The Prancing Horse hits a hurdle: What is Happening to Scuderia Ferrari?
If you were to ask a child their favourite car, there is a very high chance they will say Ferrari. The prancing horse is an icon in the automobile world not just because of its beautiful cars but also, its heritage in motorsports. Ferrari has been performing strongly off the race tracks as well, with a 31% YoY growth in Q4 profits and consistent growth in revenue and earnings throughout the years.
However, for the past 6 years, despite podium finishes, Ferrari has failed to mount a consistent title challenge in Formula One. So, what is happening to the legendary Scuderia and why is it important to the company? To understand the problems and their importance, we must first delve deeper into history to understand what led to Ferrari becoming an icon.
The History
The origins of the automobile giant date back to 1939, when a man named Enzo Ferrari started a racing team named Scuderia Ferrari in a small town in Modena, Italy. Scuderia Ferrari has been competing in Formula One since the inaugural season back in 1950, and is the only team to have competed in every season since then. Henry Ford II had realized Ferrari’s potential too and opened negotiations to buy Ferrari in 1963 to strengthen Ford’s motorsports division. However, Enzo Ferrari refused to sell because he didn’t want to lose control over his racing team. He then decided to sell a majority stake of the company to Fiat instead.
The Scuderia holds such a position of importance on the Formula One grid that it receives a controversial “historical” bonus simply for competing in the sport. Regardless of its performance in any given season. And even though fans argue against this bonus, Ferrari’s competition on the grid; Williams F1 Team Principal actually supports the bonus as he feels Ferrari brings “a certain level of heritage and recognition to the sport”.
Ferrari hasn’t simply competed; it has won 16 Constructor titles (awarded to the constructor with the most points) and 15 Drivers titles (awarded to the driver with the most points), making it one of the most successful teams in Formula One history. Yet despite this storied past, the Scuderia has struggled to recapture its former dominance in the modern F1 era.
Why is Motorsports important to Ferrari as a company?
Scuderia Ferrari has been valued by Forbes at $1,350 million after winning 16 constructors titles and 15 drivers titles. Ever since the company’s inception, the company’s policy was clear: “Race on Sunday and sell cars on Monday”. For Ferrari, the road cars existed to fund the racing and not the other way around. Success on the track in the past has helped Ferrari build up its image and has made people associate it with victory. In the present day motorsports are important to the company the company because-
1) Brand Image: Ferrari’s positions itself in the luxury hypercar segment and caters to a very selective consumer base. Maintaining brand image and exclusivity is so important that the company even follows a policy of “controlled growth”, bylimiting production volumes and making certain models available only to loyal, repeat customers. Racing defines Ferrari’s brand image and winning is integral to its identity.
2) Research and Development: Development of the F1 car as per regulations helps in development of new tech which is then implemented in the road cars. This helps Ferrari gain a huge competitive edge in terms of road car performance over its competitors that aren’t in motorsports. It also allows Ferrari to leverage its F1 R&D costs as it capitalizes the part of the costs which benefits its road cars. This was seen in the latest Ferrari SF90, which uses tricks from the F1 Car’s hybrid engine for energy recovery. The hybrid energy focused 2026 F1 regulations and Ferrari’s vision to push towards sustainable engines complement each other, and F1 R&D could play a pivotal role in giving Ferrari a performance advantage in the expanding hybrid-hypercar market.
3) Revenue: Even financially, the company derives benefits from motorsports. It earns almost 10% of its revenues directly from “Sponsorships and Branding”. This includes its prize money from all motorsports and sponsorship agreements with the Scuderia. It also earns a portion of its revenue by supplying engines to other Formula One teams like Haas.
Besides the direct revenue benefits, many Formula One teams calculate the intangible benefit they get from television exposure by calculating the “Advertising Value Equivalent” i.e. how much they would’ve had to pay for a similar amount of advertising through traditional means.
