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Ferrari has reduced the number of cars it sells in the UK to stem declining residual values of its luxury vehicles, prompted by the departure of wealthy individuals after tax changes and the abolition of non-dom status.
“Some people are getting out of that country for tax reasons,” chief executive Benedetto Vigna said in an interview with the Financial Times. “What I can tell you is that we see a stabilisation over there” after the company reduced allocations of its vehicles to the UK, he added.
The move by Ferrari underscores the widespread impact caused by the UK government’s decision to abolish favourable tax treatment for non-domiciled residents and raise other duties on the wealthy.
In April, the tax regime ended for non-doms — UK residents who declared their long-term home was overseas to avoid paying British taxes on their global income and assets.
UK chancellor Rachel Reeves has rejected claims that there has been an exodus of wealthy residents, telling The Guardian this week “this is a brilliant country and people want to live here”. At the same time she has also made it clear that the wealthy would be one of the targets for higher taxes in next month’s Budget.
Ferrari chief executive Benedetto Vigna © Francesca Volpi/Bloomberg
The non-dom tax changes spurred fears that Ferrari would lose its wealthy client base, leading to volatility in its residual prices or the expected second-hand value of a vehicle when a leasing deal ends. The fluctuation was heightened by uncertainty surrounding US President Donald Trump’s tariffs, according to people with knowledge of market conditions in the UK.
The company began to “significantly” limit its supplies to the UK from about six months ago, one of the people said. Vigna has also acknowledged to investors that “a lot of people” had left the UK.
Vigna told the FT taxes were not the only reason for the depreciation. “Maybe when you sell to the UK, that car cannot be sold somewhere else [due to its right-hand wheel]. There are many different factors.”
In other markets, residual prices of some Ferrari models have fallen due to the recent sharp increase in customisation of its vehicles, which makes it harder to sell to a second-hand buyer.
Most new cars in developed markets are bought on deals that provide financing based on the amount of value a vehicle loses — its “depreciation” — rather than the overall sticker price.
If cars have weaker second-hand prices, the financing needed increases and the car becomes more expensive to lease.
According to online marketplace Auto Trader, the residual value for Ferrari’s Purosangue model fell 12.2 per cent between January and October, while the SF90 Stradale fell 6.6 per cent. However, prices have started to stabilise in recent months.
Resale values are also a core indicator of a vehicle’s desirability, reflecting what a second-hand buyer is willing to pay for a model that is typically about three years old.
For example, the Ferrari 296 GTB, a supercar launched in 2022, had a recommended retail price from £256,275 for a new car while a used version was available for as low as £189,490 on Auto Trader.
Ferrari boasts an industry-beating operating profit margin of 30 per cent thanks to an aggressive pricing strategy enabled by creating “scarcity” of its sought-after cars.
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But shares in the Italian carmaker have fallen about 17 per cent since it said last week that its profit margin would remain largely flat over the next five years.
Investors have focused on whether Ferrari will be able to maintain its traditionally strong residual value of its vehicles as it adds hybrids and electric vehicles to its line-up of petrol models.
“It’s always coming to the management of scarcity that is key for us,” Vigna told investors when asked about the deprecation in the residual values of its vehicles.