Good day and thank you for standing by. Welcome to the Ferrari Q3 Results 2024 Conference Call and Webcast. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. (Operator Instructions) Please note that today's conference is being recorded. I would now like to turn the conference over to your speaker, Nicoletta Russo, Head of Investor Relations. Please go ahead.
Thank you, Olivia Ph, and welcome to everyone who is joining us. Today, we plan to cover the Group's operating results of the third quarter of 2024 and the duration of the call is expected to be around 60 minutes. Today's call will be hosted by the Group CEO, Mr. Benedetto Vigna; and Group CFO, Mr. Antonio Picca Piccon. All relevant materials are available in the Investors section of the Ferrari Corporate website. And at the end of the presentation, we will be available to answer your questions. Before we begin, let me remind you that any forward-looking statements we might make during today's call are subject to the risks and uncertainties mentioned in the Safe Harbor statement included on Page 2 of today's presentation, and the call will be governed by this language. With that said, I'd like to turn the call over to Benedetto.
Grazie, Nicoletta, and thank you, everyone, for joining us today. Before we begin, I would like to extend my gratitude to the incredible team at Ferrari for their hard work and dedication, to all our client and collectors for their ongoing trust in our brand, and to all our partners, suppliers, and dealers for the strong collaborations we have continued to build together. The stability of the Ferrari ecosystem resides on the spirit of cooperation, shared passion, and sense of belonging. Grazie a tutti, thanks to all. We are continuing to execute our business plan in line with our trajectory, and Q3 was once again a quarter rich in achievements and strong financial results. Let's begin with a brief summary of these financial results, and then Antonio will provide all other details. Revenues, EUR1.6 billion, up 7% versus the previous year. A double-digit growth in profitability, with EBIT at approximately EUR470 million and EBIT margin of 28.4% sustained by the strength of the product mix and the continuing solid trend of personalization. The remarkable net profit of EUR375 million and industrial free cash flow generation of more than EUR360 million. Such figures continue to demonstrate strong execution and sustained growth. These results were accompanied by a continuous brand momentum. The order book -- our order book has evolved as expected with the new 12Cilindri Coupe and Spider driving the order intake, providing us with a remarkable rolling visibility well into 2026. The same positive sentiment has been confirmed by many of our dealers who attended the dealer Annual Meeting a couple of weeks ago here in Maranello in our new e-building. All our 170 plus dealers from all over the world came to this important event. And immediately after it, during the dinner, they reported very favorable feedback across the board from recent product unveiling to customer engagement, from a clear and consistent product and industrial strategy to increased openness and transparency, and of course, unique brand experiences. In this same location, in the e-building, during those days, we arranged the bespoke previews of the new supercars, the F80 for our collectors before displaying it to our broader racing community at Finali Mondiali. This model opens a new chapter in the history of our legendary supercars. The F80 will be produced in a limited run of just 799 examples, which have already been fully allocated to our collectors. It joins the iconic 288 GTO launched 40 years ago in 1984, F40, F50, Enzo and LaFerrari and showcasing the very pinnacle of technology and performance. The F80 is the most powerful road car ever to come out of the factory's gate with a combined maximum power of 1,200 horsepower. It has become the new benchmark for innovation and engineering excellence from the latest generation V6 hybrid powertrain with the introduction of V turbo the four-wheel driving capability enabled by the electric front axle from the ultra-light carbon fiber chassis to the extreme aerodynamic solutions. And here, I would like to praise the entire team here in Ferrari for this incredible masterpiece, marking the eighth model unveiled out of the 15 we promised at 2022 Capital Market Day.
