812 Market Dynamics

You probably want one with atleast 400k msrp, some have gone to 500+ msrp. Seems you can find slightly used for 50k-75k behind msrp.

 

A lot of it depends on mileage, but 2018 812s with 1,000 - 2,000 miles would get trade-in offers in the $90 - 130,000 range, back of MSRP range - the higher the MSRP and the higher the mileage in that range, the higher the discount from MSRP. Even low mileage cars (<500) would be around $60,000 off of list. 2019s are worth more, but still trading-in significantly under MSRP.

It's worth adding that trade-in numbers are getting more and more aggressive and harder to come by - most dealers don't actually want the cars in stock and will instead try to reach some sort of consignment arrangement.

 

In UK super car dealers are all desperate for SOR not buying, h I guess been drunk for years on stable or rising inventory it must be a shock.

 

It is true. The basics are clear, they are not losing money because it is a bad product. It is losing money because they were too expensive to start with and there are too many of them, massive over production . Ferrari don't care, depreciation is not their worry, they just need to get the new cars out the door. Or should they be more concerned ? As long as there are new car buyers, are they wrong ? It just becomes the cost of owning such great cars. The idea that you build one less than the market requires got lost along the way here.

Whilst I don't begrudge the management for meeting their bonus targets, I am not so convinced how they are going about it is correct. When high value items lose value so rapidly it diminishes the value of the brand, and is a far cry from an exclusive brand as it shouts unwanted . More bespoke is one way, but more volume, more models that overlap and over supply is not it. Noone wants to be seen in the car that loses 50k without turning a wheel. Hardy an advert for ones business acumen, and yes some say really wealthy don't care, but I am yet to meet a successful businessman that , no matter the wealth, takes such things seriously. Indeed once bitten and all that.

I joke about the depreciation, probably out of madness as it will hit me hard if I ever sell , and knowing I should have just got a 6 month old 812 for 100k off with 1 k miles, but owning a V12 Ferrari was always an expensive love, but in the last 2 years, it has got to until levels. I just hope the GTS orders are not with people thinking they are going to compensate the coupe losses. If you get a first car maybe something, but 12 months in, when they announce the VS , and all the people buying these cars to get a profile ( it seems) so they can have the chance of owning something really special , will be dumping the GTS. I am not sure what special car they are building their profile for mind. I assume an Icona car , as they are the only limited cars, and a replacement LaF , probably full electric , is 5 years away. I actually love the Monza, that is for me what a true limited Ferrari should be . But it is 2 million and an 812 underneath. No bad basis for a great car, but 2 Million.

IMHO and it is very humble HO , the impact of this new level of world leading depreciation will come to a head when the people chasing something that really is not going to happen come to their senses . When they realise there is no 500 build car to aim for unless it is an Icona and for that you probably already need to have been in the family a very long time too. When they ask why they have lost so much money , not driving multiple cars (and we are all guilty of phases of this, I have been ) and losing a bucket of money.

Which brings you back to the real point. Ferrari will take your money, they are paid to do that and are very good at it. It is not their responsibility to look after your depreciation, threads like this can do that. It all depends on how much you love your car, and the desire to actually use it. Maybe order one less car and use the car you have. They are really exceptional, and I mean exceptional, but the joy of ownership, the joy of experiencing one of the automotive icons is lost amongst chasing a false dream of the next best thing, that is not going to arrive . I look forward in years to come of reading on here of this generation of wonderful cars being used for 100 thousand plus miles, and stories of adventure, because that is what the real essence of Ferrari is and is why they are currently losing a very big part of what made Ferrari Ferrari.

All in my view and I appreciate every one has a different opinion. Forza Ferrari .

 

FWIW my perf spider sold in a day

Well said.
What we sometimes overlook is that it only takes ~12,000 people a year to make Ferrari happen and keep them on this path. As buyers get burned and churn out, there are 2 new buyers ready to step up such is the pace of new money globally. I’ve witnessed this now for several years watching people I know walk away from Ferrari after playing the losing game.
Simple adage of buy what you like to drive usually helps.

