V12 - a good investment ? Or obsolete. Last of the N/A does anyone care ?

Too funny!!

 

I think you raise lots of interesting questions and just my 2c on the "good investment" question:

The generational changes you point out at least anecdotally make sense to me: I took my 16 year old nephew for some hot laps on track in the F40 which he declared was "a bit pointless" given he could do the same on his computer game with the virtual reality goggles on. Apparently the sound is better on the headphones too....

I think the 10 year investment question has to be viewed against the context of where we are in the cycle. 10 years ago, a Mondial at $15k or 348 at $25k were priced at near obsolescence, not dissimilar to normal cars. Today we are at the highs of a global asset repricing driven by near zero rates for almost 10 years - cash looking for returns, and debt that costs little (when available). No doubt other contributing factors are at play: emerging market high-net worth demographics, tech industry wealth creation etc.

In this context, my guess is some cars will pass into the automotive art category and will remain highly sought after - the classics plus perhaps some of the epoch-defining cars like Mac F1, and halo cars like 288 to LaF series. However, the current feeding frenzy of special editions of every kind driven by the idea that rarity is necessarily equal to value is likely to get unpicked. There are too many cars being sold as "the last of/only one of X" - manual/RHD/with some handling pack/in Grigio Ferro/built on a Tuesday etc. The modern day equivalent of Semper Augustus tulip if you will. IMHO, that's late cycle froth that will eventually dissipate (perhaps when rates normalise), and may have a much bigger impact on a 10 year horizon than the generational changes in attitudes.

FWIW, I find it hard to think of F-cars as investments (just because they have gone up in value recently) - they are more big boys' toys. Just my 2c.

 

My garage was open when two high school kids were walking by and their jaws dropped when they saw my 550 and 355. Not "cool" cars by todays standards at all but Ferrari has done a good job keeping their product line an aspirational goal IMO.

I do think however that Ferrari (and all others) are catering to the masses more so than the true fans because it's clearly more profitable. What that will do to the value of these high production number modern cars is anyones guess.

Supply and demand will dictate that...and with 500 million people entering the middle class in China alone, my guess is demand will significantly outstrip supply on even high production cars.

 

Can anybody liquidating a sub 100k F12 PM me please ? Non RC/Low mileage/carbon cup holder cars only considered.

Seriously though, when trading a volatile market you need to 1) avoid liquidity traps and 2) not fall in love with your position.

Many owners in the 60's classic market have failed to observe these rules. Understandable when entrance/exit cost such as auction fees are so high and your position looks so sexy on the drive.

So when you decide to get out, get out fast. Swallow an auction fee, sell to a dealer accepting his need to make a turn, hit a bid rather than waiting for the market to come to your offer.

We aren't there yet. I think the ordinary 599 is a good bellwether. Getting to be too old for depreciation, modern/post manual, fast, noisy, thirsty and unlikely to get you invited to a vegan hemp weaving party.

To me prices seem robust. Maranellos dipped to sub 50 k, not many 599s get below 100k. I was offerd a GT/Cuoio early 599 for 108 K 5 years ago, It wont be worth much less now, maybe more if it hasn't put on many miles.

 

Given liquidating multiple cars individually can be difficult, especially when the market turns South, one of my acquaintances who has a €20mm collection of 80-90s modern classics has set up a fund, and has offloaded around 50% of the portfolio within 18 months, while retaining some limited use of the cars (in the name of storage and maintenance). His aim is to get to sub-10% which he markets as a level of "skin-in-the-game". Of course, the reality is that mainly monetising his gains rather than buying in at the same level as his investors as would be the case in true alignment. I also of know of others with smaller collections who have joined together to form a big enough portfolio - typically a few $million. These funds offer annual liquidity, and have market valuation triggers. So, I would imagine if ever they are a forced seller, it will be ugly, but the original seller has largely exited his portfolio by then. These funds are currently marketed as "a new asset class in classic cars" to retail investors who are not close enough to the market to know - not dissimilar to wine funds at the turn of the decade (which didn't end well for many of the fund investors). All they see is they are invested in an asset class with 5 years of stellar performance.

A somewhat cynical sell strategy? Yes, but also effective.

 

I read an interesting article published by the Guardian already this year on the subject we’ve been discussing here and I would like to share the content with you.