So what is most striking about F80? Firstly, it symbolizes our technological evolution, the significant transfer of technology from our racing world to the road. Today, both our Formula 1 and our 499P hypercars have Turbo V6 ICE engines with a hybrid system. So (inaudible) choice for us to transfer this powerful and advanced architecture into our newly born F80. Secondly, we are making a clear technology statement. More specifically, I refer to the following three key components of our F80, all developed and manufactured in our newly inaugurated building. One, the electric motors, the first to be developed, tested, and manufactured entirely by us. Two, high voltage battery module conceived for very high power density and adopting a patented carbon fiber housing system to save weight. And three, the front axle, designed for high efficiency and incorporating two electric motors, an inverter using silicon carbide transistor and integrated advanced cooling system. What I just mentioned at the above underlines the progress that we are making in our electrification journey. And our willingness to internalize core components. After the first hybrid F1 car of 2009, LaFerrari 2013, and our six hybrid models, F80 represents a key milestone in our electrification journey. And now after our amazingly beautiful and high-performance Ferrari, let's switch gears to client activities. Q3 has been also a quarter reaching many unique experiences such as our presence in Pebble Beach, where the T1 hosted many classic and new Ferraris, the Cavalcade Classiche which attracted over 60 historic Ferraris and their owners to Italy, Friuli-Venezia Giulia region and Slovenia, and the legacy tour dedicated to owners of the iconic 288 GTO and our first supercar. And the Finali Mondiali, which saw the participation of more than 35,000 motorsport enthusiasts, clients, deforces, sponsors, suppliers and employees with their friends and families. Each event -- each event has been a resounding success bringing together our community to celebrate the Ferrari legacy and extraordinary experiences that define our brand. These opportunities for our international community to gather offer a unique platform for enthusiasts to immerse themselves in the Ferrari experience. They foster connection and create unforgettable memories that resonate with the true essence of the prancing horse, a shared passion and a strong sense of belonging. And Finali Mondiali is a good launch pad to our racing and lifestyle world. So let's start with the racing world. September 1st is a date that we will always remember because for the first time in Ferrari's history, we secured the two victories in the two championship, WC and F1 in a single day as our victory in Austin came just a few hours after our win at the Italian Grand Prix with the Scuderia Ferrari HP. I was in Monza and I can tell you that you cannot describe those emotions. You can only leave them and you will never forget. In Formula 1, the recent victories and improvements in Austin and Mexico City have provided us with the boost we need to continue to fight in the last few races of the championship, always with the four wheels on the ground. The road -- the road till the end of Abu Dhabi is -- we will make all we can to fight till the very last lap. The recent racing and sportcar events have also been occasions to showcase our renewed lifestyle dimension. Among the many activities, let me highlight our last
collection shown during the Milan Fashion Week and that has been very, very well received. The strength of our brand is farther demonstrated by the record attendance at our museums. Two months, in Q3, both saw well above 100,000 visitors, and year- to-date, we already passed the record of attendees of last year. And lastly, I want to mention another very important achievement of this quarter. Actually, it's a quantum leap toward our carbon neutrality target for 2030. We have switched off our three generation plant here in Maranello and we managed to do this three months earlier than we had previously planned. This means we no longer use gas to produce electricity Maranello, replacing a significant proportion of our methane gas consumption with renewable energy sources. This will ensure us a 60% annual reduction in Scope 1 and Scope 2 CO2 emission compared to the 2021 base year. To conclude, we are conscious of the macro environment around us and we continue to monitor it very carefully. We are all fully committed to execute our strategy with a focus and determination, confident in our clients, our direction, and the opportunities that lie ahead of us and always keeping in mind the importance to be well grounded. And on this note, I hand over to Antonio to review the Q3 2024 financial results. Antonio?
Grazie, Benedetto, and good morning or afternoon to everyone joining us today. I start on Page 6 with a quick glance at the highlights of the third quarter. The quarter posted strong financial results aligned with our targets, once again affirming this year's main drivers, product mix, and personalizations. As previously communicated, volumes and mix also reflected our decisions to facilitate the company's transition to a new ERP. In this respect, I want to take this opportunity to extend my thanks to all the colleagues (inaudible) company with this transition. In summary, shipments were few units less than prior year, while revenues were up 7%, adjusted EBIT up 10% with a 28.4% margin. Adjusted EBITDA increased 7% with a 38.8% margin, and such economic results led to a strong industrial free cash flow generation of more than EUR360 million.
Thank you, Antonio. Olivia, we are now ready to open the Q&A session. Thank you.
Thank you. (Operator Instructions) Thank you. We are now going to proceed with our first question. And the questions come from the line of Thomas Besson from Kepler Cheuvreux, please ask your question. Hello, Thomas, your line is open. You may ask your question.
