Warren Buffett isn’t big on automakers. As the Berkshire Hathaway CEO said at the conglomerate’s shareholder meeting last May: “The auto industry is just too tough.”
But the billionaire investor did express confidence in Ferrari. Though Berkshire hasn’t invested in the Italian luxury sports car manufacturer, “I would say Ferrari is in a special place,” Buffett noted last spring.
He was onto something. On Thursday, Ferrari reported that its net profit for 2023 was up 34% from the previous year, raised its forecast for 2024, and said its order books were pretty much full until 2025. That sent shares to record highs, pushing the carmaker’s market cap close to the $100 billion mark.
Berkshire has in general steered clear of automakers. Last May, Buffett and his right-hand man Charlie Munger, who passed away in November, explained their reasoning.
“It’s just a business where you’ve got a lot of worldwide competitors, they’re not going to go away,” said Buffett. “And it looks like there are winners at any given time, but it doesn’t get you a permanent place.”
Tesla a no-go
Berkshire did make an exception for China’s BYD, which recently overtook Tesla as the leader in global electric-vehicle sales. Munger drove the decision to invest in BYD in 2008, and last February he said, “I have never helped do anything at Berkshire that was as good as BYD.”
In another exception, Berkshire bought GM shares in 2012, though by the end of last year it had offloaded all of those.
But not even Elon Musk could persuade Buffett and Munger to overcome their reluctance to invest in automotive stocks. A year ago, the Tesla CEO answered an X user’s question about what Berkshire Hathaway should invest in, writing, “Starts with a T …”
He then added, “Munger could’ve invested in Tesla at ~$200M valuation when I had lunch with him in late 2008.” Tesla’s market cap now stands at $585 billion. That’s despite a rough start to this year that’s seen Musk lose his status as the world’s richest person to France’s Bernard Arnault, the patriarch behind luxury goods giant LVMH.
Ferrari makes relatively few vehicles, as Buffett noted last year. In 2023, shipments totaled just 13,663 units. By contrast, GM sold about 2.6 million vehicles in the U.S. in the same period. But Ferrari has the advantage of being a luxury brand, meaning it can prioritize quality over quantity.
On Thursday, the Italian carmaker received another boost, this time from Formula 1 racing. According to statements from the teams, racing legend Lewis Hamilton will leave Mercedes and join Ferrari for the 2025 F1 season.