To the home of Ferrari. To all of you with us here and also to everyone joining remotely. Welcome to Italy. For all of those of you who have journeyed to be here from abroad, Foferrari is, I feel very much an expression of the very best of our wonderful country. And welcome, more specifically, to Maranello, the town where Insoferrari established over 70 years ago, not just the maker of cars that have ever since eclipsed all others in terms of prestige, but also to a place where dreams have been made real for generations after generation and continue to come true today.
Before I move on to this morning's business, I'd like to say a few words about someone who is not with us here today. I'm referring, of course, to Sergio. Sergio Marchionne, who until July was Chairman and CEO of Ferrari and whose passing has been a sudden and immense sadness to us all. Everyone who knew Sergio will have a particular memory of him. But one thing you will all truly know is just how much he loved everything about Ferrari and how he was looking forward to spending more time here in the coming years after his planned retirement from FCA.
At last week's shareholders meeting, I said that Ferrari would build a future as good as its past. Sergio played a special part in enabling that future, and we owe him our profound thanks for that. Enso Ferrari once said, what's behind you doesn't matter. He was, of course, referring to track position. These are the words of a man who himself raced competitively and very successfully in the early years of the 20th century, and whose long and extraordinary life was characterized by a relentless focus on winning and winning with style.
We are determined for this to continue in our future. But in another sense, what's behind Ferrari is also fundamental. The unique story of Enzo Ferrari that I hope those here today will have been able to learn more about when touring the wonderful museums in Maranello and Modena has been and remains the essential source of constant inspiration to everyone who works here as well as to our loyal Ferrari and of course to the 100 of millions of Ferrari Tifosi all around the world. It's from our founder story that was born the very spirit of Ferrari that still today is the decisive factor in everything we do and to the dreams this house brings to life. Enso Ferrari was an individual of exceptional genius, whose greatest success was to inspire those who worked for him to produce something extraordinary.
In terms of beauty, of power, in terms of innovation, style and success. He described himself as an agitator of men and talents. And in agitating, he created a lasting spirit that has been handed on and still leads us to do great things. This spirit is here in the soil and in the walls of Maranello. It is in all the people who work here and it is in each and every car we build.
Our owners, some of whom are here today, will know well what I am talking about because the spirit, it is also part of the unique feeling they have when they own a Ferrari and become part of our family and of our story. Our CEO, Louis Camilleri, understands the spirit of Ferrari better than any. He has been closely associated with our racing activities over many years as lead sponsor. As you would expect from someone whose leadership credentials include many years at great companies such as Altria, Philip Morris International and Kraft. He appreciates the uniqueness of the Peles Ferrari brand and the spirit that powers it.
He is the owner of a number of beautiful Ferrari cars himself. And as a member of the Board, he has been closely involved in the key decision making that has driven our success in the recent years. Louis understands perfectly the significance of our heritage and the Drake's legacy to the success of the plans presented today. We are fortunate to have him as our CEO, because he combines a hugely successful career at the head of some of the world's most successful public companies with a deep knowledge of and a true passion for Ferrari. What you will hear from the leadership of Ferrari this morning will, I am confident, reaffirm in your minds the sense of ambition that animates this company.
You will also be left in no doubt as to the rigor and purpose that will be our mark as we work to create even greater value for all of Ferrari's stakeholders. Let me take the opportunity to underline my own deep interest in every sense, in the success of the plans that are being unveiled at this Capital Markets Day, not only as Chairman of Ferrari, but also as the company's single largest shareholder through XOR. It is also only natural that I'd like to close my remarks here by recalling that my family has had the privilege of contributing to Ferrari's journey for 50 of its 70 plus years. When on June 18, 1969, Inso Ferrari met with my grandfather in Turin to seal this unique partnership, a rare bond was formed. Enso Ferrari said of that meeting, I told him of my past and my present, of the things I wanted for my factory, And I was able, as never before, to express what I really thought about things.
I was not born when this meeting took place, but in the years that followed, I became aware of the profound importance of Ferrari to my family and to my country, Italy. So you will understand that it is a special honor for me to be speaking to you today and to have Piero Ferrari alongside me. Thank you. Gracias for your attention. It is now with great pleasure that Luica Minleri and his great team will begin the proceedings of Ferrari's Capital Markets Day.
Thank you, John, for those very generous and kind words, especially those related to Sergio, who we all miss dearly. And thank you for the kind words you said about me. It's a shame my mother is not in the room. She would have enjoyed that. Probably the only one who would have believed it too.
So good morning, everyone, and let me reiterate John's heartfelt welcome. Welcome to our Capital Markets Day and to our home here in Maranello. To all of you here, I trust you had a wonderful time last night and also an instructive tour of our facilities this morning. Ever since my first visit here some 25 years ago, I've watched with all the evolution of our state of the art facilities, even more so each time I come here to this special place where I now have the privilege of essentially living full time. I have a profound sense of the magic of this temple of automotive design and technological innovation.
As John said, its very walls are imbued with a history of a success that is truly unique. I hope that you too have felt some of the very same emotions and inspiration during your visit. Let me begin by saying how delighted we all are that we are joined here today by our Chairman, John Elkan and also our Vice Chairman and the son of our Founder. And of course, and certainly not the great senior management team that it is my great privilege to work with. They're behind me and on the side.
Here on this slide is our agenda for this morning. Our aim is to provide you with sufficient granularity with which to understand clearly our priorities for our midterm plan. These are not only to deliver superior results in the midterm and well beyond, but also to continue to inspire and then fulfill the dreams of our loyal customers. I certainly do not wish to steal any of Enrico's, Michael's or Antonio's thunder with these introductory remarks. But I do want to share with you some of the thinking that informs our abiding confidence in the extraordinary potential of this jewel of a company.
While today is mostly about adding detail to our midterm plan, I'd also like to underline that this is a house in our 71st year. Our perspectives are naturally longer than a single planned period. And indeed, we are investing to sustain our growth well beyond this period. We are thinking as much about the next 10, 20, 30 years as the next 5. Our confidence as we do rests on a number of key pillars.
1st and foremost, amongst these is the unique strength of our brand and its unparalleled history. Everything we do and will do is and will always be rooted in and inspired by the values, ambitions, standards, drive and creativity of our founder Enzo Ferrari. If I were to choose one word to describe Ferrari, it would be passione. I believe our company is the very embodiment of passion. It is genuinely palpable and tangible.
You can see it, you can smell it, even taste it and you can certainly hear it. The Ferrari Monza we unveiled here last night and which stands before us today is a glorious manifestation of our Ferrari's DNA, inspired by our past but tailored to the present. A wonderful example of the essential characteristics that make this house so very special. It embodies all we all love about Ferrari, its special history and its magnetism, beauty, design, art, craftsmanship, performance, speed, driving pleasure and emotion, just pure wonder. The Monza is another stunning addition to the Ferrari story and is a taste of the delights of the plan will bring to life in the next few years.
While for obvious reasons we will not disclose too much detail about what we have in the pipeline, We will add a number of magnificent new models over the life of the plan about which Enrico will talk in a little while. These will be classified in essentially 4 distinct segments or pillars: sports cars, Gran Turismo cars, special series, some of which will be limited and what we call Econa, which will always be strictly limited. The very first of which you here with us today can admire before you in the shape of the Ferrari Monza SP1 and SP2. While it's fair to say that in more recent times our success has been defined principally by our outstanding capability in sports cars. Gran Turismo is just as much a part of the history and heritage that define Ferrari.
It's sufficient to remember that 2 of the most highly recognized and prized Ferraris of all time, the 250 GTO and the 250 Lusso of the early 60s exemplify the distinctive but complementary place that Gran Turismo occupies alongside our sports cars. And no one could ever reasonably claim that one dilutes the other, quite the opposite. I am confident the work we are doing on the Gran Turismo segment will delight you as investors as much as it will amaze and impress our customers as they take delivery of these wonderful machines. And while we continue to project a significant increase in affluence and purchasing power worldwide, we also understand that not everyone who loves Ferrari yearns for a high performance sports car. Many who are drawn to our brand are instead seeking the authenticity, elegance, comfort, craftsmanship and quality that only a thoroughbred Ferrari Gran Turismo can provide.
And this represents a significant opportunity for us and one that is already an important part of our success story. Another great opportunity within Gran Turismo cars lies in a segment that few would have thought of as our natural territory. And I know that the so called SUV is also a subject of keen interest to everyone here and to many more. First of all, can I say that I abhor hearing SUV in the same sentence as Ferrari? I don't want to wish to offend anyone who can use the term with less discomfort, But in the generally accepted sense, it just does not sit well with our brand and all that it represents.
And that's why this vehicle we will produce will be unique in so many ways and will redefine expectations. Unmistakably Ferrari with features that have never been seen before. It will be called Purosangue, a thoroughbred and launched at the end of the current plan. It will be elegant, powerful, versatile, comfortable, spacious and features state of the art connectivity and infotainment. A wonderful hybrid powered newcomer in all respects worthy of the Ferrari Shield.