Sorry for that. It's Thomas. Thanks for taking my question. I'll have two, please. I'd like to start with the F80, can you give us an idea about the timeline for the first deliveries of this product, and over which time period or how many quarters you intend to deliver it given its substantial price point and likely contribution? That's my first question. And the second question, I'd like to come back on the mix gains in Q3. Could you discuss why it declined sequentially (inaudible) that much? Is it mainly due to sequentially lower Daytona shipments or is there something else that explain the relatively low mix gain, please? Thank you.
Thomas, I'll take the first one. The second, Antonio will be more specific. So F80, we start deliveries Q4 2025 and we will go ahead for two to three years. So that's about F80. And the number of cars we will ship is 799. The second one about the mix, Antonio will comment.
The sequential decline is due to the fact that the comparison with last year was based on the fact that both for Daytona and SP3 and mix impact and personalization last year was already high in Q3.
Okay. Thank you very much.
We are now going to proceed with our next question. The questions come from the line of John Murphy from Bank of America. Please ask your question.
All right. Good afternoon, everybody. Maybe just a question as you look at sort of the upcoming product launches. I mean, you've got the F80, which is very impressive, 12Cilindri. I would imagine a successor to the Icona, the Daytona, the Purosangue successor that will come in the next couple of years, and the EV hypercar, there's a lot at the high end here. It seems like it's very strong and will be well received. I mean, how do you think about positioning all this with your customers, and particularly the F80 as we kind of look at it sort of somewhere between the Iconas and the EV hypercar that's coming.
Well, John, the supercar is coming as the pinnacle of technology and performance. And as I said earlier, it represents an important step in our electrification journey, showing how Ferrari can manage key components for electric vehicles. With the F80, there are a couple of important messages. First, Ferrari is able to deliver exceptional performance both in the hybrid and ICE worlds. Second, our product roadmap ensures continuity between our past achievements and future plans. This blend of tradition and innovation is a unique strength of our company. Additionally, the F80 is helping us learn new manufacturing techniques that will benefit not only future electric cars but all our vehicles. This underscores the significance of the F80 in our roadmap.
Maybe just a thought: if you think about the EV hypercar or supercar, however you want to use the terminology, will it be positioned above the F80 or adjacent to it or below it as far as the price point...?
I understand your curiosity, John. However, as a luxury company, we value maintaining some secrecy about our future plans. We've already launched the F80 in Q3, so let's wait a bit before revealing more details. Stay tuned.
Okay, we love the product. Just one follow-up: there's a lot of focus right now on volume declines in the luxury market. With all these great products coming, could Ferrari operate with little-to-no volume growth, instead focusing on mix and scarcity to enhance profits and margins, staying true to its brand? There seems to be short-term concern about volume declines.
This is a great question. First, Ferrari operates on two key dimensions: luxury and technology. Second, we always prioritize the quality of revenues over quantity. Our business plan is designed to focus on quality rather than pushing top-line growth excessively. As always, we aim to prioritize the quality of our P&L.
Perfect. Thank you very much.
Thank you, John.
We are now going to proceed with our next question. And the questions come from the line of George Galliers from Goldman Sachs. Please ask your question.
Good afternoon, and thank you for taking my questions. First, regarding guidance, you've expressed increasing confidence in it. However, at the low end, the implied EBIT for Q4 would be about EUR400 million, lower than Q3. Could you walk us through the factors influencing Q4 relative to Q3? Second, on residual values, we've noticed that low-mileage 296 models are trading at lower values than older F8 Tributos with higher mileage. Why do you think this is happening? Are you reconsidering your pricing or powertrain strategy?
Regarding residual values, dynamics vary across countries. In the UK, the market is slightly softer, but this isn't the case elsewhere. Additionally, higher personalization levels by first buyers sometimes don't appeal to secondary buyers, impacting resale value. We monitor these trends closely.
On guidance, keep in mind that the "greater than" language allows for upward flexibility. In Q4, we plan higher Daytona SP3 deliveries than last year but slightly fewer than in previous quarters. Q4 will also see incremental OpEx related to racing and lifestyle activities, persistent inflation, and increased D&A from digital and lifestyle initiatives. These factors influence Q4 results even at the lower end of guidance.
Understood. Thank you.