 

Great post. Be sure to tune in Monday:

https://corporate.ferrari.com/en/group-results-3rd-quarter-2019#

 

Spent the day in the Mclaren GT4 track car. Someone had the Lamb Super Trofeo Evo there as well. All organised and prepared by the dealer. Why do I mention this. These brands have amazing track cars (In reality striped out road cars). Yes depreciation (bla bla bla) but no need to chase every new version, learn and drive at your limit, have fun with your buds etc etc.

There are other ways to enjoy the cars without chasing every new model IMO. Oh and in crazy tax countries (like mine) - no taxes either

 

Yep.... Fiat Chrysler and Peugeot maker PSA Group of France are in talks over a potential combination, according to people familiar with the matter. A deal could create a nearly $50 billion trans-Atlantic auto giant.

https://www.wsj.com/articles/fiat-chrysler-peugeot-owner-psa-in-talks-to-combine-11572373519?mod=hp_lead_pos1

 

From Tesla’s 10Q filing on Tuesday. So much for U.S. demand without artificial incentives. I’m curious to see what happens further to sales & residuals when folks better understand the costs of replacing batteries. Used EV’s may become throwaway items. Pretty eco-friendly...

“U.S. sales in the third quarter fell by $2 billion year over year to $3.13 billion. Sales in China rose by $260 million to $669 million in the quarter while sales in the Netherlands rose 56% to $427 million and sales in Norway were up about 10% to $253 million, but a U.S. sales decline of 39% was too large to overcome. Total sales fell by $521 million year over year to $6.3 billion, including $402 million in Tesla's storage and energy generation segment.

The U.S. sales decline was attributed to ‘price adjustments [Tesla] made to [its] vehicle offerings’ in the first nine months of the year. The company was referring to the halving of the federal tax incentive from $7,500 for a buyer of an all-electric vehicle to $3,750 through the first six months of the year and the halving again that will drop the incentive to $1,875 for the second half before disappearing altogether on January 1, 2020.”

 

With internal combustion engine, you can rebuild it over and over and over again. With EV, not so much - more like a disposable flashlight. OE's will just LOVE it when, instead of rebuilding the engine, you have to buy a whole new car.

Post 1/1/2020 sales of TSLA w/o gov't incentive will be like when people discovered that those "boxes" from Theranos weren't actually being used at Walgreens for blood sample testing. Sooner or later the truth always comes out.

 

There’s a whole thread about TSLA in the business section...

https://www.ferrarichat.com/forum/threads/tesla-pricing-makes-no-sense.548173/page-141

 

So much wrong with both of these long Tesla love letters. The “analog” manufacturers have not focused much attention on the EV market for the most predictable of reasons, namely, it doesn’t exist, at least not from the conventional sense of producing stuff that people want for the express purpose of outsized profits. Toyota makes $20B in profits per year. It’s a safe bet that when the EV market matures and the cars can be sold for profit, that Toyota will be there and so will the other “analog” manufacturers. Tesla is not a tech company, it’s a garden variety auto manufacturer.

That said, let’s turn our attention back to 812 market dynamics and the $100,000 I’ve lost on mine and how many blanks I could give about it...

 

Mic drop!!

 

That will be Ferrari in 5 years... Just wait.

 

The same Exor NV that owns 29% of Fiat Chrysler also owns 23% of Ferrari. In 2014, Dongfeng Motor Group, the Chinese partner that builds Peugot cars in China, and the French government each took a 13% stake in PSA (Peugot owner) in a financial rescue operation, reducing the Peugeot family share from 25% to 14%. Things to keep in mind.

 

And yet Porsche is worth probably $100B with some of the lowest volume in the world. Market size does not indicate the value of the market.

The reality is that Tesla as a business is currently worth more than Ford, GM, VW, and many other mainstream huge manufacturers. I'm sure none of those CEOs would have liked another $50B in value for shareholders, right?