I will admit that as a diehard Ferrarista, I was a tad skeptical when the concept was first voiced at the Board. Having now seen the wonderful design concept, the extraordinary features and knowing the resources we are dedicating to bringing this vehicle to life, I have become a hugely enthusiastic supporter, a vocal Tifoso filled with wonder at what this Ferrari team can achieve. These are exciting times indeed for us here at Ferrari. We have a truly spectacular new model lineup ready to roll out over the next few years. Cars that will enhance even further our brand equity, enchant and enthuse our customers and position us strongly to enter new segments where we will nurture our exclusivity and enhance new customer loyalty.
We have significant potential for further success in new geographies, in particular in China, but also more widely in Asia and the demographics of growing global wealth creation are aligned in our favor. Even the great industry issue of our time, place of the car in an era of climate change will likely be an opportunity for us. Innovation is in our blood, so the challenges of building a Ferrari for a low emissions future is one that we are already embracing. Let's not forget that the most highly performing, most efficient hybrid engine in the world today is manufactured right here in Maranello and powers our Formula 1 cars. That powertrain knowledge and other technological know how will continue to be transferred into our road cars.
In part or in whole, the most recent example of this knowledge sharing being the outstanding LaFerrari Hypercar. By 2022, nearly 60% of the models we produce will be built around hybrid powertrains. And clearly, we will go further than that as the years unfold to meet both specific regulatory requirements, but also to satisfy customers' desires for significantly improved emissions while retaining and this is very important the driving emotions that render Ferrari's simply unique. This morning, Michael will review our plans with regard to sustaining our technological leadership in terms of hybridization and other innovative features. I mentioned Formula 1 just now.
It's such a huge part of who we are and yet it is our big known unknown as of 2020 1. As you know, discussions are ongoing with regard to the sports technical regulation, all the financial aspects and its governance under the umbrella of the new Concorde agreement. While I believe that there is a basic consensus on the principal objectives that will define the way forward, the precise views on how to get there vary quite widely. There has been some limited progress, but we are still far from a comprehensive agreement that all participants will sign on to. I remain reasonably optimistic that a consensus will be reached in time.
But I would add that as Ferrari, we will always insist that F1 remains at the pinnacle of technically advanced competitive motorsport. Moving on to say a few words about our luxury adjacency strategy. This is still very much a work in progress. I am ever more convinced that there is considerable value to be generated from this arm of the business. Indeed significant value is already being extracted from the Ferrari name, but not nearly enough of that is accruing to us as the owners of the brands.
We must bring back that luxury value home. And we will not move in the decisive way we need to in this area until we are 100% ready to do so. We are not there today, but rest assured that it is one of our priorities to transform our capabilities here and to add greater momentum to our preparations. I would add that the potential upside from Luxury Adjacencies has not been baked into the financial targets that Antonio will present later this morning, but that does not mean we regard it with any less urgency. Our 2018 to 2022 plan is the fruit of considerable and detailed labor by the entire team and I'd like to take this opportunity to thank them all for their great work so far.
Our objectives are ambitious, but they are based on a meticulously constructed model pipeline, our enviable pricing power and appropriate investment levels to support our key initiatives during the planned period and indeed beyond. Investments that will evolve our facilities to enhance our flexibility while retaining our historical strengths of craftsmanship and excellence. They reflect a sensible assessment of the risks and the opportunities, but always with the accent more on the opportunity in keeping with our culture of innovation and achievement and the pursuit of excellence in everything we do. You would not expect anything less from the world's undisputed premier luxury name. What distinguishes us as a company is the formidable power of our brand, its vibrancy and endurance, our earnings resilience and our ability to generate consistently strong cash flow.
And it is our clear intention to capitalize fully on this predictable and growing free cash flow by rewarding our shareholders for the confidence they place in Ferrari. Antonio will tell you what our plans are in that regard shortly. Beyond the numbers, you can rest assured that the entire management team and all the men and women of the Ferrari family will work continually and incessantly with relentless dedication and yes with passion to excel and delight our customers, shareholders and racing fans. We here have been blessed with the good fortune of being a part of this unique story. And I can say that from where I stand today, I am as inspired and excited as I could ever have imagined to be about our future, not just for this planned period, but well beyond.
Rest assured that as a management team, we also have our feet planted firmly on the ground. We recognize that the ambition must be matched and we are ready to accept that challenge precisely because challenge is what Ferrari thrives on. At Maranello, we don't say the best is yet to come. We say the next car will be the best one, as Enzo Ferrari taught us to. Welcome again to the home of Ferrari.
Thank you for your attention. I will now hand over to Enrico. Thank you.
Exceed customer expectation, since ever in the history of Ferrari, we have been always trying to exceed customer expectation, not just matching their expectation. And I think the experience that you had the privilege to share with us yesterday and the 2 iconic model in front of us clearly represent the effort that every day we are doing in order to achieve this challenging objective. Now I will try to give you some more details about the strategic direction we want to put in place in order to keep winning in such a challenging task. In order to do that, I will take you through 3 chapter of the presentation. The first one of course is concerning the product, our product strategy, future years challenging and exciting project.
But not only the plans that we are putting in place require an activity system that is allowing to put on the ground the power and the energy that we will produce in the next year. So we'll talk about what we are doing as far as our partner are concerned, the dealer network. And last but not least, how to further expand the customer experience and the feeling to be part of the Ferrari family. Now let's start from the first chapter. Let's talk about product.
And the first step is to give a picture of where we stand today. This is the current product offering that a client can find in our dealership. It's divided in what we call road car that are homologated for road use and truck cars that are designed in order to give the opportunity to our client to enjoy driving a Ferrari on track. Well, as far as the road car are concerned, we clearly divide them in 4 different categories. From the first one is the sport car, which represent of course one of the pillar of our offer.
The second one is the Gran Turismo cars that are designed for a more versatile use. And then we have the special series model like the one we just recently introduced on the 488 with the 488 Pista and the Pista Spyder. And then we have the 4 series and the one off that are again designed in order to offer an incredible high opportunities to choose the best car for different use. I wouldn't be reluctant to say that this is probably the strongest ever product line that Ferrari ever had in its history. But we are not stopping here.
We still believe there are untapped opportunities in order to bring on the market some additional model again to overcome customer expectation. And as Louis already said, I will spend a few words on what we consider our pillars, the pillars of our offer from where we expect to have most of the news in the coming years. And of course, we will talk about the sports range, the Gran Turismo range, the special series and the new addition to our range, which is as we said already is not just a simple model, is a new pillar in our product range which is the Kona. Let's start from the spot car range. And here the strategic ratio we want to give to our offer is very clear.
We will keep working in order to confirm Ferrari as the leader in performance and driving no compromise. Whatever spot we will put in the market in the future is going to be the pinnacle in terms of performance, which is going to be led thanks to important technological innovation, which are going to be incorporated in our road car, thanks to the experience coming from our racing department, mainly as far as the hybridization is concerned and the HMI is concerned. Mikael Leiter will come back later on with more details on the subject, more technical details. The big news and I will expand a little bit is also that for the first time at least in our current offer, we are planning to enter with a 2 tier mid rear engine offer in the market with the flexibility that our powertrain offer will offer us. Let me expand a little bit on the subject.
Basically what we plan to do is exactly in the mere read engine offer to have 2 tiers of offer. 1 is what we call our top of the range model that we don't have at the moment that will come very soon that is set to deliver uncompromised performance. Here I mentioned supercar performance. Again, Mikael will come back on the subject, what we are planning to have is something that will be a real supercar even though in the standard range. This car will be coupled with the replacement of the 488, which is our current V8 mid rear engine model.
And this segment will be featured by an even higher fund to drive. So from one side top of performance, on the other side high performance, but with great fund to drive. This of course will give us the architecture to work also on potential future product extension giving us a lot of flexibility to plan our future range. And last but not least, in order to achieve such a performance 100% of the future range up to 2021 will be full hybrid. Let's move to the 2nd chapter, which is the Gran Turismo.
And as Louis was mentioning, this is part of our heritage. In our history, in our classic car offer, the Gran Turismo is having a great importance. So what we plan to do as far as the Gran Turismo is concerned is to work in order to bring the concept back to its origins, delivering in the market product with an even higher style, elegance and of course driving emotion. This is done with a clear objective in mind, which is to expand the Ferrari family exactly as it happened some years ago with the California that was able to attract 70% of new to Ferrari clients in the family, which now became clients of the whole range of our product. Now the car we are planning to introduce is giving exactly this objective, having a design, a performance and comfort on board that we'll able to achieve this important objective.
And of course, this is going to be achieved also working on creating even higher versatility, comfort on board, thanks also to the introduction on the hybridization on our future product line. Again, let's expand a little bit on the subject in order to give you some additional details. I think the first point which is also given the size of the opportunity goes and look at the development, latest development of the Gran Turismo segment which in the last year more than doubled and even more important a big contribution especially in the last year has been given by what is called the SUV. Now we will not enter the market as it has been said with a standard product replacing something existing in the market, but we will come with 2 new products that we believe will help us to achieve the objective I was just mentioning. The first one is something that goes back again in the work we did with this car, with the Econa, but with a different objective, which is exactly to inspire ourselves from the most classic and refined Gran Turismo of the past.