Hi, good afternoon, everybody. I'm going to follow up on the implied 4Q guide, but for industrial free cash flow where your language says up to EUR950 million, which would imply if I use EUR950 million, a fourth quarter year-on-year decline of industrial free cash flow of about 36%. So, in addition to the factors you already mentioned driving EBIT for the fourth quarter, I didn’t – Antonio, could you comment on maybe your outlook for change of working capital or CapEx that might be driving that type of year-on-year decline in free cash flow? And I have a follow-up.
Thank you, Adam, for this question. I think it's important that we comment. The -- I think I said already in the past few quarters this year will be particularly strong in terms of capital expenditure. And I also said that the spending is more linear compared to what we were previously used to. And this is essentially because our expenditure for infrastructural development, including the e-building in the first part of the year and then the new painting shop from the second quarter on is going to have an impact. So this is biting into the cash flow for the full year. And the second element is obviously that in these conditions, I do not expect working capital to help generating significantly, while we obviously have higher taxes in consideration of the higher results that we expect to achieve. So hope this helps.
It does, Antonio. Thank you. And just a follow-up on SG&A increased two times faster than revenue this quarter. Again, you highlighted some of the reasons including the digital journey, ERP, integration, et cetera. I just -- any outlook on forward SG&A, how much farther this -- this temporary -- is this a temporary bulge in SG&A, which kind of reversed a multiyear decline in SG&A as a percentage of sales? How much longer that might continue? If you want to describe that in either dollar terms or percentage terms? Thanks.
No, there is an element, which is structural. The fact that with the current accounting principle, expenditure for digital infrastructure, particularly for software and when we use cloud is going to be expensed to the P&L directly. So this is a change that occurred a couple of years ago already. And as we grow in this respect with updating our digital infrastructure is going to be an addition to the -- to the SG&A spending that we are used to. Does it make sense?
Thanks, Antonio. Grazie.
Thank you.
Yes, good afternoon, and thanks for taking my question. The first one is on the F80. Are you going to collect advances on the supercar. And if yes, when do you expect to account them? My second question is on the personalization rate, which was 20% in the third quarter. I'm just curious what is the average price increase embedded in your personalization compared to the previous years? And the third question is on the shipments. Obviously, you can allocate the shipments as you wish. It's a deliberate strategy. In China, shipments decreased a lot. I know that you keep it below the 10%, but I'm just wondering if you can give us a flavor on the -- on the consumer spending or on the willingness -- willingness to buy in China as of now. If you can give us any color, it could be real helpful. Thank you.
Okay. So I will take the third one also because I was in China till a few hours ago, and Antonio will navigate you through two other questions. First of all, I'd like to -- I appreciate when you underline the deliberate adjective that we are using in our presentation, that's very, very important. And then coming specifically more to China, I think we have two different -- I met all the five owners of the dealership that we have in China. And I can tell you that, let's say, in China, they agree that the grow in China Ferrari must be done in the right way with the right pace in the sense that the strategy we highlighted of staying below 10% is the right one because they need to get acquainted with our brand. They do not see any particular negative signal -- signal because the order book is still around five, five quarters. And we have some areas that are a little bit stronger than others. I can tell you that in that region that is reported as Greater China, we have some different dynamics. One, it's going a little bit down, that is China. The other one is going up, that is Taiwan. So if you see, we have two different pattern over there. But clearly, I mean we are -- we see a traction of some model in China and we have to make sure that we provide to the Chinese market also the cars that are more fitting with their, let's say, the tax structure over there, because the 12 cylinders is not so well, it's a little bit -- not so cheap in China. It can cost up to three times what the client will pay in Europe.
Yes.
So this is about China. The first two, Antonio, F80?
Hi, Monica. Yes. So, on the F80, yes, we will collect advances on the F80, and this will start in 2025. On personalization, 20% in Q3, the average price increase of personalizations that we applied for this year was in line with the inflation that we expect.
Oh, okay. Thank you very much. Thank you, Benedeto, and thank you, Antonio.
You're welcome, Monica.
You're welcome.
