812 Market Dynamics

While that sounds logical, and they are valid points, I am not sure that's the entirety of the situation. I would start with the same question: why would they do this? Do you really believe the answer is they are that short sighted as to undo all this brand building so they could have 1 or 2 good quarters? I think that can't be it.

I think we will have to wait for more time to understand the answer. I think the world is always changing and while its tempting to ask why can't it remain the way it was, we all know that's not how it works.

It is clear they are transitioning to a new marketing plan. But, then Ferrari is always moving and changing. I can remember some of the horrid depreciation that befell 430 Scud and 599 owners. I know, you will quickly say "the great recession!". Yes, that would be right. But today if you are going to look at the UK, you have to consider Brexit. I don't think its a trifling thing.

Also we have to consider we were inside a bit of a car bubble over the past several years and are now just coming out. Look at the auction results- its a soft market.

And lest we romanticize the period we are coming out of, there were plenty of cars that tanked in value. I saw FFs lose $80k in under a year. And I did hear "Ferrari doesn't care" from these people. Yet, when you think about this time frame ~2013, do you think that was the norm? No, we tend to romanticize the past.

I share some of your concern, but I think the best move is to buy what you love and can afford. And then let's wait and see. I will begin to worry when Ferrari dealers are offering countless lease specials on their latest and hottest models.

 

Am I alone in feeling so depressed with this thread. There are alternatives as well, Patek and Hermes great examples. However I guess these are private companies so its a quarterly game. Such a shame.

 

A 812 for £100k off list has to be a good buy in the long run? Especially with the way the future cars are going? If you want to buy and use for 3 or 4 years?

 

Jerry, I genuinely hope you’re right. Based on what I’ve witnessed over the past 2-3 years, I worry.

I agree that it’s best to buy what you love and can afford. Personally, I’d take a pre-owned F12 over the upcoming Portofino coupe all day long.


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But can you really compare an F12 to a Portofino Coupe?

I'm not saying there is nothing to these concerns, but I also think it's easy to fall into a trap of over doing it.

 

I'd imagine that depends on the sticker and whether you want all those options or not. 100K off a bare bones car sounds like a steal. 100K off a TM car with 150K of options doesn't.

 

I understand why someone who loves open-top driving might buy a new Portofino. It’s a great car. Lose the top and I cannot fathom why any Ferrari enthusiast wouldn’t buy the far superior, more special, and still modern F12 when they’re both priced around $200,000?

The PF coupe seems like another attempt to squeeze every possible dollar out of every platform. Using the Pista engine in the F8 Tributo is another example. The pace of new model variant releases is nuts. You can’t even take delivery of a car before several new models are already introduced. Not surprisingly, supply is far outstripping demand for most models. Falling residuals are the result, and this cheapens the brand.


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Not really. Think about what you're saying. You're saying the 'regular' buyer wants to be able to sell it for close to MSRP. Well, in order for that to happen, there must be a secondhand buyer who is willing to buy near MSRP knowing that he will be the one to suffer the depreciation.

So what would change if Ferraris started depreciating more? Well, the 'regular' guy now becomes the one who has to wait for the secondhand car at the depreciated price, and the guy who was buying used before now gets his car first and suffers the same depreciation as before.

Quicker depreciating cars simply means the people who want them most and will pay the most are the ones to get them first. That's fair. If you're willing to pay the most (depreciation), then you should get the car first.

 

(The PF coupe...)

Hey, I understand the shorthand, but certain standards need to be maintained.

THIS is a PF Coupe. LOL

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I think we could compare prior era pre owned models to any new model they release, so I don't see that as a new development.

Of course they are trying to make money, they always have. Do you remember the cost of the electrochroamatic roof on the 612? Or simply the price of CF on any of these cars? You could buy nice A-B transportation for the same amount.

I am actually amused a little bit with the F8 critique. Usually the next gen model that is on a new platform is faster, has the benefit of the new platform, and is priced a little less dear than the special model that came before. This time that is all true but the car is a little bit slower.

I think we each make a personal association to a brand we love so much. So I can understand how change could challenge that association. But I think Ferrari has been on this path for a long time now, certainly at least since the modern California and FF. No more stick, now with AWD? And a car targeted to non traditional Ferrari clients?!......

As to the residuals, I think it is a more complex discussion, the short version that we were in a bit of a new car bubble, people thought for some reason they don't depreciate, and then others (McLaren) decided to crash the party, and the supply from them is having a tremendous impact. The status quo for anyone in this market, including Ferrari, simply would not remain.

