Mike Sheehan - The Ferrari Curmudgeon

agreed. i love my 512tr. poise, performance, presence. its a bad ass car and has the balls to prove it. then it attracts a crowd like a martian landing. drive one and you will see what we mean.

 

i read the sheehan article, and as much as i cringe when he disparages some of my cars, i also think he is generally correct.

if you are a reader of scm, you will also see the collier articles, and miles has often made the correct statement that values only rise for cars that were desirable in period, and it helps a lot if they were made in low numbers by a vaunted marque, and verifiable competition history, even just of cars of the same model, knocks it out of the park.

ok, so the problem with most (obvious supercars excepted)of the fiat era cars (lets just say that starts from 1973), is that fiat conducted production like a business more than a labor of love, and they made lots of them and raided the fiat parts bin for all the switches and dials. so, sadly, despite the fact that we may all like 3x8, 512's, 550/575's, 360/430's etc, they made thousands and thousands of them. they can never be as valuable as their pre fiat predecessors that regardless of performance, were made in the single digits to hundreds. its just math.

the parts issues are similar for all eras. they are of poor quality (except engine and tranny pieces imo), and cost a bomb; from the stupid latches on the older cars made of potmetal and spit that cost $500+, to the plastic kick plate in my 360cs that costs more than $2k !!! so you can use that as a price differentiator, or a reason for not spending the money on repairs on a less worthwhile car, and its true - sorry.

sheehan may not deliver the message you want to hear. he may have business practices you dont like (no personal experience with him so no opinion), but on the question of the relative values of the fiat era cars vs pre fiat - he is dead on.

(and i wish i could afford a decent one )

 

Spot on Ross. You say it all.

 

But does it matter? A 308 will give you all of the same ownership experiences as a 360 or a 275. If that is the case, doesn't it make sense to reduce the amount of capital you have tied up in it?

 

thats not what we are talking about. you are evaluating emotion, and specifically your emotion, and the article talks about prices, as assessed by the market at large.
luckily for you, you like the 308 and it doesnt cost much. thus its not relevant to you whether it will be worth more in the future or not.

the element that sheehan caters to is the client looking for assets. the definition of an asset is that it gains or at least retains its value. only the supercars of the fiat era do that. so this type of person doesnt view the 275 as capital tied up, he views it as capital holding place or working for him, just like he might if he bought a set of majorelle tables or giacometti painting.

as some people above have said, sheehan is now being forced to trade a little deeper in the bucket and he is a bit unhappy about having to cater to buyers who can only afford the fiat era cars because his comms are less, and the buyers are just as much of a hassle. and he is right. sorry again.

 

Are 3x8s ever going to be as valuable as a 250 SWB, 250 GTO or 250 TR? Not likely. That's a function of a lot of things. But saying that a Fiat-era or Montezemolo-era car will never (or cannot) be isn't accurate, either. One of the things that irks me is that he has made certain arbitrary decisions that, if people are paying attention to him, can affect the perception of valuations. And, by virtue of his columns, he casts a wide net when it come to broadcasting them. These are, of course, just his opinions, but they can indeed do damage. I don't think there's necessarily an obligation on his part not to do damage, but if you disagree with him, he's got a vested interest in HIS opinions, and doesn't want them disproven. Indeed, he has every reason to support his opinions (as he clearly derives some benefit from being correct in them). And, repeating them over and over has the impact, perhaps, of making people believe them to be true. In other words, the more he hammers the same nail, the more his "opinion" has to be argued against.

CW

 

But they're just cars and the only tie back to potential appreciation in value are due to people's emotions, there is no inherent value, the car is not going to see market growth, be able to reduce fixed costs or all of a sudden develop a cash flow.

Cars are a liability from day one, not an asset. Hence many of his arguments are flawed right out of the gate.

 

The whole discussion can easily be reduced to one single consideration: Production numbers.

A part from our own emotional appreciation (looks, performance...) the predominant determinant of Ferrari value is simply the number of cars produced.

That's the key distinction (not the only one) between a Ferrari and a Ferrari-Fiat, and that's the main reason that there is no significant apreciation potential for Ferrari-Fiats (a part from the supercars and a few of the early ones), and that there never will be. IMO.

As far as a Ferrari being a liability and not an asset, an Enzo era Ferrari is as much a liability as a Picasso. I wish I had many more such liabilities.