Hey, guys, good morning. Thanks for taking our question. And I guess with Daytona moving into later part of its life cycle over the next few quarters, if I assume, you know, make some assumptions around how many units left to sell and generally spread those out now that the -- now that the units are starting to decelerate on a quarter-over-quarter basis, as we look out past the end of this year into the first half of next year, you'll have Daytona as a lower impact to the all important average selling price per car before you start to shift the F80 in the fourth quarter. I'm wondering how you would tell us to think that you guys will strategically approach fighting that sale -- that revenues per car compression in the first half of next year with those dynamics? And then, Benedetto, as you move more into electrification and the eventual full electric vehicle next year, how do you see the margins on an expanding portfolio of electrified cars influencing some of the historical targets you've given us like the 40% EBITDA margin you laid out at the 2026 Capital Markets Day.
Thank you, Michael. I'll take the second, the first one, Antonio. So, look, what we have been doing, what we said since the beginning, we intend and our plan, Call-IT electrification, hybridization, combustion engine is in-line with our -- with our plan. So you can -- you can use different adjective, but the -- what we are doing is in line with our plan. Yeah.
On the first one, you're right, the Daytona is going to decelerate until say the third quarter of next year, more or less at what we could expect as of now. In terms of development of mix though, it also depends on the [ph]range cars and the specials that we have. In Q3, you've seen a few initial units of the XX, SF90 XX starting. This will grow and the 12Cilindri will be added to the [ph]panel. So, overall, the mix will be less dependent on the Daytona and a bit more diversified in terms of the product offering.
Okay. Thanks a lot.
You're welcome.
Thank you.
Thank you.
Thank you. Thanks for taking the question. The first one is just a housekeeping one. The ERP volume impacts, just confirming that was pretty much done in Q3 and won't happen in Q4. And then did you guys disclose how many Daytonas were delivered in Q3? And then my second question is a follow-up to George's question on residual value. The one that comes up a lot is Purosangue. Obviously, it's probably too early to tell, but the fear here obviously is that it's a very different type of vehicle, may be used for different purposes, more kind of utility as opposed to what other Ferraris are used for. So that potentially could impact the residual value. I'm sure it's something you've considered. Just love to hear any thoughts you have on how you plan to maintain the residual value of Purosangue? Thank you.
Tom, thank you. I take one and three, and Antonio will take the second. So ERP transition has been concluded. So, there is no impact in Q4. And by the way, you may remember that in the previous call, Antonio said that we anticipated some shipments just to make sure that the transition would have been a little -- I mean, smoother. This was done always within the three months of Q3. When it comes to residual value, if I take the Purosangue, your observation is right that what we see is that some clients are using the Purosangue more than other cars. And I think that, this is fitting also with -- if you want the regional positioning of the car where to allow the people to enjoy more of the car together with more friends, with the family. So we do not have yet a lot of data coming from the client, but we expect to see a little bit more increased mileage of the Purosangue. On the other side, we see that the demand on the Purosangue is very, very strong, keeps very strong. And I can tell you that we receive more or less a daily request of -- of people from all over the world that want to have fun with our Purosangue. The second is...
Yeah, I think the only one remaining is the Daytona in Q3, few units less than the previous quarter. So around 70, but I mean, it's not really the specific number that matters. As I said, it all depends also on the mix and Q3 was particularly heavy in terms of the entry levels of our [ph]range cars.
Got it. Thank you.
You're welcome.
We are now going to proceed with our next question. And it comes from the line of Henning Cosman from Barclays. Please ask your question.
Good afternoon. Thank you very much. And perhaps the first one for Antonio. I'm still trying to reconcile Antonio that deliberately softer language with respect to the third quarter. And I think by (inaudible) it's been a pretty strong quarter, in terms of margin, in terms of mix. So I suppose I'm trying to get to what that implies for Q4. I mean, some of my colleagues have asked this already. But any more color you can give us on -- did it actually better than you expected or does this still determine a soft quarter in your opinion? I'm still a little bit confused if it ended up as weak as you thought it would be or if it actually turned out to be better.
If you -- if I can just on this one, then I don't know if you have other, but maybe we'll try and clean the table of the question. I started explaining already in Q2 that in terms of unit Q3 would have been softer -- softer. And this is because with ERP, you basically remain with your production and delivery stop for some weeks. So in order to ease the transition, we decided to sell some units more in the previous quarter and some less in Q3. Does it matter overall? Honestly, no. Obviously, we arrange also the mix in order to have the quarter sufficiently strong overall from a revenue and margin perspective. It was just flagged because if you look at the units, you see that those are lower than last year. But the units are in no -- in no way related to demand or whatever that is rather as common in few reports, okay. So, deliberate decision.