There is a big history on the company of this kind of car. We think that we can take inspiration bringing a new and more elegant addition to the Ferrari Prada range, which is the perfect combination of comfort on board and Ferrari driving a mission. This is going to be set is one of the chapter that is going to be set in order to bring new Ferrari family members on board. And then of course, Louis already talked about another big news that now is called Purosangue. Purosangue again it has been chosen as a name of the project because we want to witness to the market that we will make something that is not going to compromise on the Ferri DNA.
This is going to be 100% Ferri, which means that we'll be able for sure to give the same driving emotion, but in multiple location and with more passengers. It's of course set to be the best in class in terms of performance and fun to drive as every Ferrari in the market and it will have some revolutionary approaches at least to several elements, but for instance to the accessibility of the car. And again, this will set a further additional opportunity for the company because it will give us an additional opportunity to work on product extension based on the new platform. Going on our pillars, we've talked about the special series. I think here it's important to mention something important.
For us, a special series is also a unique product concept. It's not just taking an existing model, adding few horsepower or modifying the style of the model. This is a complete new concept like the one you see there, which is the 4 88 Pista Spyder that we just recently introduced. These cars are designed in order to bring an additional driving emotion. So there is always a significant delta in terms of performance and technological innovation versus the standard model.
This car can be limited in time or in volumes, meaning to say that the total production of course is going to be quite low. And these cars are able to give us what we call a sustaining pricing power in the market. Few words again, don't think we have to spend many words because you have been attending the presentation yesterday of the new Icona. But again, maybe it's worth mentioning that again this is a unique concept that again takes inspiration from our iconic car of the past, but are interpreted in a modern way with innovative materials and innovative technology. And most importantly, it's not just one of a kind, but it's a new chapter, a new pillar in the product offer of the Ferral brand, which is going to be aimed to reward our best ambassador, our best client.
So with the Gran Turismo we want to attract new clients, but we need to have also something rewarding our best customer and the ICONA will be the way to make it. An additional word of something that is not currently in this plan, which are the hypercar. We're talking about LaFerrari, LaFerrari Aperta. For us the hypercar is what we call the pinnacle of the technological innovation. The hypercar is for us a laboratory where to develop new technologies, very innovative technologies that are going to be aimed to be put in our future range models.
Now it's not foreseen in the next mid year mid term plan, but the investment or part of the investment are already there because we are already working to the development of the new future Ferrari hypercar. This brings me to make a synthesis of the main element of the plan that underline the emotion and the challenge that we have in front of us, because we plan to introduce in the market 15 new products in the time of the plan, which is something that it has never been done by Ferrari in the past. Around 60% of our product offer will be hybrid, which again imply a big and important work in terms of research and development. And the new product range will give us the possibility to further improve our retail price in terms of price and product mix. One last word about an important part of our business and important part of our client experience, which is the personalization.
Here on the chart you see the level and the different level of personalization we offer our clients. On the bottom, I am reluctant to say the standard personalization because already the so called Carracerias Caliette gives a huge list of opportunities to our client. But we start from the so called Caratieri Escalieti and we go up in the experience in different level of personalization up to the pinnacle which is the one off. The one off is something that we keep extremely exclusive. We are not making more than 2, 3 projects per year and the waiting list over there is well beyond our capacity over the next year.
Now why I'm mentioning the personalization, because this is an irrelevant part of the customer experience At the same time, it's an important source of revenue. That's why we still believe there are some additional opportunities to take. That's why we are launching a list of new projects in order to further enhance the offering in every single segment of the offer. I would like to mention among the other an important project that will be live very soon, which is going to be the opening of a new tailor made center in New York in Park Avenue that will happen in Q1 next year. Now this brings me to the 2nd chapter, which is the dealer network.
The amount of project and the energy that all these projects will put on our shoulder require a strong leg in order to achieve the results. That's why the dealer network is having a relevant role in the achievement of our objective. And that's why we already started some years ago in order to keep our Nectar to face the future opportunities. Let me give you some direction about what we are doing and about what we plan to do. The first focus talks about the hardware, the showroom.
Well, we already have a quite well established network in more than 60 markets in the world, but we plan to further expand the number of showrooms and the number of workshop. The difference of the percentage is very simple. We perfectly know that our clients are willing to dive a little bit to go in a big dealership in a big city to buy their car. But whenever they have to service their car, they want to have a nearby service. That's why we plan to slightly increase our footprint both of the showroom, but more of them in terms of workshop.
We launched some years ago and we plan to complete 100% of the stores beginning of next year, a new luxury focused corporate identity, which means that we don't want to have our dealership appearing like a normal auto car showroom. The experience we want to give our clients is the real luxury experience and this is going we hope to deliver with a new corporate identity. But we are also already working to further enhancement what we call the point of sales of the future, because we believe that our clients will still want to have the physical contact with our car, but introducing some additional elements in the experience. This lead me to the second point and probably one of the most important that are the people. The people spread in 60 markets are the ones that represents our brand, are the ones that should be able to deliver the message to the final client.
That's why we wanted to have and we already have 100% fully dedicated staff to our brand. And most of all, we launched a project that is quite unique in the automotive industry, which is basically we wrote the precise job description of every single employee of the dealership from the mechanics up to the general manager and we partner with a leading assessment company, international assessment company in order to run the full assessment of every single person working in the dealership of Ferrari more than 2,500 people have been assessed in order to map whether they have the capabilities and if they don't have either how to replace them or to help them to improve, thanks again to something quite unique, which is an internal training academy to fit and fix the gap. The last chapter is as far as customer expectation. This chart is a bit complex, but it's just meant to say that our client expect from Ferrari what we call a state of the art service. And in order to achieve that, we already started working to launch in the market some innovative services where basically for instance we are able to offer our client a full set of service for their car up to 20 year of life.
There's no other car manufacturer in the world giving such a service. And then after 20 year immediately the car become a Classica and is going to be managed by our Classique department. And then of course what our client expect is a further increasing level of quality, which is something we have been working hard in order to make it. And most of all, whenever a problem arise to the car, they want to have them fixed very quickly. And here again, we have something very special that is allowing us to measure the level of performance in every single step of the repairing in order to fix the gap and improve the performance.
This lead me to the last chapter. Last but not least, yesterday you had the chance to experience what does it mean having an experience as a Ferrari customer. Here I think there is an important concept I would like to highlight. Again, taking inspiration from what Louis said before. From our customer, one of the most important asset is the exclusivity.
Louis talked about the level of the wealth in the world. Well, let me couple this information with the level and the number of high net worth individual in the world, which is around 18,000,000. It means that if we couple this number with the number of cars we sell per year, the current penetration is around 0.05%, which means that it's not only an opportunity to take, but it's an opportunity with lower risk in terms of exclusivity, because even growing at 0.01% or 0.02% still leave us in a very exclusive position. Now in order to capture these opportunities in the market, again as far as the customer experience is concerned, we have been working hard in order to try to map the whole customer experience. Now we know exactly what happened in every single step of the so called customer experience coming from the first moment which is the clients getting to know about Ferrari, about its product, bring it to the active consideration down to the purchase and down to the experience.
Now I could talk for hours. I think the best example is something that you experienced yesterday and maybe another easy way to express what I mean is to see a short video. This is about the Ferrari experience. We want our clients to enjoy their car and share the passion. That's why we organize a lot of events on track and on road.
But most of all, we also need to enlarge the family. And we are not planning to do it with the usual standard weapon, which are the advertising of the money on other channels. What the way we do it is to work on the word-of-mouth. We want to have other experience that becomes something to tell to your friend like the experience of yesterday or like the experience we will see in the second video. This of course was the launch of the Portofino, 1200 clients from all over the world.
They were our testimonial, our ambassador. They were the ones spreading the word-of-mouth about what Ferrari is capable to do. Now the challenge is there and there is a lot of work behind the plan that we have. That's why now I will ask Michael Leite to join the stage in order to talk about the new challenges as far as the technology. Thank you very much.
Patrizio, Bonjour, Tutti, and good morning, everyone. Ladies and gentlemen, technological leadership is the topic of my section of the presentation, And Enrico left some important inputs for me for the presentation, but actually for my work. And one was new powertrain offers. The second one was hybridization. The third one was we will do more models, and the last one was we want to grow in the GT segment.
And these four inputs have an impact on the product development we have to do, on the technologies we have to develop. And I would like to explain you a little bit what is our strategy on what we are doing on innovation on the technology. Obviously, I can't go too much in detail. I'm sorry for that, but I would give away too confidential information and I would give away in a consequence also competitive advantages. So anyway, I will try to explain you the concept.
And before coming to the technologies, I would like to explain you a little bit the framework in which we are developing cars and what is actually the DNA, the technical DNA, the technical footprint of Ferrari and there are 3 elements. The first one is performance. Performance is quite easy to explain. All the numbers or the technical numbers you can find in a car magazine. Weight, horsepower, torque, aerodynamic efficiency, acceleration, top speed, all these numbers.
All these numbers we conclude in one value, which is a lap time on a racetrack. And obviously, for us, the most important racetrack is a racetrack of Ferrari, Fiorano. So every Ferrari has to be a very performant car, best in class car in a segment. And then we have versatility and comfort. Obviously, comfort is easy.
