditures and some cost reductions in 2020 due to the coronavirus outbreak “have delayed certain models and the investments behind them.” 

“We felt it was prudent to delay what we felt could be delayed between three months and nine months, which obviously will have an impact longer-term,” he said. “Some models will be delayed, others will be on time.”