"Ferrari Finances Trump Aston Martin’s, But Powerful Backers Can Sponsor Electric Fightback"

Ferrari is every billionaire celebrity’s favorite sports car and its profitability continues to accelerate while its rival and financial-basket case Aston Martin’s losses worsen. But despite these contrasting fortunes, the ailing provider of movie secret agent James Bond’s wheels could quietly be setting up a come-from-behind rally.

Leadership in the electric car revolution is a must for serious players in this high-end sector. Ferrari has not exactly been setting the world alight with its plan to unveil its first all-electric vehicle in 2025. Aston Martin’s credentials aren’t very impressive either, but some of its biggest shareholders are leaders in the transition to an electric world. Investors who have been hanging on through recent turbulence might well be thinking this could be the key to transforming Aston Martin’s future.

British-based automotive analyst Charles Tennant says huge hurdles have to be overcome first.

In 2022’s 3rd quarter Ferrari’s adjusted earnings after interest tax depreciation and amortization (EBITDA) rose 17% to €435 million. It raised its expectations for all of 2022 to more than €1.73 billion after it forecast an increase to between €1.7 to €1.73 billion three months ago. Everything progressing nicely. No surprises there.

Meanwhile, Aston Martin’s operating loss widened to £58.5 million in the same period, compared with a loss of £30.2 million a year ago. Perhaps the storied British luxury sports car and SUV manufacturer and heavily indebted Aston Martin was getting close to the 8th bankruptcy in its 109-year history. So far this year, Aston Martin’s shares have lost around 80% of their value. Aston Martin’s red ink tripled in the first half, with a pre-tax £285.4 million ($347 million) loss, compared with the same period last year. This led to more restructuring, and prompted talk a takeover was required for survival.

Ferrari has gone from strength-to-strength since being spun off by Fiat Chrysler Automobiles about six years ago. It has no trouble living with a share valuation which means it’s rated alongside massive profit makers like luxury goods players Hermes, LVMH, Prada, Ferragamo, Moncler or Richemont.