(If you want to get really scarred, have a look at the inventory building up for other brands... its massive)

 

Your history with the brand goes back further than mine, and you may be right. I’ve honestly never had a problem with Ferrari trying to make money via overpriced options. I had the electrochromatic roof on our 612, willingly do TM specs, and always order every CF option. I certainly don’t mind change, either. The DCT offers far superior performance to the 6-speed gated manual in our F430, and I love AWD.

My concerns center around more recent corporate decisions, such as the increased pace & breadth of new model introductions; the move to no longer number sub-$1.7M exclusive models; the increased production of most models despite increased competition from other manufacturers; certain designs like the 812 GTS where it appears that the bean counters may have won the day over the designers; moving further downmarket with a Portofino coupe when brand residuals and exclusivity are already suffering; introduction of GPF and ADAS into markets where they are not mandated; an increased focus on hybrid tech; etc.

One could justifiably blame greater macro issues like Brexit, the trade war, slowing global economic growth, etc, for the softening demand and residuals. Honestly, that only makes Ferrari’s current path more dangerous in my eyes. Ultimately, there are a limited number of buyers who will accept repeated significant depreciation losses on numerous obligatory regular production purchases simply to secure non-number-limited “special” models that don’t appear destined to retain value, either.

The cars are fantastic and may provide even greater value on the secondary market. But there could be real damage to the brand if overproduction and significant depreciation becomes the norm.

 

No disprespect as I am also a victim of this market and 'playing the game' but if people order cars to get allocated another car further down the line, in my opinion they are not buying that car for the right reasons. They never really wanted the car so it has become a commodity rather than an emotional purchase that a Ferrari should be. This is the problem with the market and will damage the brand. Brexit is an aside and an additional reason that is probably exaggerating the effect but the market is flooded because people ordered an 812, Lusso, Portofino etc to get either a 812 GTS or maybe an 812 LE.

Worrying about ordering the next car, should i keep it, when should i sell it, i shouldnt add too many miles, what will it be worth etc all totally ruins the ownership experience as far as i am concerned and have recently found out.

I have a year old Lusso with 5,000 miles and a new 812 waiting. I dont need both and would prefer to sell one but not in this market. I'd rather keep both and assume i've lost £100k on the 812 and drive the thing! If i sell it in a year or two later i dont believe i'll lose much/any more and at least I will have enjoyed it! Its a bloody amazing car as i reminded myself recently when i actually drove one!! ))

Personally i think the UK market will settle early next spring after the election and Brexit. When sentiment improves cars will suddenly look good value and as others have said the V12 Ferrari product is an amazing product that doesnt have a real rival in the market.

So, yes it is depressing but a great therapy is go out for a blast in your V12, as i have just done, remember why you bought the car and put a smile on your face!!!

 

Bingo!!!!! Hence, the depreciation meter goes bonkers immediately after delivery. Can't worry about these things any more. If this is of concern to potential buyers, that in and of itself should be the signal to immediately back off.

It's no different than signing a dealer agreement (early release models) that says you can't sell the car within 12 mos. Who cares? Meaning, that I didn't buy the car to flip it and MAKE $50k or $100k . I want the car not the money, so losing $100k on my 812SF is the same to me as passing up the flip money (if there ever was that opportunity). Not to say that 50k or 100k isn't meaningful. It is, but my exotic car brain isn't wired to my wallet brain when it comes to Ferrari's or any other expensive toy cars.

It's the dopamine that's expensive!!


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There's a lot to like in this post.
I really dont care for the Pista but am taking it for what I can get next (if there is a good next in the lineup!).
Noisy, great design, decent performance, perhaps open top.

 

Did the numbers make the models special? Maybe for speculators, but not for those who love to drive them. I do agree the pace lately has been a bit much and I hope it slows down. I like to take my time to discover a particular model.

 

It is not just owners who are concerned, it is also dealers. One dealer in particular has over twenty 488 variants (GTB, Spider, Pista) in stock, for sale, with no movement , and customers wanting to trade in more. He can't move what he's already got, and has run out of space. He also notes 488 GTB now prices within $30k of 458 Italia. If dealers are concerned, are owners not justified in being concerned as well?

 

Great post, Justin! Couldn't agree more !!

 

Being 1 of xxx didn’t necessarily make the SA or tdf more special, but it did protect exclusivity and values. It also nicely honored the customers who invested significant time and financial resources needed to reach top-tier status - not just through purchases but via active participation in the Ferrari social, TM, and racing ecosystems.