It's riding comfort and comfort on board. Versatility means spaciousness, accessibility, but also traction. We will have an rear wheel drive, we will have an all wheel drive. And in the future, really important, do we have e drive, electric drive? In some city centers, you won't enter anymore if you don't have a certain electric range.
So we have to consider this. But the most important element of the Ferrari technical footprint is driving emotions. This is the real secret of Ferrari. This makes the real difference between a Ferrari and every other sports cars. So what does it mean to have driving emotions?
One of the most important points is sound. Sound is so much involving the driver, how he drives the car. So the sound is using the ears. And there's a second element. I call it perceived acceleration.
What is telling your stomach to you what is happening in the car? It's not the time from 0 to 200. It's a perceived acceleration that you can sense with your stomach. And the third element is, I call it always, go kart feeling. Every action you take on the car has to lead to a direct reaction of the car.
If you steer, the car has to curve into the car. The pedals, the shifting, everything has to be very, very responsive and very, very precise and controllable. So these are the three elements that define the technical footprint of Ferrari. And if we now take these three dimensions and put on a chart the actual cars we have. We have 2 different groups of cars.
On the left hand side, you see the sports cars, the 488 and the family of the 488. We heard before about special series. Obviously, the Pista is based on the 488 GTB. And then we have the 812 Superfast. And on the right hand side, you see the Gran Turismo cars we have today, the GTC 4Lusso with the T and the Portofino.
For the future product range, we have to enlarge all three dimensions for all our cars, focusing for sports cars on performance and driving emotions, focusing for GT cars for versatility and comfort and some driving emotions. So what is the way to do it? Key factor is innovation. Innovation focused of these three elements, leveraging Formula 1 know how to be the 1st mover in core areas of Ferrari, and if we use technologies that are already on the market, we have to customize them in the Ferrari way. Later on, I will give you an example on the Turo technology we use today in our cars.
And obviously, we have to understand how we can create synergies. We can't begin every time from scratch. We have to use technologies we have developed. We have to develop them continuously, but if they come to a new model, there have to be synergies. And also this, I would like to explain you later on in my presentation.
So these are all internal factors, but there are also external factors. And one of the most important external factors is regulation. As you know, the challenge is growing from year to year, and we have to be compliant to all these regulations. You know that the big challenge right now for the European Automotive Industry is the regulation in Europe. We are working on technical solutions for Euro 6C and D.
We, as a small volume manufacturer, have a little bit more time, so we will come up until 2020 with our technical solution. The same on China with China 6A and 6B. This is still under discussion regarding the timing. We have in the United States the 3rd stage of LEV, So we have to come out until model year 2022 with BIN 50 and then we have the SVN status where we have to understand, obviously, we understood already what is happening when we go over 10,000 units and we have prepared everything in our plan already to manage also this impact. So this is a little bit the framework in which we have to develop the new models and new technologies.
And now I would like to come to the first point and Rico mentioned, engines and powertrain. And this is actually in tradition with our founder who said that the soul of a car is its engine. So I would like to start with the engine families we have today. I don't read you all the comments you read here. I just wanted to mention.
The most important award for engineering of engines is the engine of the year, and we won with these two families, the V12 natural aspirated engines and the V8 turbocharged engines, several awards of the engine of the year. But three times in a row, we won now with the V8 family, the Engine of the Year. That means in all segments, they are the best engine is the engine of a Ferrari, and that's not all. Since 20 years, this award is given to car manufacturers, and this year, they awarded the best engine in 20 years, and we are very proud that this is the engine of the 488 Pista. But this is not only to be proud.
This is a duty for us. We have to understand and we have to develop new engines that have the same uniqueness like our engines of today. And let's look now what is the future offer of engine families and I guess there's some good news for our customers. First is, we will maintain and continuously develop the V12 natural aspirate family engine family. This engine is a pinnacle of Ferrari and we want to keep this in our product range.
We will do the next technological step ups for the V8 family, and this is another good news. We will develop a totally new V6 family based on a very, very particular innovative architecture with plenty of innovations regarding technologies and components on this new V6 family. And now I would like to come to the point why are our engines so successful, because we are following, especially with the turbo engines, a special concept. And to understand this concept, we have to take 2 engineering indicators, which I'll try to explain to you now. One is regarding driving emotions and the other one is regarding performance.
So if you look at the way axis, there's a performance indicator. There's a trend in the industry to have always higher specific power outputs. You need this to increase on the one hand side the power, horsepowers and on the other hand side to be more efficient regarding emissions and fuel consumption. So how much horsepower can I create out of 1 liter of displacement of the engine? This performance.
And on the other hand side on the X axis, you have the response for the go kart feeling. Full throttle, you are cruising, you do a full throttle and immediately the car has to start with acceleration. We can't accept a turbo lag, and that was the reason why we have maintained, stayed so many years with natural aspirated engines. And what did our competitors in the automobile industry? They introduced turbo engines and what happened is they increased the performance, the specific power output, but they created Turbolex.
So if I do the pedal to the metal, I have to wait. On this slide, you have to wait on some cars more than 2 seconds to have the maximum torque of the engine. This is not acceptable for Ferrari. So what we did is a technological breakthrough. We created a turbo engine with the performance of a turbo engine, but with the emotions of a natural aspirational engine.
We increased up to 184 liters horsepower per liter, the new engine of the 488 Pista, and we don't have any turbo lag. You read it before on the remarks of the jury of the engine of the year. So what is the future now? And there, we are talking also about hybridization. We want to continue this read to maintain, to foster this gap we have positive gap we have to our competitors.
So we will use hybrid technology and Formula 1 technology to even increase the specific power output without having any turbo
lag. So
what is the next step we can do using hybridization? And I would like to give you an example with a reference to one of the most performing car and the car with the highest fun to drive we had until now, the LaFerrari. And here again, we are talking not about performance, we are talking about fun to drive. And Ferrari will use hybridization to enhance performance and Phantom Drive. We will also use it for fuel efficiency, obviously, but our main focus has to be performance and fun to drive.
So what is this? This is Ferrari perceived acceleration. Again, you are cruising with your car, you do a full throttle and what has to happen? Direct response, so you see that the curve is increasing immediately. And the second thing is the acceleration has to increase continuously.
It can't be a dip or something like this. You have to feel like going in heaven, never ending acceleration. That's the philosophy of a perceived acceleration we think in Ferrari. So what can help us the next generation of hybridization? And again, the LaFerrari's OLED curve is a super car.
We are talking about a car which is the top of the range of the future normal product range. And you see, we have a direct response, we have a continuously increasing acceleration and all this even on a higher level than on the LaFerrari. This is our target and this is how we will do and interpret in a Ferrari way hybridization. So, I talked about 2 inputs from Enrico. Now I would like to take the 3rd one.
How can we do so many sorry, to complete the picture, we have to talk about the sound. I told you that sound is one of the most important elements we have to create driving emotions. And you see, this is absolutely in line with the perceived acceleration. Also, the sound has to increase in this maneuver constantly and not only the volume. And that's the reason why we talk about music.
We don't talk about sound. Also the character of the sound has to change. So let's make the comparison with the coral. With low res, we have the basses. With mid res, we had some Luciano Pavortis.
And when we come to the soprano, we had some Mario Callas. So all this together makes a concert of emotions and this is what we want to achieve with our technologies, new engines and hybridization. And now really I come to the next point, how can we cover with our architecture all these new models we want to do. And therefore, the first thing that we what we have to do is to understand what are the product specification, what are the drivers that creates variants and that creates a need to be a flexible and modular architecture. First is the engine, I talked about this V12, V8 and V6 we will cover.
We have the hybridization, sometimes we will, sometimes we will not have. We have to talk about the traction, 2 wheel drive versus 4 wheel drive. We have a higher spread regarding the seating because we will have a 2 seater and 2 plus and 2 plus 2 and we have the possibility to do a 4 seater. Regarding the body style, we stayed with Coupe and Spider. In the future, we have to cover also the Porous angle.
In a consequence of this, also the clearance has a much higher spread from low to high. Beside on that, we will stay on 2 main ground architectures. One is the rear mid engine architecture and the second is the front mid engine architecture. And these both architectures, let me say, we can play in several variants. Let's start with the real mid engine architecture.
Let's start with the engine that will have multiple power outputs with a higher specific power output and we can combine all these engines with an electric motor to make hybridization. We combine this with a double clutch transmission, a new one, an innovative one. We will have on board a hybrid system, which will offer electric range and obviously, all this hybridization will have an impact on the weight and therefore we have to do 2 things to reduce the weight. 1 is we use new technology, so we will have the option to use also multi material for lightweight. And the second point is package efficiency.
We have to compact the car as much as possible to reduce the weight. To applicate different engines and different powertrains, we will have the possibility to vary the wheelbase and we will have a totally new HMI, which I will explain to you later on in my presentation. So there we have a very, very high modularity to create different product characteristics. We have to be even more flexible if we talk about the front mid engine architecture. Also there, we have the engine.
The engine is in the front and we are in the back, we are in the rear, we have the gearbox. So this is the typical Ferrari architecture. We will stay on this, even if you make the Purosangue. Front mid engine transaxo concept because this is already the architectural advantage we create to have the best weight distribution and to have a low center of gravity to ensure driving emotions and performance. This is a base also for the Purosangue.
