7 May 2019

Formula 1 as a marketing tool

When it comes to marketing Formula 1 is a very powerful tool - and it seems like you don't have to win races to be able to sell your products.

Obviously, success must have some kind of impact but the glitter of F1 seems to be sufficient when it comes to selling road cars. McLaren recently reported on its 2018 sales, with the road cars being a huge success with an increase in sales of 45 percent compared to 2017. Sales leapt from 3,340 in 2017 to 4,829 last year. There was particularly impressive growth in China, which was up 141 percent, with the Asia Pacific region up 57 percent, Europe up 43 percent and North America up 42 percent.

The company had revenues of $1,643 million, compared to $1.132 million in 2017. We will not go into too much detail about the F1 side of the business except to say that the year saw revenues drop by $100 million, from $272 million to $172 million. This was caused by the loss of prize money and sponsors due in part to the poor results in 2017 and in part because of the decision to split with Honda, which brought substantial financial support, in addition to free engines.

All of this meant that despite selling off around $13 million of "heritage cars", the racing division ended up with a loss for the year of $125 million.

Down in Italy, Ferrari might not be winning World Championships but the company is selling cars. The Q1 results have just been made public and Ferrari shipped 2,610 units between January 1 and the end of March. This is up 22.7 percent compared to the same period last year and revenues were $1,052 million and pre-tax earnings of $348 million, significantly better than forecasts.

The company says that it expect to increase revenues for the year to about $3.9 billion, with pre-tax earnings of around $1.4 billion. Ferrari floated in New York in the autumn of 2015 with a share price of $52. Today the shares are worth $132... Don't you wish you had bought some?

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