The editorial says that the rise of electric and largely automated cars might change the world around us almost profoundly as the internal combustion engine did and mentions that all-electric traffic will be faster, reversing the trend of the last century because lighter cars will accelerate and brake more quickly, while increasing automation will mean traffic moves more freely. The author thinks that if those trends continue, the private car might disappear altogether and be replaced by a network of hired autonomous vehicles, at least within cities. The beginnings of this development are already visible in the reluctance of young people to learn to drive. The article continuous by mentioning the less obvious, but just as important, symbolic values of cars and it says that it’s not just for Bruce Springsteen that they embody freedom, autonomy and power. It also refers to the fact that the car that we own says almost as much about our social position and our aspirations as the clothes we wear. Car ownership was for much of the world a mark of status in the way that owning a horse made us a knight. To finalize the editorial says that the coming revolution threatens far more than the vehicle manufacturing industry because if cars do come to be valued for their usefulness, not as means of ostentation, they would become only a status symbol for the rich, as useless, if still as loved, as the private horse now is.

 

Excellent points. Thank you all for the stimulating discussion! I did get a very good laugh with Solid State's comment about the fruit loops!

I tend to look at these things more as art and toys than investments. However, many of you make a great point that while we can appreciate how special these cars are, we also have to consider the financial side of things and I think if you find yourself truly worried about values and the size impact a negative change in values would make to your life, then maybe it is best to exit.

Mario, your article makes some great points and I think there is much validity there. However, I would like to make another analogy: fine watches. We all know digital watches are superior as time keepers to mechanical watches. Yet, how do you explain the good health of the watchmaking industry for many years. Smart watches offer even more functionality. The last time I looked, it doesn't seem the Apple Watch made a bit of a dent into the industry.

Recently a friend and I were having this very discussion and he expressed the following thoughts, which I am rephrasing a little bit but I think he makes a very good point. Watches are really one of the only pieces of jewelry that any man can wear with safety. Necklaces, bracelets, earrings, they all can be taken the wrong way. I'm not saying no men can wear these items with confidence, but one has to ask if they can carry it off. Some can. Some can't. Everyone can carry off a fine watch. And these watches are a way to express your sense of style and taste- even your character. An Apple Watch, or any other digital or smart watch, or even your smart phone, cannot fulfill this desire. And I can tell you that everyone has this desire. Any time you customize something, you are attempting to full this desire. I think a V12 Ferrari can be like this also. Ferrari is a V12 company. And you will have a very strong argument from me if you say their engine builders are not just like the finest watchmakers from Switzerland. The Ferrari V12 is really a thing of magnificence!

So a question is will your Ferrari be like a classic watch? Only getting better with age? And perhaps the value increases also? I think that comes down to the specifics: which Ferrari are you talking about. I'm not quite a big enough watch buff to say which watch an F12b (or 812) would make the best comparison, but maybe its a nice modern Patek. However, I am convinced the older cars will stand the test of time.

But, as we get from here to there, you all are correct- there most likely will be some bumps in the road. Maybe even corrections/ crashes. You have to decide if you want to keep skin in the game so to speak. I'm not an expert on this, but I still have an opinion, which is its valid to wonder what happens when the loose money tightens. I think the odds are good that asset prices readjust. How much or little is something I just can't say.

My intention when I bought my F12b was to keep it for a very long time, and that has only strengthened now that I've been able to drive it. But I completely understand someone who says they don't want the exposure and there are other things out there they want to explore. Variety is the spice of life.

So in the end, I think the answer to the question if these V12s are a good investment or not, well, I think maybe you should also consider it as an investment in your happiness. If the worry about values exceeds, or worse, dominates! your enjoyment of the car, then I think its time to move on.

 

From the perspective of art, watches or fine motors (limited edition) being investments one has to consider the integrity of an item not just the potential.

Short term gain is often the goal of new money, nothing wrong with new money but sometimes it maybe just the gain that is the motivator rather then the joy.

With regard to watches I was gifted by my dear departed father a Rolex Submariner which has not left my wrist since, apart from the brief service calls at £500 a pop. Joke not.
I alway thought it to be a normal submariner, nothing noteworthy just a typical Rolex which kept time like most other Rolexes ie badly. But no, apparently it is a 'Feet First' Rolex which is quite different.