We will have the option to make an all wheel drive. We have to be very flexible and we'll be very flexible regarding the wheelie base, not only due to the engines, but also due to the seats we will perceive. We can do a 2 seater, up to a 4 seater, I said it already. Regarding the accessibility, we have to be very spacious and comfortable. Clearance, I talked about.
And again, here, we will have the possibility of hybridization with an electric drive. Very important for this architecture, especially in the application of the Purosangue will be new suspensions we are working on to have a high range between comfort and sportivity. So these are the 2 architectures we will use to cover all these models Enrico talked before about before. The last message of Enrico was we have to grow in the GT segment, and we are preparing the next generation of human machine interface for Ferrari. We are using for this state of the art technologies.
We will stay on a concept derived by the Formula 1, very concentrated and our concept is eyes on the street, hands on the steering wheel to be concentrated for safe and enjoyable and pleasure to drive. But we will add new technologies, a new head up display. We will have a new innovative cluster. We will have a new steering wheel with new commands, new infotainment with connectivity and again to increase driving emotions not only for the driver, also for the passengers, we will try to involve also the passengers more in driving Ferrari. So this is one element of the GT segment we will enforce and we are already in the middle of the development.
And the second one is, maybe you don't expect this for Ferrari. The second one is autonomous driving. And obviously, we won't present a car which drives by itself. That's not Ferrari. What we have to do is on the one hand side, we have to consider regulations and customer requirements if you go to the GT segment.
And we will come up short term with the first systems or with advanced driving assistance systems. But the next step is autonomous driving, which is far, far beyond that. And that means for us we have to monitor these technologies. We have to understand what benefit can give us sensors, artificial intelligence and all these autonomous driving will have an important impact on the board and architecture of the cars. So we will customize these technologies to find the Ferrari way to offer our clients, our customers Ferrari specific experiences.
This is the way we will follow this technology. Doing all this work, doing all these innovations, we are convinced that in the future, our product lineup will be enhanced in all three dimension I explained to you, will be more performance, more comfort, more versatility and more driving emotions. But I would like to underline again the point of driving emotions, I would like to show you a video. In this video, you can see Sebastian Vettel driving 1 of our cars. And you will see his shine in his eyes with joy.
And this can't be because of the performance of this car, because he is driving almost every weekend the most powerful car in the world. So why should he be so excited about a street car Ferrari? This is driving emotions.
I guess
I don't have to translate mamma mia, but the last words was German, so I translated for you. You said Feuerwerg, which means what a display of fireworks. And please conclude that always, this is a Formula 1 pilot. Imagine the pleasure, the emotions our customer will have when they drive our cars. And that's the reason why we are so convinced doing all these new models, these new technologies that our new product lineup will be very, very successful.
And now I hand over to Antonio Picapicon, our CFO of Ferrari. Thank you very much for your attention.
Thank you, Mikael, and Benvenuti at Nostra Capital Market Day. It will now be my pleasure to walk you through our financial targets up to 2022. No video, I promise. Before looking at our future, let's take a step back and review our recent performance. Ferrari's key financial strength has historically been growth, margin expansion, solid cash flow generation.
As you can see from this chart over the 5 year period running from 2013 to 2017, Ferrari was able to grow its top line and to maintain a strict control on annual shipments. We delivered a 10% annual growth rate, while increasing shipment by a speed of only 5%. At the same time, we expanded our operating profitability as measured by adjusted EBITDA even faster actually at 13% annual pace and reaching 2017 a recurring margin of 30%. During the same 5 years, we generated nearly $1,500,000,000 of industrial free cash flow with a normalized cash conversion ratio above 35% on average. What you can't see from this chart is the level of resiliency this business proved during the downturn of 2,009.
Our performance was modestly affected for 1 year only. Revenues suffered a contained drop of 7%. EBITDA margin softened by just north of 1 percentage point, but this was more than offset by a 5 point margin growth immediately thereafter in 2010. I believe this compares very favorably also in the luxury brand arena. With respect to 2018, as you can read from this slide, we have now updated our guidance.
Considering the growth opportunities that we want to pursue by broadening our product range, we have decided to accelerate the pace of technical investments and therefore to increase our CapEx spending for the year up to approximately €650,000,000 from €550,000,000 However, we already announced advanced agreement signed 1 week ago with the Tanya Revenue Agency to access the parent box staff relief, which provides for an immediate benefit in cash of approximately €139,000,000 now allow us to target an improved net industrial debt level for this year, lower than $350,000,000 instead of 400 Let's now review the financial implication of all what has been said this morning with respect to our future. First of all, let me be straightforward. Today we will not provide you with a target for our shipments in 2022. Rather than on volumes, we will focus our attention on the development of the revenues and profitability attached to such volumes. As my colleagues have previously explained, the portfolio will evolve into 4 distinct segments.
Besides sports cars, we will expand our GT offering, refining the concept of special series and introduce the Aiconas. This will allow us to tap into new market opportunities. On this basis, we are therefore targeting for 2022 this breakdown of shipments. Sportscar will continue to represent more than 50% of the total. Special series will account for roughly 5%.
GTE will expand to less than 40% from 30% in 2017 with the Purosangue coming at the end of the period. The Icona will remain substantially less than 5%. The whole product and volume plan remains ultimately designed to stick to the Ferrari's scarcity model. Let's move on to revenues then. We already said that this is a transformational business plan for our product offering.
As such, we have decided to focus almost exclusively on the revenue growth from cars, including personalizations and parts, for which we continue to target an annual pace of 9% and this implies an increase of up to €1,500,000,000 Consistent with the comment you heard from Louis, we have kept the overall contribution from all other revenue streams substantially flat in our projections, therefore targeting to achieve total group net revenues of just less than $5,000,000,000 in 2022. With such top line growth, we are aiming to raise EBIT to more than €1,200,000,000 by 2020 2. The 2 main drivers will be volumes and price mix, which are expected to contribute approximately EUR 500,000,000 each. Volume increase is explained by shipment development of both GT and sports cars. Personalization and parts will continue contributing in line with the past.
Price and mix will evolve according to the guidelines summarized by Enrico, reflecting overall significantly improved average contribution margin supported by sports cars and the Acona. We assume no significant change in the allocation of our sales by geography. The R and D expense including D and A required to broaden the product range and to further enhance Ferrari's technological hedge will be managed as a gradually declining percentage of revenues. SG and A will be developing more slowly than the company growth. While FX with the euro dollar exchange rate at 1.20 is factoring to be a drag and accounts for the bulk of the negative contribution in the last bar.
As a result, we aim to almost double EBITDA over the planned period and therefore to further expand the EBITDA margin even above the 38% threshold, which we believe is indeed a remarkable target. Following a period of enlarge our offering and subsequently fuel Ferrari's next steps. As a result, we've been increasing our capital expenditure and will further grow it up to the level required to support the foreseeable launches, not just encompassed in the plan, but even beyond 2022. We therefore expect that CapEx will be peaking in 2019 at 2 times the D and A and will then come back to a new normal level by 2022 when D and A will fully fund once again the entire expenditure. Cumulated CapEx spending over the planned period will amount to €3,600,000,000 Considering that the preparation of the manufacturing infrastructure necessary to flexibly cope with product diversity and volumes as already started over the last decade to a point that allow us to consider it substantially established, the vast majority of our investments will be focused on broadening and innovating the product range.
As a rule of thumb, EBITDA less CapEx represents a good proxy for our free cash flow throughout the plan. All other cash components are assumed to have a limited impact on a yearly basis. In summary, based on the previously outlined assumptions and objectives, we are targeting to yield accumulating an industrial free cash flow between EUR 2,400,000,000 and EUR 2,800,000,000 in the period and to be net industrial debt free by 2020, assuming dividend distribution and excluding any further share repurchase. Free cash flow generation is based on a cash conversion ratio substantially aligned with historical trends. On this slide, you can find the financial targets we have set for the mid and the end points of the period.
Net revenues to grow on average close to 8% year over year versus 2017 in an event not to exceed €5,000,000,000 in 2022 with 2020 just about €3,800,000,000 Adjusted EBIT to rise from approximately EUR 780,000,000 in 2017 to more than EUR 900,000,000 in 2020 and to over €1,200,000,000 in 2022 with an EBIT margin above 25% at that time. Adjusted EBITDA to keep on expanding in line with the previous 4 years and to lend in a range between €1,800,000,000 and €2,000,000,000 from more than €1,300,000,000 in 2020 with D and A almost doubling between 20172022. EBITDA margin to further improve about 38% at the end of the plan as we said. Going forward, we will gradually shift our focus towards 2 additional metrics that we believe are more appropriate for our business as it should be ultimately appreciated for its ability to generate cash and reward invested equity, industrial free cash flow and EPS. Adjusted EPS diluted is targeted to grow by over 11% on a yearly basis from €2.8 per share in 2017 to over €3.4 in 2020 and more than €4.7 in 2022 based on current number of shares.
Industrial free cash flow is expected to significantly improve from $330,000,000 in 2017 to more than $400,000,000 in 2020 and to up to $110,000,000,000 125,000,000,000
in 2022.
