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Ferrari Aims to Double Hybrid and SUV Earnings by 2022

Ferrari Aims to Double Hybrid and SUV Earnings by 2022

Ferrari is planning to double core earnings to 2 billion euros ($2.5 billion) by 2022 and be free from debt, relying on the solid demands for hybrids and SUVs.

Sergio Marchionne, Ferrari CEO, aims to achieve this by banking on technological advancements, introduce special edition vehicles, and present customization options.

To appeal to a bigger demographic, the company aims to build hybrids by 2019, and an SUV sometime in 2020.

Marchionne said that downsizing engines is not off the table as long as they keep the Ferrari brand’s appeal intact.

“We are absolutely convinced that these numbers are doable,” Marchionne explained during a conference call, further saying that he expects profit margins to increase to at least 36 percent by 2022. “The house is firing on all cylinders, we are in a good place,” he added.

If this is to happen, the brand needs an average annual core earnings growth of 14.1 percent, or 17.9 percent, Evercore ISI analyst George Galliers said.

“This type of earnings growth is unlikely to be seen by any other automotive OEM over the coming five years,” Galliers mentioned.

The problem though is that the stock was not cheap and it could be one of the early challenges in attracting investors.

After separating from Fiat Chrysler two years ago, Ferrari has endeavored to show it can prosper without any support from its parent company. The group was able to achieve this goal, all thanks to some special edition models.

Marchionne says currency fluctuations shouldn’t be a problem, further attesting that the brand should be able to stand firm with its pricing.

Marchionne, who is going to leave in 2021, has long said Ferrari was close to arriving to a point where it would be limited by what it can do based on its current range, and needed to look beyond.

But any endeavor to explore new grounds - like the planned SUV - has to be within Ferrari’s interests to maintain its prestige and identity.

If a true all-electric powered supercar is ever created, it will be manufactured by Ferrari, Marchionne explained confidently.

“Whenever Ferrari does express itself in a fully electric vehicle, it will do so by making sure that both sound and handling are reflective of Ferrari's heritage,” he mentioned.