Early 1990s crash of collector Porsche and Ferrari values...how did it happen?

"The prices went to high"
There is usually never just one simple answer to a depression/crash/or catastrophe in an investment market. More often than not tell tale signs that something is out of kilter will show. I am sure Sheehan in his own opinion has simplified this position quite a lot.
There is a reason prices went to high and a reason why the money went out of that asset to another investment. Ferraris were investments prior to 1990 and are investments once again.
When you can see the sharks circling get out of the water.

 

Fantastic observations.

 

599 stick was not bought by an enthusiast, its a checklist sale by the clueless ie a "rare v12 ferrari, but may be a anomoly for now. Dealers are coming out of the woodwork for my car, a sign. There isa big difference between the obcene asks on ebay and somewhere like hemmings, fantasy vs reality.

The trigger is when enough people have to sell, I dont know when or what that is, but prices are high enough and sales slow enough that all it will take is the right trigger.

As to the scale of the crash, this whole thing looks like the american iron bubble, lots of overhyped stuff and what 1/3-1/2 price reduction when it was all over.

 

Other factors in the '90s:

The dot-coms collapsed and previously nouveau riche were unloading their gaudy toys.

Buyers were anticipating the 360 and getting on the huge waiting list -- and trying to sell their older 'Raris.
(Remember the 360 flipping going on in the early '00s?)

And remember: right now (onset of winter) is always a dip in the exotic market.

(I bought my 328 in December ... of '99.)


Basic economics: more sellers than buyers => lower prices.

 

What goes up must come down.

So long as you're buying smart & at a sane level, are not leveraged, and have a long term outlook (not a flipper) then you'll be fine...just ride it out and the next wave up will carry you even higher. It might take a decade but who cares, you love the car and can drive it around in the meantime, right???

 

worked for me over the past 24 years of ownership, covered the car and all the maintanace costs so far, if the next dip and runup does not take too long I might even see technical profit one day, and will still probably/hopefully own the car.

Buy the most desireable car you can afford, keep it and enjoy it, one day people will compliment you for your good taste and foresight.

 

Greed.

There are a number of reasons to attempt to explain what pricked the bubble last time. I.E. Savings and loan crisis. But even in hindsight, one cannot prove with 100 percent certainty, the exact factor that actually pricked it.

Well said. And I will expect this to hold true when the bang happens. I'll bet there will be some brokers that will refuse to give in for a bit. When it happens, the results will speak for themselves in auction price and private sellers. And it won't matter anyway, plenty of cars will be up for grabs that nobody will want and they can keep their "rare" cars as long as they'd like.

Ferrari 328 GTS | eBay

Some great verbatim on this one.....

 

There is a 348 on eBay that a dealer had listed for 35k obo months ago and never sold. The price has been creeping up every time he lists it. The asking price is now up to 48k obo.

 

Wow! Comparison to a 246 GTS! Get em while they're hot!

 

3x8s are beautiful, beautiful cars. They really are quintessential "modern era" mid engine Ferraris. I think they also remain the most recognizable for biggest part of the population thanks to great looks (and of course Magnum PI).

But the recent prices, and particularly some of the asking prices, are (I think) out of line with reality. It seems like the tone on Fchat itself has turned a bit towards more people acknowledging the bubble. That is further evidence (alongside lackluster auctions) that it is starting to turn. Calling a top is almost impossible. Timing too. The existence of a big bubble is much easier to see, and when cars of that volume more than double in price in a short time, the writing is on the wall.

 

For those that can remember on 1/1/1991 the "Luxury Tax" began. That was a 10% tax on items with a retial value of more than $35,000. It killed a lot of the big boat business and just about drove Ferrari dealers out of business. I remember seeing new TR's and 348's that had been sitting on dealers lot's for over a year because of that tax made it impossible to retail one.

 

Good thread.

Tons of interesting views here.

 

Good graph. We are in the denial phase. Some cars are just past the denial,like e-types. Porsche will be there soon,ferrari will tag along.If you have money ,not needed for food and heat,the despaire phase is the time to buy. Think it cant happen and I am full of BS? People in Canada were walking away from their houses in the 70s. This society is so in dept the toys go first.,the beef jerky stays till the end.

 

Fed just raised. Game on

 

In Canada when rates hit 18% the s**t really hit the fan. 95% of current financial advisors have O experience with the gnashing of teeth.

 

That's me, right now (the highlighted bit in bold). So this is sort of an uplifting post. Last sentence is something I have already learned, and believe in.

 

Interesting scan I had saved, showing some details of various models tracking 1982-90
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I was at that Orion Auction pictured above and even watched that particular 250 get auctioned off. Fun times at very least.
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I agree that prices have escalated and dealers are trying to hog inventory, but I don't see any mania at the moment in general.

The older cars, pre 1990 deserve to be higher based on relative rarity, and the coming of age of middle aged guys fulfilling their teenage dreams. What I do see as a problem is the escalation of cars that aren't very old and aren't very rare. 550M with asking prices of 200k all the sudden is a good example.

I don't think the economy or the stock market is about to implode, so I don't see a big downturn in the prices of truly classic cars.

 

I sold a car in '89, and watched the price double in a year. A year later, I could have had it back for half of what I sold for.

 

Thread is only 7 days old and has 7500 views...

 

I saw it posted on FB.

Good knowledge here and it's usually cheaper to try and learn from others mistakes.

>8^)
ER

 

Market outlook 2016

Le Monde Edmond | Classic car market: Outlook for 2016

 

In 20+ years ago , it might not be ; but now it seems to be OK .... classic and exotic cars market is similar to the real estate market , it has been going up and down , eventually the price is still on the high side ..comparing to 25 years ago.😜

 

the best thing to happen to older cars(pre 2000 give or take-not vintage) in the past 5 years are the new cars they are pumping out of the factories.

the above fact will prevent a full blown collapse of the market like we had last time, and the Luxery tax, super hi interest rates and a couple other factors that really hammered prices.


However there's going to be a correction. I havent sold anything since the prices have jumped up. I did just before they did-ouch.


I think there's a correction coming but to sell and take a position in another car is a bit more complex than stocks or gold. And I dont think the correction we will see will be a across the board correction either. the 3 Pedal cars I believe will retain some premium. And LE cars like the F40, 50, Enzo will hold up ok as well. I dont think 512M's will hold up as much. or the TR's.

I wouldnt buy right now or sell. I'm holding on to what I have-Lambo's 3 Diablos 2 GTR's SE30 and a brand new 250km Countach 89. they might go down some, however long term i like my position.


Also to respond to a person who had this idea in this thread that oil prices have no effect on Ferrari prices-I asked him his age a few pages back. His thinking is VERY narrow. Sure who cares what gas costs when you own a $400K car(that was his point) he missed Macro Economics 101. Oil effects everything, cheap oil is good-unless your in the oil biz and that's a small % of the population. same for the strong USD$ we export 15% of our GDP how is a weak $ good?

I think cars will be fine in the near and long term, unless it all goes to hell then watch out!!!! haha