With this target in mind and appropriate consideration of the self financing capability of TESARO over the planned period, the Board of Directors approved the proposals to proceed with the following: a dividend payout for the following years raised to a steady 30% as well as a €1,500,000,000 shares buyback to be executed during the planned period in line with the actual progress of our free cash flow generation. In any event, the guidelines for our capital structure will be to continuously maintain very solid investment grade rating, as well as a safe cushion of total available liquidity in relation to revenues well above 20%. With that said, let me recap. 1st, we are convinced that our mid term plan rests on a solid and comprehensive ground. It privileges revenue growth over volume growth and it entails a solid price mix contribution, which in turn is fueled by an exciting model pipeline across the 4 pillars as we have presented to you today.
2nd, the plan also includes a property investment to extend our growth trajectory not only in the coming years, but even beyond this planned period. 3rd and final, we are committed to enhance shareholders value through the judicious return of our free cash flow to you, our shareholders. Please rest assured that we all here at Ferrari are determined to flawlessly execute this plan and to grasp all the opportunities that lie ahead for this company. I thank you for your attention and I think we are now ready to take your questions.
Thank you, everyone. Allow us a minute to start and prepare the setting for the Q and A. Thank you. We are now ready to start the Q and A session. I kindly ask you to wait for the office to arrive and please state your name and institution once you have the microphone.
Please go ahead, Michael.
Hi, Michael Binetti with Credit Suisse. Thanks for all the information and help today.
First of all,
I just want to address the targets that you laid out in the financial section. Much has been made of the preliminary guidance we got €2,000,000,000 in EBITDA in this plan. Today we see €1,800,000,000 to €2,000,000,000 Much has been made of the Board of Directors knowing about plan for a year at this point and approving of that target a year ago. On your first call, on the earnings call to us, Lou, you described it as that preliminary target is having as being aspirational, having both risks and opportunities. Could you help us think about what if anything was adjusted between the earlier communication or the preliminary version of the plan and today, so we can think alongside you on that?
And then to the point that there is both risks and opportunities to the plan that we see today, is there a potential for a path above the range that you gave? And if so, what would what do you think would be in the list of things that goes right to get there?
Thank you for your question. I don't want to get to the etymology of words as to whether it was aspirational or I certainly did not say it was unattainable. You should realize I was in the job and so was Antonio for all of 6 days. And I don't like to promise things that I don't have my arms around and that the whole team was behind it. So we spent the last few weeks really putting a very strong framework and details behind the plan So much so that today we are confident despite its complexity, we are confident that it's doable.
We have mentioned, I mentioned in my remarks that the adjacency strategy is not in there. So that's a potential upside. Currency is anyone's guess, but I think the plan is based on a relatively conservative currency forecast. So I just want to make sure that nobody thinks that because there is a new CEO he is lowballing the number so you can over deliver. This is an ambitious plan but a doable one and is based on concrete detailed framework of how we get there.
If I could
follow that. We've talked about hybrid for a while.
Could you give us a
little color on when you think you see
the first when we will see
the first line of hybrid in the market? And can you talk about the impact that you think that will have on the pricing structure in the first half of the plan that you laid out in the step to 2020 that you showed? Thank you.
Well, hybrid is you're going to see it quite soon. And obviously, it builds up over the plan. I think we've said that by 2022, some 60% of our shipments will be hybridized. And beyond the plan, that number will obviously increase, as Michael explained. Hybridization is clearly more expensive, but I think that gives us an opportunity to use the price lever.
So I do not think that hybridization per se will dilute our margins quite to the contrary.
Can we go to Ryan, please?
Hi. Ryan Brinkman from JPMorgan. Thanks for taking my question. Around the time of the IPO, there seemed to have been a lot more emphasis back then on the ancillary non automotive opportunity. Since then, obviously, the automotive opportunity has been so much greater than anyone had imagined.
With that being said, though, I was hoping you could circle back to the remarks you made in the beginning about the ancillary opportunity, including about what is a good example now of how it's the brand is being monetized? And then where are the areas that you think you need to work more on? And also did I sense a little bit of potential for vertical integration maybe? You were talking about some capabilities that you'd like to bring more in house? Thank you.
Definitely it was covered in the IPO. I think as I mentioned in my remarks, we believe there's a lot of value that is actually being created today, but doesn't accrue to us. So, we need to rebalance that. If you were here last night, we touched upon 2 little elements, which were products produced by Loro Piana as well as Berluti that should give you a sense of more where we will be going very importantly that those products are very linked to the car. And I think for that going forward will be very important.
As I said, the strategy is still not finalized. We need to develop the framework and then play within that framework with great, great discipline. And I'm hoping we can get there in the not too distant future. Having said that, I think it was only natural to focus all the attention on the car business. We are going through a rather important transitional phase and it's clear that the priority should have been given to the cars and this comes later.
Thank you.
John
Murphy from Bank of America Merrill Lynch. Just a first question, I think there was a great expectation that the Parasanga as well as a hypercar or supercar might be all electric would be part of the plan. Now it sounds like they are part of the plan, but they're outside of 2022 or right at the tail end. So if we think about sort of the growth in sales and profit, particularly on the EBITDA line, they really aren't big contributors in the numbers that we're looking at this point, right? I mean, the HyperCar is outside of 2022 and it sounds like the ParaSaga is right at the end.
So what we're looking at right now is sort of more core growth as well as ICONIC kind of coming through. Is that a fair statement and the benefits of those would be outside of 2022?
It's a fair statement if you assume that any Ferrari is core. I think we've all said it, all 4 of us this morning. We're all very excited by the product pipeline that's coming up. Henrico mentioned 15 new products in the next 4 years. We haven't achieved to my knowledge ever.
So I wouldn't say this is business as usual. There's considerable amount of activity going on.
And then on Ikana, what's the cadence of those? Is that sort of an every other year type of product? And if we think about price point and sort of positioning, can that be positioned sort of in the realm of LaFerrari or potentially even higher just given some of the exclusivity that they have there?
I mean, we're not going to give you the cadence of when the models come out or shipped. But I would get great confidence as to the trajectory of our EBITDA margin which keeps going up. And as we said, we plan that it will exceed 38% by 2022. It's a pretty straight line going up there.
And then just last question, just to that point. When you look at 38% EBITDA margins by 2022, you're talking about incremental operating profit margins that are below your gross margins of 50%. I'm just curious given that you're showing an SG and A and D and A not going up as much if at all during the planned period, is there something else that's kind of going into the cost structure that would keep your incrementals below your gross? Because it seems like you might be very conservative in your margins for 2022.
It's predominantly R and D, if you look at it. Thank you. Thank you.
Now you can over to Adam, please. Thank you.
Hi.
Thank you. Adam Wyden with ADW Capital.
So I
have a question about capital allocation. When you look at the predictability of the business and the consistency of the cash flow, the optimal capital structure is not net debt free. Your buyback effectively approximates industrial free cash flow over the period during an elevated CapEx period. Given that your financing costs are effectively 0, wouldn't it make sense to crank the buyback a little bit harder into free cash flow rising exponentially 2022 and onward?
You're the typical investor who always wants more. I think what we declared this morning in terms of raising the dividend payout ratio from roughly, I think it is 24% today to 30,000,000 and a 1,500,000,000 dollars buyback over a full year period, which gives us the flexibility to potentially accelerate that if we so desire should please you all. In terms of the capital expenditure of the capital structure, we do look at our gross debt as well, which is $1,800,000,000 That's roughly 1 to 1 on EBITDA multiple and that's an area where we're quite comfortable. So thank you.
Adam, please.
Hi. Just two questions. Sorry, Adam Jonas, Morgan Stanley. Hi. So Louis on the last call I asked you if a silent Ferrari could be a Ferrari and your response after I think some pause was it was a valid question.
But then I think gave an answer, very eloquent answer as to such a thing could not be done short term or else it would be chaos. Anything is possible long term. I just want to confirm that Ferrari is currently not undergoing any costs in this plan related to the development of a pure EV? And then I have a follow-up.
I think that's a fair characterization. However, if you listen carefully to what Michael was saying, sound is key and we're obviously working on sound too. So that's it.
Okay. And my follow-up is on the FUV, just to confirm that the plan Purosangue. Sorry, Purosangue, excuse me, beautiful name, that the plan includes all costs and no revenue from that project. I didn't know if you could quantify broadly order of magnitude how much those costs because you are in the plan because you do outline some DNA creep and R and D, but I didn't know if you could isolate how much that is a weight before we can start to get some of the benefit beyond 2022?
I can assure you that all the costs and investments are in the plan. We've said that the model will be shipped initially at the end of the plan period. So, you really get the benefit in the plans ahead, but the costs are there, rest assured.
To Giulio, please.
Hello. Giulio Pesciatore from HSBC. So first question would be how should we think about pricing for the GT cars? Because if we think about your lineup at the models, the average price for GT cars is below the 1 of Sport cars. So what you're working on at the moment, would that be able to be priced at a similar level to the Sport?
Or how should we think about price accretion as you expand into the GT segment?
Well, I can start by saying that as we bring in new models, it gives us the opportunity to notch up the price on the replacement models or the new models. We have a pretty strict pricing policy, one that we don't necessarily want to disclose with all due respect. I don't know if you want to add anything, Enrico.