Okay. Thank you. And maybe one for Benedetto or perhaps both of you, but just because Benedetto said it in his opening remarks that you are executing in line with the trajectory. Now, I think it's the first time we have the opportunity to speak to you again after the F80 release, and at least compared to my expectations, the economics seem to be even stronger and obviously 2026 is going to be a year where you already take a lot of advantage of that vehicle. So, in the context of the targets in 2024, we already being in the bottom-end of the 2026 range. So can you just sort of put a bit more color around that again to what extent that is now in fact well ahead of the planned trajectory and in what way you would say this is still in line with [ph]factory or at what point you may be considering to update us around these things. Thank you.
Thank you. Thank you, Henning. It's a good question. Yes, for sure, let me say, when we did the Capital Market Day in June 2022, we were not expecting such high level of personalization, especially on something, the carbon -- the carbon finish that was -- that is basically highly appreciated by the client on one-side and also, let me say, a good personalization option for us to sell. So, in that sense, if you want, the bigger difference between what we planned and what we have seen is this one. Now, for us to give a longer-term -- a long-term view of where the company is heading in the next years, well, H2 next year, we will have the Capital Market Day and we will update all of you. But clearly, you hear me always thanking the team as well as the client because all this has been possible thanks to the personalization that the client have been willing to take from us.
Thank you, both.
Thank you, Henning.
We are now going to proceed with our next question. The questions come from the line of Stephen Reitman from Bernstein. Please ask your question.
Yes, good afternoon. Thank you very much. I have a question about the F80 and some like special cars you can do. And we heard that when on the 17th of October, we heard that demand for the F80 has been 3 times the level that you're actually going to be delivering. So very strong demand from your best customers and you can only satisfy a certain number of them. And we also know that with the e-factory, the idea is not to increase the absolute level of production capacity, but give you more flexibility. And it strikes me that the time scale that you're producing the F80 is going to be quite -- quite small in two- and-a-bit years maybe to deliver 799 cars. And does the e-building give you -- is it because the e-building gives you more flexibility to do these kind of complex cars? And what does that say about your ability to make other kind of vehicles like this in the future? My second question is about the battery warranty that you're going to be -- that you're introducing on the hybrids, plug-in hybrids obviously for the BEV as well. Can you update us on what the take-up has been on this so far? Has it already been rolled out? Thank you very much.
Thank you, Stephen. Benedetto. I will take the two points. So, the F80, as I said, is an important milestone for our electrification journey because for the first time in our history, we are going to do internal some component for all our electrification journey. As of today, if you look at our hybrid cars where we are buying from outside some components, while for F80, the key component, the axle, the motors as well as the battery will be done in our e-building. And the e-building, you said it well, is not meant to increase the capacity, but it is meant to increase the technology flexibility because we want to leave the ultimate choice of the motorization or the production to the client. So I think this is very, very important. This goes hand-in-hand with our strategy to push, to keep alive the three platform, the ICE, the hybrid and to add the electric, because you know, Stephen, for us, it's not electric transition, for us it's electric addition. We want to add also the electric platform, and the e-building is the tool that will allow us to master to give this flexibility and to leave the ultimate choice to our client. So this is about, let's say, the F80 and about our electrification journey. The second question was about the battery warranty. Well, we can tell in this way that the people are always worried about something they don't know, and the battery is something that usually people don't know yet with the same level of depth like any other component of the cars. We wanted and we -- with this warranty that we started in July, we want to give the peace of mind to the client. It's still a little bit too early to see how many people are activating it, but I can tell you that the people that are taking it and I was with people in China as well as people in US, in Pebble Beach or during last week trip, they all appreciated the fact that we give them the peace of mind and we take care of the battery. That's a key point because the battery start to become something that more and more clients start to know and I think this was a good -- a good -- they appreciate because they -- we listen to them. So this is good, but we can provide you more data in the next quarters.
Thank you.
Thank you.
Thank you, Stephen.
