Will Ferrari values ever stop rising? (article)

The author doesn't know the history of the late 80's bubble. IMO two things started the incredible rise in prices, one of them being Enzo Ferrari's death. His passing was what really started prices going nuts, not the end of the bubble. The prices peaked around 1990-91. F40s were over a million, 250GTOs were 10 million+, 512BB were $250k, even lowly 308s were pushing $100k when they had been half that just a couple of years earlier.

But aside from Enzo, the real reason was the stock market crash in late 1987 where the Dow Jones lost almost 20% in one day. It was a huge correction that wiped out many, and rocked confidence in the market worldwide. People that still had money had to put it somewhere, and at that time stocks were not seen as a great option given the volatility. Gold and Silver had been out of favor for years as well, but there was art and collector cars. It is no coincidence that some of the highest auction prices ever for art also came from this time, you could argue that collector cars were viewed as art. Eventually the next recession (the recession that got Bill Clinton elected) caused the car fever to burn itself out. When the economy recovered it was real estate and tech stocks as the can't lose invesments, and we all know how that ended up.

IMO, the recent rise in prices for many cars has some similarities without the market crash (yet). While the brave or insiders can make money in the stock market, many see it as a rigged game and volumes these days seem to support many have exited entirely. They must be putting their money somewhere, rates of return for things like CDs are terrible and precious metals are fading, so I suppose some are buying vintage cars and driving up prices.

Logic and history would tell you that this is likely a bubble, it will eventually pop as investors move on to the next big thing or are priced out of the market which causes a plateau in prices, with the speculators then bailing chasing other easy money, and eventually returning to some level of normal.

Or the mechanism might be a correction and a return to credibility in the stock market, where P/E ratios become favorable and people sell the cars to re-invest in markets.

In hindsight I discount the economic meltdown of late 2008 which nearly cut the DJIA in half from the peak noted in the article. That period of time was so chaotic and scary, I'm not sure people were that worried about getting the Dino they always wanted. More like wondering if they would have any net worth tomorrow since it was exposed how our entire economy was seemingly a house of cards with blue-chip companies being exposed as shams.

 

I'm still waiting for the Testarossa to constantly crack over 125k.

What bubble ?

 

I'm heavily vested in tulip bulbs.
Any day now.. any day...

 

get a black one!

 

can't really go wrong with tulips. Everyone wants one. I foresee bulbs going for $250 per, maybe more.

 

History repeating itself is a good bet. people are creatures of habit

 

Tulip bulbs, now we're talkin' guys.
How about Beanie Babies and better yet, Bitcoin???

 

Tulip bulbs were worth more than houses. I wouldn't pay more than 10 cents.

Market Crashes: The Tulip and Bulb Craze | Investopedia

"Soon, prices were rising so fast and high that people were trading their land, life savings, and anything else they could liquidate to get more tulip bulbs."

PS my money's on the TR as the next big one.

Disclaimer: I love and own one.

 

When the correction comes it will be a big one. It will occur when there is a world economic event,not just by itself. Then these cars will be valued for what they are-an interesting old drive,not an investment. Then the cycle will start again.

 

Earthlover, (aka tundraphile), I disagree with you. Dave does know his macro econ. And while I agree with your general premise, I think you have over simplified it. There are two (at least) very different Ferrari markets. Exceedingly rare collector cars, and what most of us have, drivers, whether it's a 458 or a 308. My 355 may go up a bit - or down a bit, and I really don't care. It ain't an investment, either major or minor. Well - maybe it is a minor investment. ;>) But I do expect to lose money on it.

 

Someone on Wall St. once said that a bull market is like sex. It feels best just before it ends. I love Ferrari, just not at these prices.

IMHO

 

This one....


1989 Used Ferrari Testarossa at Fort Lauderdale Collection South Serving Ft LAUDERDALE, FL, IID 12800482


Joe

 

It's well on its way. The TR has already taken off in the last year or so.