I would only add to Louis' consideration that our clients are willing to buy the additional technology we put in our car, both on GT and Sports.
And the second one, historically the way you have given guidance was meant to be read as the minimum achievable target. Should this new guidance be read out in the same light or the new management just chosen to take a different style?
I think the target is the target. Thank you.
Thank you.
Please go ahead and next. Thank you.
Thank you. It's Fei Teng from Berenberg. First question is just a clarification on the EBITDA guidance. You had a negative €200,000,000 effect from FX and other. Just wondering if you can give the details of what the moving parts are within that number and whether it's more front end or back end loaded?
Well, the FX impact is mainly coming from the dollar exposure and that account for most of the $200,000,000 that you have there. And the assumption is euro dollar exchange rate at 1.2
So my second question is on the Icona vehicles. I'm wondering if you can give us a sense of what the incremental development spending is on this particular model series relative to, say, the LaFerrari, the special edition cars there?
I'm not sure we're willing to disclose that number. Sorry.
And within the 5 year plan, within the EBITDA target, what's your assumption regarding the capital intensity of Formula 1? Could you repeat? I couldn't hear you. What's your assumption around spending in Formula 1 as part of the 2022 earnings target?
We've assumed that we would stay in Formula 1 and that we would be at breakeven.
Thank you.
Please go ahead with Martino. Thank you.
Martino D'Ambrogi, Equita. On the Formula 1, you just answered. Now it's basically you are not willing to discuss the exact P and L contribution today. But are you assuming breakeven from current loss making contribution, I suppose, with the same rules, but or something will change for sure?
It's as I mentioned in my opening remarks, it's the big unknown that affects our plan for 2021 and 2022. It affects the whole P and L from revenues down. So we've taken the most conservative assumptions we could particularly in terms of revenues when you factor in budget caps and Liberty's objectives of reducing payments to the teams and particularly to the leading teams. However, I think from a financial and cash flow perspective, the key was to have a breakeven assumption. So that's what we did.
Okay. And I may follow-up on the non car and spare parts business that in your assumption is basically flat. Just to be clear for me, it's an opportunity that can be exploited during the business plan or is something which is not a priority, so it remains as it is maybe after the business plan will be pushed.
It's clearly a priority for me and the team and I would very much hope that it would start kicking in by the end of that plan period. So yes, it is an upside that is hard to quantify today.
Thank you. Last on the Uroshanue, if I remember correctly, you had or in previous calls, it was planned to launch in 2020 the new family. Now it seems to be more of 2022. Is there any specific reason for the delay because other players are getting a lot of volumes from new SUV, let me. I know it's a totally different product.
That's exactly the point.
We're not following what's out there. That's why we want to call it Peru Sanguay. And the team and I came to the conclusion that we had to get it perfect and to give us a bit more breathing time to achieve our ambitions in terms of that model, which as I think I mentioned and others have mentioned will be an extraordinary vehicle with all sorts of aspects to it and characteristics that have never been seen before. So we just need a bit more time.
Thank you. We are ready for the next question.
Thank you. Stephen Reitman from Societe Generale in London. I have two questions please. You mentioned now that you also had to do I think first thing a V6 engine which suggests from remarks of your previous Chairman that you would at some stage reenter the Dino segment. Could you make some remarks about that within the context of the plan?
And secondly, within your assumptions, you haven't given, as you mentioned, a volume target for 2022, but could you say something that you mentioned also that the geography there's not a big change in the geographical spread. So does that mean that your expectations that your sales in China are not going to increase substantially from the current level within the quarter by 2022? Thank you.
Yes, I'm aware that there's been considerable discussion and speculation on the Dino. I can safely say that the V6 engine has nothing to do with the Dino. So it will be a completely different model. The Dino is not in our plans. With regard to volumes, I'm afraid we're not going to disclose those volumes.
But your point about the Gran Turismo which eventually will be driven in part by the Purosangue comes at the end of the plan. And it is our sense that the Purosangue will be very much the model that will appeal most to our Chinese customers. So you'll see that. You'll see hopefully a shift in our geographic mix beyond this current plan. It all sort of fits quite nicely.
Now please hand over to Dureka.
Hi. I am Dureka Karaswadeau from the
Canada Pension Plan. Maybe just two questions for me. There were expectations of volume targets in 2022. So perhaps I just want to ask the question again. Are you sure that you don't want to comment on volume targets by 2020 or 2022?
And my second question is, if you can perhaps confirm, I'm still a bit confused on the Purefangue. Would it be right to say that it is a net negative contributor to the 2022 numbers?
Sorry, I missed that. What's the negative?
With respect to the Purosangue, would it be correct to assume that is the net negative contributor to the 2022 guidance?
Well,
we were quite sure when we were discussing this yesterday that we would get a million questions on volumes. So the answer is no, we're not going to give volume. But I think it's important that you should all realize that we're privileging revenue over volume. And I think in the end of the day, revenue is more important than volume. As for your assumption that the Porosangue is a drag because it's got its costs in this plan that the benefits coming into the following plan, I think that's a fair characterization.
We can go on with the next question please.
Great. Thank you, Jamie Albertine,
Can you help us delineate
on the F1 side? You mentioned how wide ranging sort of the views are about the next phase of F1. Can you maybe give us a little bit more granularity in terms of what people's and your competitors hold up is at this time and what we could expect in terms of what we should watch for in terms of potential progress there in the coming year or so?
I can't really give you any granularity other than the fact that there are obvious conflicts of interest. Liberty wants to make more money. The teams want to make more money. Some of them clearly are on the edge. And at the same time, we all want to retain F1 at the pinnacle of motorsport and render it as competitive and technologically advanced as possible.
How all those blend in is a bit difficult to perceive at this stage. I'm hopeful that we will find some consensus. Just saying at this moment, the way to get there, there's no consensus, I would say whatsoever.
Understood. And as a follow-up on the technical side, if we can talk a little bit about and alluded to the V6 and you've got a 8 cylinder turbocharged now in the 488. Is the hybridization a replacement for turbocharging or more of an enhancement as you see it for turbocharging as you sort of think about downsizing power plants?
It's an enhancement. It's not a substitution of Togo Technologies. It's an enabler for us.
Understood. Thank you so much.
Thank you. We can move on to Max.
Thank you. Max Warburton from Bernstein. Could I just ask for some details on 2 products? Enrico, I think you actually just announced an important new product in your presentation and no one has picked up on it, this high end mid engine car. Can you help us think about this?
Is this Aventador rival? Is it sort of $400,000 price point? Can we do Aventador type volumes on that product? And when does it launch? You said soon.
What does soon mean? And then the second question is on the Pura Senge. I love the way us English speakers are pretending we could pronounce that word already. But on this new 4 door car, when you say it comes at the end of the plan, I know you don't want to give us volume numbers. Could you give us a feel in 2022, what percentage of a full year of volume would be achieved in 2022?
If 2023 is 100%, what is 2022,
please? Well, on the first point, you currently got the message, we will come with the new models in our product range. I would forget competitors name. We are going to come with our own way that as Mr. Leiter explained, Mikael explained, is going to be a car with a performance of a supercar, which means that this car will have a higher performance versus LaFerrari, which is
the top performing car in
the market. The development is well advanced. The launch day or month is not yet something we can share.
We can now move to the next question.
I think as answer to the second question, I think it's roughly 20% to 25%.
Hi, it's Michael at BlackRock. I can't pronounce that word either, that prune is saj. But I'm thoroughly confused. Is it an SUV? Is it a saloon?
Is it a big GT? I mean, what is it?
It's one that you've never seen before, so don't try to give it acronyms. You just have to be patient. The name itself should give you some confidence as to what this thing will be capable of.
If we can go in the front to Monica, please.
Thank you. Malika Bazzio from Banca EME. I've seen that the Palena is factoring the ForEx impact, but I remember that Ferrari was trying to neutralize the ForEx impact. I was wondering if you can give us some highlights on the strategy ahead for the ForEx and especially toward the dealers? And the second question is, I know that you are not going to disclose volumes or exact number for the pricing, but you have room for a significant price increase.
In the past, I remember that consensus was positioning us for a +4 percent price increase on average. Can we stand on this level or maybe it's more likely something higher? Thank you very much.
Thank you. The currency you're looking at is from 'seventeen to 'twenty two. 2018 forward, there's no currency impact because we've taken the whole currency. We kept it constant. There's been a lot of debate on currency and currency exposures.
And I guess you're also referring to one potential solution which was discussed at some time which was the euro pricing. After considerable work by the entire team here, we came to the joint conclusion, the euro pricing didn't make any sense because effectively it was bad for our customers, potentially bad for our distributors and ultimately bad for us and affected market dynamics in a way that we did not necessarily want to have. I think some have read that the fact that we've walked away from euro pricing somehow sends a signal that we have less pricing power than we in fact do. I never could jump from one conclusion to the other. We still have considerable pricing power.
We will address currency both from a hedging perspective internally, but also when necessary from a pricing perspective. The other interesting thing that always I find fascinating in currency is that people only look at the one way bad way of currency shifts. They sometimes come our way too. So I wouldn't forget that. I think I addressed your questions.
Thank you.