What are the problems with the Scuderia Ferrari F1 Team?
Ferrari has been struggling in recent years. Ferrari has gone from being one of the most dominant teams on the grid in the Michael Schumacher Era (2000-2004), to not even putting up a fight for the constructor’s championship in 2025. Its performance was exceptionally bad in the 2025 season, with both drivers consistently finishing below 5th position and battling in the midfield on a good day. The team is performing so comically bad that Lewis Hamilton, a 7 Time world champion didn’t finish on the podium in a single full points race throughout the season. Some of the many issues surrounding the team include:
1) Technical Issues: The car has been extremely unpredictable this season according to the drivers. It seriously lacks pace and doesn’t even seriously challenge the title holders McLaren. To add to the woes of the fans, there is news on the paddock that Ferrari is seriously lagging behind on its 2026 car development, which is a huge lost opportunity, as 2026 will see a completely new set of car building regulations with a shift to a more environmentally friendly 50% Electric + 50% Combustion engine, which would’ve levelled the playing field and given Ferrari a chance to bounce back and potentially reclaim its position as a contender for the title.
2) Communication and Coordination Issues: The F1 team has become a meme due to its lack of coordination and horrible communication. Some of the highlights of Ferrari’s radios over the years include:
· “Stay out, stay out”: In Monaco 2022, Charles Leclerc was calling into the pits to change his tyres, and after he entered the pits his race engineer told him to stay out. This careless strategy error cost Leclerc his chance at winning his home grand prix.
· “We are checking”: This is the most commonly used phrase by the Ferrari mechanics on the radio. This is the answer given by Ferrari engineers to the most obvious, basic questions by the driver.
These are examples of the horrible communication and errors in judgement by the Ferrari garage. Delays in communication of critical information are unacceptable in a sport where 1st and 5th position are separated by a second.
3) Driver wellbeing: Ferrari is not just a racing team, it’s a religion in Italy and has a cult following throughout the world. When the team disappoints, blame is often put on the drivers. This creates pressure on the drivers and causes them to struggle mentally. Hamilton was extremely demotivated with no hopes for a race win in Post-Race Interview throughout the 2025 season. To further add to this, politics runs rampant in the company and the leadership lacks stability.
What can be done to improve the situation?
For technical problems, Ferrari has already started taking action. It has started poaching key personnel from other teams to help it speed up development for 2026. It has also increased capex by almost 14% from 867 million pounds in 2023 to 987 million pounds in 2024 aimed towards developing EV manufacturing and R&D which will help both its road cars division and the Scuderia.
For the other issues my recommendations would be as follows:
1) Ensure faster and accurate communication and have clear lines of communication.
2) Ensure stable leadership and create a conducive environment where employees can communicate freely without worrying about politics.
3) Manage the expectations of the Tifosi and don’t overpromise and underdeliver.
4) Help the drivers manage pressure by creating a supportive environment within the team.
Citations
1. Rogelberg, S. (2024, February 1). Ferrari stock rockets, adding $10 billion on solid earnings—and the news that Lewis Hamilton is joining its top racing team. Yahoo Finance. https://finance.yahoo.com/news/ferrari-stock-rockets-adding-10-172355229.html
2. Sylt, C. (2019, April 26). REVEALED: The $285 million cost of winning the F1 championship. Forbes. https://www.forbes.com/sites/csylt/2019/04/26/revealed-the-285-million-cost-of-winning-the-f1-championship
3. Jackson, K. (2024, February 2). Lewis Hamilton worth revealed after Ferrari share price skyrockets. The Independent. https://www.independent.co.uk/f1/lewis-hamilton-net-worth-ferrari-mercedes-f1-b2489366.html
4. Noble, J. (2025, August 30). A new Brawn GP? What Ferrari’s expecting from F1 2026. The Race. https://www.the-race.com/formula-1/a-new-brawn-gp-what-ferraris-expecting-from-f1-2026