Price Guide Report

 

I always try to drive off any value increase, figure $1 drop in value per mile I put on my car. I predict my 355 will go up in value $5000 next year, so will have to drive it at least 5000 miles to break even.

 

If there is a bubble its not the same as before. 250 Gtos are not going to tank, just liek picassos or rembrandts are not going to tank.

Cars have moved on into the indistrial art category and are valued in and of themselvs. Some cars will squeek intot his range, mabe Boxers have or maybe not. this rnage will recorrect froma hght. Are w eat thta high yet? who knows. Many other lesser cars are getting lifted by thet tide, they will sink back down till the next cycle when they may reindex to art status.

You know during the last boom, new cars liek 25aniv Cts and Trs were rolling off the line and onto the block for record prices. I cant think of nay production cars doing thta today. laferrari is not aproduction car, its an aoutalyer based on Luca Bs and stupidity of buyers.

For there to be an equiv bubble today we need to see new 458s comming out the fcatory and auctioning for 500k, I dont see that happening.

Do w ehave froth int he market yes, but its different world.

Would I buy a BBI at 300k or aTr at 125K and think I am going to make money, no, you may well jus as seasily loose over the next few years.

But unless ferrari starts again making soem old style supercars, w ecan also predict that gwoing global wealth, a true desire to colect cars, witht he ferrari brand being the epicenter of cars desired to collect globaly, that it quite likely that somewhere within the next decade a Bb will be a 500-700k car and aTr a 250k car. Can they drop 30% in the interim, undoubtably.

If you nwat to buy an inexpensive ferrari that will appreciate 100% in the next 10 years, the 5000 with a stick is a no brainer. And once it goes above a certain price it too will be investment category.

 

5000?

 

With fiat spinning off 10% of Ferrari to pay for thier debts, possible production increases, parts sharing from Chrysler (think nav units in the FF and California ripped right from a caravan) and possible platform sharing for Ferrari's future cars, the face value of the cars could change for ever.

This happend with Maserati. They had a glorious history and name. But with a few very bad decisions, miss mashing of parts,( think the bi-turbo) the merak with it's Citroen SM brake system and other parts, they killed the name, and the brand became sonominus with crappy cars. It killed the value of almost every Maserati on the market. They are just now getting outa that reputation.

This could happening to Ferrari if they aren't careful. If they end up building cars based on high production chassis, and useing parts from caravans in there cars, and continue to charge huge money, people will get sick and tired of it. Once that happens all Ferrari's will get painted with the same brush (except the really rare and speacial units). The run of the mill TR, 308, 360 etc will be thought of as garbage.

 

Prices could break the other way just as easily. Unlike Ferrari, Maserati never had universal appeal. They were great and important cars but never had the same cache'.
Luca Era cars may look like the last "real" Ferraris.

 

Yes...it could work either way for the current generation of ferrari cars. But IF they adopt the path I'm thinking they will (and that's just me thinking, worthless at best) it could paint a broad picture of the cars, past and present. But only time will tell. The only people that really know is the board of directors at fiat. And obviously they are not saying much.

 

It all about demographics.

Baby boomers are buying the cars of their youth as they are running out of time. Nostalgia can be expensive, especially when the end of the road is closer.

Boomer generation was also first in US history to grow up in suburbia with high mobility, bringing about a kind of disconnection from belonging to real communities. America like always had an answer to that problem. By obtaining expensive consumer products that you can "love", you could buy your way into a "family" or "community". Voila your modern day brand enthusiast is born.

Next generations won't have any attachment to some 60's or 70's cars, at least not enough to value them where they currently are. Ferrari classic car values in real terms are probably hitting their peaks.

 

Very realistic comments! It's nice to hear instead of all the pie in the sky talk you hear around here.

 

You give them far too much credit.
They're not thinking beyond the dollars that THEY'LL get.

 

Rise, Fall, Repeat.

End of story.