Exclusivity and speed
Sports have the ability to capture our attention; competitions, which date back thousands of years, are an opportunity to measure the technical skills or even the competitor’s creativity when designing and executing different strategies. Over time, these have become more complex; a small failure can cost years of training and millions of dollars of investment.
Many car races take place at the same time around the world, each with different styles and rules adapted to the specific championship event, but on the international stage, Formula 1 is the best-known format. It’s the first one that comes to mind when we think of high-performance races or big names like “Michael Schumacher.” So, is Formula 1 synonymous with Ferrari NV (BATS EU: RACE)?
Enzo Ferrari, the founder of the Italian company Ferrari NV (BATS EU: RACE), had the ingenuity to use Formula 1 to boost his brand and take it to the top, becoming, nowadays, a leading brand both on the tracks and on the streets, but also a symbol of prestige, with its luxury cars and craftsmanship that justify the price tag on each model.
Although Formula 1 (F1) is comprised of other major brands such as Mercedes Benz Group AG (BATS EU: MBG), Aston Martin (LSE: AML) or Red Bull, there is a big difference in the vision of Ferrari NV (BATS EU: RACE); the Italian team uses it to show itself to the world and make itself known, without the need for extensive advertising campaigns. Fans are a fundamental pillar, and it is estimated that Ferrari has about 400 million worldwide, expanding its reach into markets like China and India.
High-performance competitions around the world are so crucial for Ferrari that the numbers speak for themselves. In 2021 the company exceeded by $100 million the revenues of 2020 and reported profits of $500 million from different brands that wanted to have their logo on the race cars, with Shell PLC (BATS EU: SHEL) being the most iconic of all times, powering the engines with its high-octane fuels.
The ability to build a reputation does not depend only on the fans; the quality of the products is also of utmost importance for the European company, which stands out for having few models with reduced production numbers but handcrafted to perfection. Ferrari NV (BATS EU: RACE) produces an average of 10,000 units annually, which results in exclusivity by being available to only a few, which in turn increases the value of these exotic cars.
The company’s success in racing is not accidental; the fans’ great support is valuable, as well as its exclusive customers who drive the sales made every year, positioning itself above all its competitors. Ferrari not only leads on the tracks but also does so in finances, achieving revenues of over $4 billion in 2021. All this cash facilitates developments in future races and allows a comfortable advantage over other teams, which must seek other funding sources.
A reciprocal relationship occurs when both parties need each other, and this is precisely what we see between Ferrari and Formula 1. In this case, the most satisfied are the “Tifosi,” as they call the genuine fans who every Sunday religiously enjoy this fascinating high-performance sport.
Undoubtedly, the future of Formula 1 is amazing, and the teams are beginning to accelerate, preparing for the next seasons, posing a great challenge for Ferrari, which must now face teams such as Red Bull Racing, who are quickly emerging as one of the great teams for the coming years.
But the great race to victory will become even more vertiginous in 2026, where new teams will be joining, and expectations are high, as the Volkswagen Group AG (BATS EU: VOW3), the German car manufacturer, will start racing and Audi will be the star representative on the tracks; it will also be in charge of manufacturing and supplying an engine designed completely from scratch. And this is in line with the new regulations that the “FIA” wants to implement this year, setting the guidelines for greater aerodynamics and sustainability.
Formula 1 is and will continue to be a stage where high-performance automakers like Ferrari NV (BATS EU: RACE) will showcase their engineering feats in one of the fastest sports in the world.