 

Right all the way, Julio

To quote Big Tex a previous time this was discussed, the high volume stuff are used cars with a yellow horn button

 

cars are a liability.
vintage ferraris are as much of an asset as paintings.

 

Wow, I hope none of you guys are accountants by trade.

Until it has a resale / scrap / parts value of $0, a car is an asset, not a liability. Items you can sell: assets; items you must pay to get rid of: liabilities. What cars generally aren't (and what has a much more subjective definition) is an investment (or at least not a very good one).

I really don't understand why people get quite so worked up. Most of the people in here have already made their decision and bought something. Secondly, the movements of rational investments are difficult enough to predict; it's certainly not any easier when consumer emotions are added.

To the Sheehanites: You're absolutely right. High(ish) production numbers will prevent 308s from ever exceeding their sticker prices in real terms. They are collectible and may see modest inflationary price increased, but will never be investments. Also, they're simply too "new" and not differentiated enough from mainstream cars.

To the Anti-Sheehanites: You're absolutely right. While the 308 production numbers are high, there will be high attrition from improper maintenance and a large number of cars will exported to emerging markets where they are valued more highly. This will create a situation of multiplied demand and pared supply, pushing prices higher, especially for well-sorted cars. They will occupy a sweet spot: old enough to be charming but modern enough to actually drive.

 

Forget all this fluff about car character blah blah. That's subjective and relative.

One post talked about cars of our youth - THAT is what will drive the market.

308 was built in numbers? Compared to a GTO maybe, but compared to a mid-year Corvette ('63 - 67), it's miniscule:

1963 - 1967 Corvette - 117,964
1975 - 1985 Ferrari 308 - 12,149

Even if you add in the 328 production (I think an additional 7,400 units), that's nearly an order of magnitude difference!. Last I checked, a SBC '65 Vette will run you $40K in ok shape. Figure about $60K+ in top flight condition. Forget about a BBC - you're looking at close to $100K.

Don't tell me anything about exclusivity or cachet - the mid-year Corvette is the antithesis of that. It has everything to do with desirability - e.g., this is the car I WANTED when I was a kid.

The 308 was THE car for people of my generation. I paid less for my '66 E-Type than I would have for a decent 308 - FWIW.

 

Haha! Well said!

 

Ferraris are like a lot of 'things" tho......difficult (or impossible) to liquidate in a down economy at full value..

And in a severe economic melt down, most likely I'll be living in it...

They certainly have upheld thier hard earned reputation as Money Pits when it comes time to maintain them.

 

Fine. Then you can deal with him.

CW

 

Those are normal production numbers for Corvettes or Fiat-Ferraris.

Enzo-era Ferraris go by different magnitudes altogether, very rarely over 1,000, often in the dozens. That's a difference of many orders of magnitude.

 

Paintings and vintage Ferraris are only "assets" so long as people are emotional about them and feel some need to own them. Brass era cars were the big **** a while ago, now not so much. Fads come and go in the art world all the time. Its still a fool and his money...

 

Right, but the discussion is around how Sheehan doesn't think highly of Fiat-era Ferraris. And while I understand the points made given his business and other happenings, from a desirability and valuation standpoint, I think he's wrong.

My Corvette example stands as evidence. Mass production has some effect, but it's not the final argument. It's weighted as much towards the desirability of the car as it is the exclusivity.

 

I actually traded correspondence with him maybe 10 years ago. He told me he didn't do much of the Fiat era cars (no surprise), but I've followed him since.

His "bias" is evident, but I don't put much stock into it. I don't have any skin in the game (Jag owner), but even then, my Ferrari of choice - should I ever jump in - will be a carbed 308 or a 328.

FWIW

 

I'll challenge - I think your 24% estimate is too low. I'd say the reality is more like 50% - maybe 7,500 of these cars still around.

 

Far fewer are LEGAL carbureted NON CAT examples....

They are still a Royal pain in my azz.......

 

I'll just state that after having had discussions over the years with him about acquisitions, and having actually made an offer on one of his cars, I won't do it again. Even though he occasionally has cars I'm interested in.

CW

 

Mike sold my Queen Mother two years ago in less than 72 hours for an amount within 1% of my asking price. I'd sell again w/ him anytime.

I have never purchased anything thru him.