will Ferraris and other exotics face downward pressure in prices?

Curious if you are seeing any downward pressure on price of Ferraris, especially used cars like Scuderia, Speciale etc.

 

There is a Scud on Fchat that just dropped from $180k to $100k*....





*must buy $1M+ home to unlock discount


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Image Unavailable, Please Login I have offered a brand new California T for free to anyone who would buy my house back in 2015.

 

There was already a downward trend before this coronavirus ***, so it's probably not getting better now.
In many european countries the car business is virtually closed down anyway, so we'll see when transactions resume some weeks (months?) from now.

 

Interesting spec.

 

It’s already happening.


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That seems like the case. As others have mentioned, the market was already softening and this is going to accelerate it. 1.) People are now having to balance investing in the markets when assets are cheap vs. buying a Ferrari. 2.) I think the really special models like Scuds, Speciales, 288 GTO/F40, etc. will still fare a little better because it seems like those get viewed more like investments now than toys by many collectors.

It's all speculation right now though. We'll see what happens when the situation passes.

 

My predictions:

On the sell side, It'll be mixed - some will need the cash asap and will dramatically drop price to get their car off their books and this will be a race to the bottom. Others will see recognizing a loss as a waste in its own right and will shift mentality to owning their car years longer. That should balance things out a little.

On the buy side, it'll be mixed too - those still making money or flush with cash will go deal hunting. While others who may have been stretching for the purchase in the first place will disappear from the market (unless they have moved into the first group).

For dealers, the hard part will be not just a drop in traffic but for inventory they own. Nobody wants to wipe out their gross by selling a couple pieces of old inventory at a big loss. Maybe this is a good time to talk about dealer margins and what they should be *allowed* to make again, lol. Consignment business will be better than normal I would guess. Dealers won't want to buy, but might cut a few% off the commission to get some blood flowing.

What's interesting around my part is that I see people driving their toys a lot more the past week or two. Stuck in the house + don't want to go to the store + empty roads = time for a cruise?

 

yes for sure - lots of deflationary forces at work...

 

VW Group is burning through 2.2B a week with production stopped. Among other lines, VW Group owns Audi, Bentley, Bugatti, Lamborghini, and Porsche marques. What the production stoppage means to future car prices -- new or used, I have no idea.

 

Agree for most part. In my portfolio I have been sitting on a large % of cash for years (~20%) because I have been expecting an end to the bull run for years (political, trade wars, exhaustion of business cycle) giving up gains along the way. As a result I have actually been too conservative in my portfolio for ~3 years. Now with large cash position you think I am going to buy Ferrari’s? No way. I am going to invest in companies and industries. The car still does not get purchased. I am sure other savvy investors feel the same.
Now..if things get so bad that I can pick up a 458 SA for msrp....well.....the calculus may bend.

 

in other words
Supply - increase
Demand - decrease
so price has to decrease.

 

I was in the same boat.... "was"
took money out of stock market last year b/c "there's no way this market can stay up". Kicked myself when it went up.
Used money to pay off mortgage "stupid to earn <1% while paying 4% interest". Might as well earn 4% instead of 1%
now stocks at bargains but no cash to buy.
Exotics will be at bargain but no cash to buy. No jobs at this point either.

 

exactly!

 

yes.
thats the way it works.
i wont even mention what i was offered in 2009....and failed to buy.

 

for me it was the beginning of last year when I started betting hard against the market...but it just kept...going...up and up

here's hoping the 16M will come down a bit. still tough to justify spending half a million CAD.

although I did come across a 16M recently at 50% off but it was a salvage title...."minor cosmetic damage" but how do I know if they are telling the truth right?

 

the thing that is very different now is the unreal amount of money the fed is dumping everywhere. Last go around that money created many bubbles...car market is one of them. will all that money go towards reinflating the same bubbles? Will there be deflation as the market adjusts then massive inflation as a result of all the trillions 'injected' into the economy? I believe so.
If that is the case all cash alterative assets will increase in cost/ value. RE, gold, stocks...anything that is an alternative to cash. People will rush to cash alternatives because they will see that their cash is losing buying power. inflation and then hyper inflation.
Will cars benefit from inflation or is their day done with the exception of the truly investment-grade collector cars....?
I really don't know.
However, I am sure as crap not buying cars now.
Keep your powder dry until there is blood on the streets...even if it's your own. Then buy true assets.

As stated by my college roommate, Barron Von Rothschild

The worse off the market is, the better the opportunities are to profit. That's seemingly the credo for contrarian investing. Baron Rothschild, an 18th-century British nobleman and member of the Rothschild banking family, is credited with saying that "the time to buy is when there's blood in the streets." He should know. Rothschild made a fortune buying in the panic that followed the Battle of Waterloo against Napoleon. But that's not the whole story. The original quote is believed to be "Buy when there's blood in the streets, even if the blood is your own."
https://www.investopedia.com/articles/financial-theory/08/contrarian-investing.asp

 

Typical modern production exotic - over one hundred of the same used low mile cars all for sale, at the same time. A patient buyer will find multiple bargains for sale. The rock trick at the deep end of the pool will give you an idea.

410 S.A. and similar crap. The market will not be flooded with excess inventory.

 

I'm not so sure on the inflation thesis. It's hard to have inflation when people are not buying. Even back in the 2008/2009 housing crash, I kept wondering where did the money go that went to buy the dirt in the first place. I never got an answer. We know the trillions pushed by the Fed in 2009 onward ended up in the stock market, which is still near all-time record highs. So where will this recent $4 trillion tranche end up? It may just replace the income lost by shutting down a $20 trillion dollar economy for two months.

I lived through Texas in the '80s. I never, ever, want to see that again. The streets were rivers of blood.

 

Are we not there already? WTI was off 25% this morning to $13.50 a barrel. Unreal. I understand that wells in the Permian are being capped because a) demand - supply imbalance, and b) no storage space left. NM is going through a draw-down on "rainy day" funds because of the loss in oil revenues.

In an economy built on leverage, particularly high yield debt in the energy space, I fear blood is already flowing instead of oil.

My sole source of humor today is a good comedy on TV. "In confusion there is profit." ("Operation Petticoat")

 

The general market will drop, except for the market for the car I actually have (this is the denial mentality most with exotics would hold) because it has X quality. An example would be the last modern exotic with an ashtray. I always pretend I am going to own whatever car I buy forever, I guess that is why I trend towards the less expensive end of the spectrum. In general, the more mass produced and expensive the MSRP is the more of a hit they are going to take.

 

where will all of these trillions of dollars go? What gets inflated (or reinflated)?

- Real Estate?
- Stock Market?
- BOA seems to think gold...
- Where else?
Some of it will be wiped out and go to money heaven...Money heaven as the money that is pumped into many small businesses (PPP) won't save them...spend 100k on something that is goes to 0 the $100k is gone.

 

Taking note of what is going on today with the lock downs etc..more and more people and business are going to realize they dont have to commute to work. Why pay for a car? Why pay for insurance? Why am I wasting time driving too and from work..only to do they same job I can do from home?

The business they work for are going to realize they don't need to be paying huge amounts in overheard just so their employees can sit in a cubicle, to do the same work they can do at home. The working model for both employees and employers is old and out dated. I think this pandemic will open a lot of eyes.

This will indeed have a direct impact across the car market.

 

In 2008-2009 here, an F40 could be had for €300k - €350k.

I saw two from one 'Mickey Maus' dealer on one day, head off to Japan.