When Roger Moore, dearly just departed, was offered the job of Bond 007 he was asked to wear the Rolex Submariner to which he immediately agreed but then threw his toys out of the pram on finding the depth reference was 200m or 600 feet. He demanded it be feet first as only a British Spy would accept hence Rolex made a limited edition run of feet first submariners stating 600 ft or 200 m. They are now escalating in value well beyond just reason because 'collectors' see them as an investment.

Most of us on here do what we do, and mostly very well but I'm sure it is the passion for the cars that drives us not the pure investment value of the commodity and if my Lusso is worth F.A. in ten years from now i will still look back an savour the joy of ownership, the pleasure of the regular continental tours, the camaraderie of the faithful and think.....such is the price of life.

 

Jerry, I think your analogy between watches and the Ferraris V12s is spot on and brilliant because as you explain they are really comparable in so many aspects. When you refer to watches as the only piece of jewelry a man can wear I completely agree and I recall a story which happened many years ago when the first Japanese digital watches invaded the world market and everyone thought the traditional Swiss watch industry was totally condemned. During these times, someone interviewed the CEO of Rolex and asked him what were his thoughts and concerns about the eminent collapse of the Swiss watch industry and his answer was - I have no idea because Rolex just sells jewelry.

My intention with my F12b is also to keep it for a long time and preferably forever because that's exactly what I do with an Omega pocket watch from the early beginning of the 20th century which belonged to my grand grand father.

 

Well said, my friends! Good analogy with automatic watches...precisely the reasons I wear them.

 

I see your point but governments don't really hate cars as much as you think. If they eliminated all cars right now, the economy would nearly grind to a halt. I also think as we get more and more into monitoring more and more of our lives, I think governments WILL want you to wear some form of monitor, like a smart watch or bracelet that can monitor your vital signs. What happens when your heart rate gives away your political (or other!) biases to those in power... (I hope this never happens! but I just can't help but to extrapolate)

I would also add that few young people wear watches because they are not interested in the functional purpose of a watch. But as their purchasing power (hopefully) increases over time, they will want the jewelry function these watches provide. Young people still spend a lot on glasses and shoes/ sneakers... They are still interested in expressing themselves with things.... JMHO.

 

Still related with Scraggy's initial question about if our present Ferraris would be a good future investment or become obsolete, Jay Leno has a story which might give us some clues. Two decades ago JL got a letter from a 12 years old kid saying he told his friends that he was his uncle and that both went driving together on weekends. The kid mentioned that he wondered if someday Leno could pick him up and take him to school. JL called the parents and said he was happy to do it and parked around the corner and waited for the school buses to unload, and then pulled up. The Countach doors come out, and the kid says, “Thanks, Uncle Jay!” and Leno replied, “All right, Billy! So long!”. That’s a kid who will probably buy a Countach once he gets to a certain age.
A similar story happened to me with the 10 years old daughter of some friends who sees my F12b in the garage and tells her mother several times a day that what she wants more in life is to be picked up at school with this car. I already promised her that I'll do it on the last day of school and like Leno's kid this a girl is a potential Ferrari buyer if one day she can afford it.

Like has happened with so many of us, these kids continuo idolizing certain cars from a very young age and the models they fall for will remain in the back of their minds for the rest of their lives. Once they grow up and if they become financially very successful, you can bet that the first thing they'll do is to buy the idol cars of their youth.

 

Great story! I agree what occurs in our youth has an outsize impact on many of our tastes as adults.

 

If it goes the wrong way next week all our toys may take on a different aspect. Flying under the radar may become crucial and that could ultimately impact on value. Fingers crossed.

As for the 'long game' Ferraris etc etc along with property and iconic wrist jewellery will always win and represent the most secure of investments but you have to be in it for the Long Game otherwise the roller coaster curve governed by politics, (ours and others beyond our shores) has a way of impacting on our good fortunes which is when car collections representing a sum beyond the manageable become a liability rather than an asset. Is it a game of chance under the guise of indulgent investment or Russian roulette ???

 

These are 2 relatively new Ferrari sports motor car models.

One is a V12, one a V8.

Both have been excellent investments, to say the very least! But more important than offering a financial return, IMO the value of these cars is truly in being able to drive them anytime the weather is nice or one simply just "feels" like it!

And, while its nice to see a rise in the digits on a financial statement, my advice is buy them to enjoy, to drive and to just have fun with--the rest is truly like gravy on an already full plate!
Image Unavailable, Please Login
Image Unavailable, Please Login