It’s at least a triple whammy: no more numbered-edition halo cars coupled with significantly greater losses on regular production cars (if you can even sell them at all) and the pressure to buy an ever-increasing number of regular production cars to maintain one’s standing.

It’s still worth it if you really love all the newer models, don’t mind redundancy, and are relatively immune to buyer fatigue. However, on a financial level, it is increasingly difficult to justify. Or enjoy, imho.

 

You're not the only one feeling that way.

 

VW market cap is 85B, how is Porsche worth more?

 

A couple points here:

+ For the USA, 812 production has been very light, probably fewer 700 812s in the country and that would make it more rare than that Speciale's in the USA. And, know this, 812 orders in the USA have dropped off in a very dramatic fashion every dealer has near if not immediate allocations. At the end of production, the 812SF could be under 1000 units in the USA, that would make it fairly rare vis-a-vis F12 (2200 or so units). In fact, the MY2020 812s maybe the most rare of all, there may be no 812s for MY2021 if sufficient 812GTS order exist.


This is the more important point:

+ Ferrari HAS, without any doubt, accelerated 812 production for Europe and China markets. This is why USA production is so light (approx. 50% of 'normal'). The reason for this is very simple, the EU regulations are going to make it quite difficult to build 812s that the market will desire starting 1/1/2020, this date is noted in Ferrari's past 2 annual reports.

This has, essentially, lead to "4 years" of production being assumed into 2 years for the EU and China, leading to the current glut of 812s most notably in the UK. Europe has somewhere between 80 and 100 for sale based on this:

https://suchen.mobile.de/fahrzeuge/search.html?damageUnrepaired=NO_DAMAGE_UNREPAIRED&isSearchRequest=true&makeModelVariant1.makeId=8600&makeModelVariant1.modelId=42&scopeId=C&sfmr=false&sortOption.sortBy=searchNetGrossPrice&sortOption.sortOrder=ASCENDING

prices are also holding higher in EU.

I think a lot of concern in UK right now about post-brexit "economic collapse" has many concerned and that's the leading reason I believe for so many on the UK market vs EU.

Back to the point, Ferrari is overbuilding the 812, Pista, Portofino, everything they can of the "non-compliant" cars because things change very soon.

You need to realize from Ferrari's point of view, this is the last time they will have a good year for a while, from here, it is all about EU/China strangulation of their core business. Cars must be quiet, must have have absurdly low particulate numbers (existing numbers are quite non-polluting, but the new regulations applying to Ferrari next year are an order of magnitude more strict, yes, 10 times the previously accepted level), fines for CO2 emissions (Ferrari has higher numbers before it is fined but they have already been paying fines, it will increase).

This also is why the large volume of new models, so some of the old models can be end-of-series and Ferrari can build them a little bit longer.

Adding to that is situation that the SF90 is not receiving wide support, time will tell, but it may be a fairly rare model series even at is very low price point (essentially that of a TM Pista).

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As for the 812, there is no replacement model announced, sure there is the 812GTS but that is not a replacement. So no current owners are frustrated that their 812 is already an old model. And, I believe the eventual 'replacement' of the 812 may not be recognizable as such because it may well not have a V12.

And, if you are thinking that recent 'patent' in the news meant anything, it does not mean anything in regards to the future of the V12, that patent has its start in 2016 and was to address Euro 6 regulations by accelerated warm up of the catalytic converters to reduce cold start emissions which are now superseded by the new regulations that essentially require GPFs to be fitted rendering the patent moot.

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In summary, Ferrari is building out as many cars as they can for the markets (EU/China) where punitive regulations are about to be enforced upon them.

Once brexit is done (eventually it will be) and the UK economy grows and not collapses (how else can it be, removing regulations always has a positive effect), those 812s will be absorbed, but right now, buyers are worried and holding on to their cash. Dropping prices does not mean the cars will be sold if no buyers are ready for the commitment.

 

Well said.

I think we really need to have some time before judging the new marketing program. What if Ferrari has another way of rewarding special clients rather than a numbered car? I'm only arguing for keeping an open mind- which I know is difficult when things are more challenging- and I know the current environment is more challenging than the recent past.

On the 488, I know many love their 488, it has many wonderful attributes, but I don't think the market views it as a great Ferrari- I believe that is the core of the problem.

 

Thank you for another very well-reasoned & factually-supported post. I don’t envy Ferrari trying to navigate this increasingly treacherous regulatory landscape.


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Well said.
I don’t think having low numbers of an 812sf for example will lead to collectibility. The visual design is not beloved today, like the spf90’s tech and weight etc, and likely won’t be in the future.