We are now going to proceed with our next question. The question comes from the line of Anthony Dick from ODDO BHF. Please ask your question.
Yes, hi, thanks for taking the questions. So, just some follow-ups on the shipments and the mix. And I know shipments is not the main criteria, but still with all the impacts in Q3, the ERP, the factories shutdowns in the summer, is it fair to assume that shipments should go up in Q4 or is Q3 though at the kind of new normal here? And then on the mix, you mentioned a lower mix on the [ph]series cars in Q3 with more entry models. How do you think about this for Q4? And also how do you think about Daytona SP3 deliveries in Q4? Should we still remain above the 60 unit run- rate or is that normalizing from next quarter? And then maybe just the last one on China. So obviously, the market is a bit different here. And I was just wondering if the current level of volumes for you is acceptable in China. Do you think supply-and-demand are well adjusted for you or could you see further downside in the quarters to come? Thank you.
I take the third one, Anthony, I'll leave the first and the second to Antonio. I believe that the level of volumes, it is acceptable, okay. And let's say, this is something that we've been discussing in detail with the dealers. So we don't see any strange pattern over there for the future.
So, on Q1, we expect Q4 -- Q4 unit -- yeah, Q4 units delivered to be higher than last year and most likely lower than the previous quarter of this year. And on Q4 Daytona deliveries, those will be lower, in-line with what we commented about in a previous answer given to one of your colleagues.
Thank you.
I think it will be anyway higher than last year for Daytona.
Yeah.
We are now going to proceed with our next question. And the questions come from the line of Michael Tyndall from HSBC. Please ask your question.
Yeah, hi, there. Thanks for taking my question. Just two if I may. The first one is just related to the F1 provision release. I just wonder if you can give us some context around the scale of that. Just trying to understand what it means for the underlying business. And then the second one is a little bit more longer-term. I'm guessing when you did the new ERP system, there was a cost benefit analysis. Can you talk a bit about the benefits? I mean, I'm wondering perhaps what it means for working capital and what's -- what's the positive side of this ERP story? Thanks.
I think the second one and the first for F1, Antonio, will give an answer. Well, I think, Michael, the -- we had a two ERP system in the company. And when you had to pass the data from production -- sorry, from sales to production, there was a little bit too much in the workload. So we will (inaudible) sure some efficiencies in the -- in SG&A because believe me, there were two systems not talking the same language. So we expect some efficiencies. And one of the reason why it took some weeks, several weeks to fix it is because really we were talking about two different generation of ERP with two different languages. And the second question -- sorry, the second question...
Yeah, the Formula 1 provisioning is around EUR10 million, the impact is not huge.
Okay, brilliant. Thank you very much.
You're welcome.
Thank you. We are now going to proceed with our last question. And the questions come from the line of Daniel Schwarz from Stifel. Please ask your question.
Thank you. Yes. Thank you very much for taking my question. One is on potential tariffs. If the US would impose a 20% import tariff and the client already ordered the car, I assume the 20% would be -- need to be fully paid by the customers. I guess that's difficult to say, but do you expect any impact on the order book? Maybe you're prepared to reallocate some products to other regions? And the second question is on R&D accounting. So, in Q3, amortization declined and capitalization increased with a positive impact on earnings. Based on your launch schedule, you expect this to reverse or to continue in coming quarters?
Maybe the first one is still difficult to say. It depends on the dimension of the tariff increase, whether there is an impact on the order book or no, and how this can be shared among the various parties in the -- in the game. On the capitalization -- capitalization rate increase, I think we commented already several times, this very much depends on the fact that expenses for innovation and Formula 1 are rather flattish during the year with some seasonality in specific quarters. And while most of our expenditure now is on development of new products, so it's quite normal that we have a capitalization rate that is going to grow. Does it help?
Yeah. Thank you.
Thank you.
Thank you. We will now end the question-and-answer session here. I will now hand back to Benedetto Vigna for closing remarks.
Thank you for your time today and also for all your questions. This strong Q3 result and the continuous progress in our journey provide us with further confidence for the development of the year and the futures. If you were here, I would invite you to take the cake of -- for Antonio birthday. On the cake, it's written greater than, and then I wish you a good afternoon, good morning and thanks again for your attention and all.
Thank you.
This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.