We can now move to Alberto.
Hi, Alberto Villa from Intermonte. Two questions from my side. The first one is on the effect of emissions. So you touched base on this point during the presentation. Can you elaborate a little bit more about how you're preparing for the 10,000 units limit and how eventually it would affect the company.
And the second one is about trade war. There is a lot of discussion about eventually having duties put on cars exported in North America. Can you share with us what would eventually be the impact for Ferrari or how the company would eventually deal with this kind of future events? Thank you.
So regarding the 10,000 units, the main impact will be on the U. S. Market where they see Grenierge Gessler with the EPAR and we have also regard this for emissions and we have the food consumptions where we have the CAFE from the Nitsa. We consider this all in our plans. So this is like we do today because sometimes you have to buy credits and you can handle this and you can manage this by this.
Anyway, we expect a very important and very positive impact by the hybridization of our cars. So also the fleet emissions in the United States will be go down even if we don't have any more specific fuel targets in the United States. So we think we are well prepared on this side.
Let's now go back to Adam and then Alan. Thank you.
Sorry, there was a question on tariffs. One would hope that rationality would prevail and particularly a tariff war between Europe and U. S. Would be quite dramatic. I think it's currently off the table.
But having said that, should it arise, and I'm doubtful that it will, I believe that we would be able to pass on most if not all the hits on tariffs to our customers.
Hi. So at the 2015 IPO roadshow, Sergio talked a little bit about technology and the ability to license that technology and create a commercial kind of revenue stream around that. And you guys are already making engines for Maserati and there's some talk as to whether Alfa Romeo is using some design and engineering and platforms and they're going electric. Is the commercial opportunity in terms of sharing that technology with Alfa Romeo and Maserati, is that in the plan? And where do you see that kind of migrating over the future?
What is in the plan is, as you know, we have a contract with Maserati. We view Maserati as a very important customer and I think they appreciate us as a supplier. We have a contract. We'll honor that contract. Longer term as technologies change with regard to hybridization etcetera and obviously there's an economic impact there.
We'll see where we go. But the relationship with Maserati has been and will always be very important to us.
Please hand over to Helen. Thank you.
Hi, Helen Brand from UBS. I've got one quantitative question and one more qualitative question. First on the quantitative, can you just confirm in terms of the trajectory of product launches because it looks like the growth after 2020 gets significantly higher in terms of revenue than it does between 2018 well, 2019 2020 combined. So can you just maybe talk a little bit about the trajectory of the product launches we should be expecting? And then second on the qualitative side, are you worried about introducing a V6 in terms of brand equity?
So how do you think about the target customer for the V six? And perhaps secondly, a little bit on the GT side. So what type of new customers do you want to be attracting on the GT side?
Maybe starting from the last one and then coming back. As I was mentioning, we already did an interesting exercise with the California. So we plan to go on, on the same platform offering a new product that is delivering high performance, but a great comfort on board and a great versatility. We should be able to attract another portion of people that are still attracted by a sports car, but reluctant to buy because of the reason I was mentioning. Few words on the V6.
V6, we don't think it's going to dilute our brand. V6 is already used in Formula 1, V6 is in the history of the company. And as Mikael was saying, the V6 we are going to develop will be a breakthrough in terms of technology. So it will add to our brand, I think.
And I think the last one was in terms of the trajectory of the models. And you're obviously trying to back out the volumes on each model. Yes, you are. But basically what you will find difficulty because we won't disclose that is obviously some models will come off production and others will take on. So it's a bit once you've got 15 models to factor that in.
But rest assured that they're all growing as they come online.
Can you kindly wait for the microphone please?
I guess just a follow-up, why is the product launches weighted towards the end of the plan rather than even perhaps more throughout the plan?
Simply because some of the more exciting models are coming slightly later in the plan. And obviously, the Burrosanxue has an impact because it's coming in 2022.
We can now hand over to Antoine, please.
Yes. Hi, it's Antoine Belge from HSBC. I've got a follow-up on China. Last week, I attended an analyst trip organized by LVMH in China, and they already generate 35% of the sales with the Chinese, and they told us that they barely scratched the surface. So how dependent is your growth in China from the Furosangue?
Are there any limiting factors to your growth in China? I remember that you changed your car dealer in Hong Kong. So yes, a bit surprising not to see already in the plan some kind of superior growth coming from that important luxury market.
We have been working hard to redefine our footprint. We have new partners that are able to represent us in a proper way. That's the first point. So yes, we have been working to have a right representation like in Hong Kong you were mentioning. As far as the volume, I think as it has been mentioned currently we are not projecting this plan a difference of mix of countries.
Even though we recognize there is an adapt opportunities in China to take especially with the new models.
And I think I said in my remarks that China clearly remains a very important market. The Chinese love Ferrari, but they're not necessarily drivers and do not necessarily want high performing supercars. So as I said, part of our plan is to ensure that we have a range of models that attracts the Chinese consumer. Our businesses in Hong Kong is very strong. In China, there's also a thing called tariffs which we have to address.
And I'm confident that once we have the appropriate range, we'll be able to grow our business in that part of the world.
We are now ready for the next question please.
Hi, this is Jerry Rivera from Fidelity. Just a follow-up on the Purosangue. Maybe thinking about how volumes could develop beyond the planned period. If you look at Porsche, Lamborghini and Aston, some of those players are seeing the 4 wheel drive 4 seater category becoming 50% plus of the total volume mix. Do you envision the Purosangue reaching that scale as a proportion of the total volume mix?
Again, it's more relevant beyond the plan period, but
Yes, it's definitely beyond the plan period. I'm not sure what the mix will be frankly and it's not for us to say so at this time other than the fact that we will have a pretty spectacular model. It will be expensive, rest assured. So that may be a hamper on volumes. And frankly, we don't see without in all humility, we don't see the current SUVs out there as necessarily the competitive benchmark.
We can now move to the next question please.
Hi, I'm Arif Kareem from Ensemble Capital. I just wanted one clarification which is on CapEx. How much of that in terms of mix is R and D versus sort of PP and E? And my second question is more around pricing philosophy. You've talked about and we obviously believe that there's plenty of pricing power here.
But in terms of exercising that power, what is your philosophy going forward relative to historical exercise of that pricing power? Is it likely to be I mean, to me, it sounds like it's going to be more aggressive and that can be fine if you're leaving a lot of value for the customer on the table and sort of redistributing that value to some degree over time. So just broad thoughts on pricing power over the next not pricing power, but pricing philosophy over the next few years relative to history? Thanks.
Do you want to address the pricing for us for you?
I think as we mentioned that we have been always in our history and we plan to do the same, very good in bringing new product in the market with a price positioning that was consistent versus the additional technology we're bringing in the market. And we have been always, at least so far, able to have clients buying in this concept. I think the next plan is based on the same concept. We have a huge and important and exciting innovation plan as far as the technology is concerned. As I was saying, both on the Sport, but also on the Gran Turismo, which means that every single model we introduce in the future, the 15 models we were just talking about are going to bring in the market a relevant technological innovation that we believe is going to be recognized by the market and by the client.
On your question as to the split of PP and E and capitalized R and D over the planned period, you should think of fifty-fifty split between the 2.
We can now move to the next question please.
Sam Winthrop from Deepfield. Thanks for taking my question. You talked about how the number of new product launches over the period is sort of unprecedented. Can you talk about how you work with clients to assess demand for these new products?
Well,
I think the answer is important because as you currently mentioned, we have a lot of new products coming in the market. I think to answer your question, there are 2 elements to consider. The first one is that every single car will have a clear different concept and is designed for different use or for different profile of customer. Translated, it means that the mission of every single model is different in terms of customer profile and whenever a client is getting in the family is different in terms of potential use, which means again translated that every car can attack a different segment of consumer and large in the family, but once a client is in the family, there's no reason why you shouldn't buy more than 1. So for this reason and this is the first we expect to have an offer that should be clear in the eyes of the client.
We are not going to have a similar product with different engine. It's going to be a completely different product positioning. And the second, which is I think more important also more important is that since sometimes we are keeping our network and our team in order to manage this additional level of complexity, which means that we are now developing new more efficient way to introduce a product in the market that should help us to manage every single launch with the right focus.
We are now ready to take our last question for today.
Thanks for taking my question. This is Jennifer Sun from Melvin Capital. Could you talk about the average tax rate being assumed for your 2022 EPS expectation? And with respect to the Patent Box, should we expect the tax rate in 2020 to go up? Or does it have a reasonable chance of being renewed?
Thank you.
Well, the Patent Box is actually provided by Italian law to stay in from 20 15 to 2019, so for 5 years period. This of course offers significant opportunity of reduction of the tax rate particularly visible this year, but we expect also in 2019. From then on, we have assumed a normalized tax rate that should be lower compared to what you have seen in 2017,
slightly
low.
Well, thank you very much everyone for attending Capital Markets Day. I do want to thank everyone who organized this, particularly Nicolas, Stefano and all their teams who have hosted us in such a wonderful way and everybody within the family who worked so hard on putting all this Capital Markets Day event together for you. So thank you very much.
We kindly ask you to go back to the lunch where transfer has been organized to bring you to the museum where lunch is served. Thank you.
This will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.