 

Since when are EVs not maintainable or less maintainable than an ICE? There are already plenty of Teslas with very high mileage doing just fine. Range is still fine, the motors are good for hundreds of thousands of miles. Less maintenance. EVs are superior long term cars for many reasons.

Who cares about rebuilding an engine over and over? No one does it. There is no point rebuilding the engine on old ICE cars because they are still worth next to nothing. It's not economical to rebuild engines on old cars when you can just buy newer ones for the same price.

The value of a car, any car, is not based on its absolute potential lifespan. A 30 year old basic EV and a 30 year old basic ICE will both be worth only their scrap value regardless of what you can rebuild.

 

EV battery degradation with cycles is a well-established phenomenon. At least according to some of the largest battery manufacturers in the world. I imagine they would know... As for smaller vehicles such as the Nissan Leaf you only need to do a bit of research. Terrible degradation after less than 5 years and with even small mileages in many cases.

 

Agreed, every shareholder of every company would certainly wish for an extra $50B in cap so long as it was durable and not temporary. Tesla shareholders should lock that value with an immediate sale because in the long run, it’s only illusory.

Lastly, it’s worth noting that the both the underlying brand value of Porsche and its margin per car is much different than Tesla.

 

The data on Tesla batteries longer term/higher miles is already out there. There are 8 year old Teslas and Teslas with hundreds of thousands of miles. It's been established that unless the battery itself has a defect, degradation is not a problem. Losing 10% of your battery capacity after 10 years and 120K miles is not a big deal considering most ICEs have already lost most of their value in that time frame anyway.

I'm not sure why people care if a car lasts 20-30 years or not. The average age of cars on the road in the US today is about 12 years. For reference, a 12 year old BMW with 200K miles is about $5K. Obviously value has little to do with battery degradation at that age/miles.

 

Another UK example

Tom Hartley are selling a V12 Lusso that listed at 315 k GBP , 2019 , 450 miles nice spec for 215k. Another example of a new Ferrari out the door and 100k off (owner must have taken more than that as TH has his margin. )

Clearly whoever bought that car did not want it or need it (wish I had known I love the Lusso and a new one at that price yes please) . Were they building a profile ? Forced to have it for a Pista ? Deceased estate sell ? Who knows, but they clearly did not want it, and added yet another car into a market that has no space for it. Should a luxury exclusive brand not be concerned no-one wants their products unless it is factory fresh ? Or only at price points that demonstrate new prices are clearly out of touch with the market. Why are people buying new cars and then dumping them like an unwanted illness ? Profile building is one, and Ferrari launching new models every few months another maybe. Before you get a car you have ordered, they have announced the replacement . So you are getting the old model.

At the moment the true new car price the market accepts in UK ( Brexit notwithstanding as an added disturbance) for a new 812 or Lusso is 100 k gbp less that list , or that the list price is overinflated by that amount. Portofino is not immune, lower starting point but similar deteriorating results. If you have a 2 year old Cali T with HS pack, why would you spend 90k to change to a Portofino? Only V8 mid engine seemed to have had any sense of stability, though the F8 with the Pista engine has managed to batter both the 488 and Pista in one go. Quite a move.

Very short term commercial approach being played out on new cars, which will work until buyers are burnt badly, realise they are chasing a dream that no longer exists, and their friends calling them out for being idiots at burning money so stupidly. Yes, in the early days replacement buyers will come onto the scene to replace those exiting, the money is out there, and the excitement of getting into a new , previously unavailable Ferrari , a dream. But then 6 months and 100k loss in and reality bites home again. The cycle will have an end point. Not sure how the dealer network will cope mind, as they already are full of stock and no longer able to buy back cars. The only way out is further price drops until the cars find buyers. When the market knows that a 6 month old Ferrari with under 1000 miles can be had for 30 percent plus off, who would buy a new one ? Still not sure why Ferrari would damage their brand so badly chasing volumes and profits when it leads to to becoming the worst depreciating car brand in the world. It goes against any concept of exclusivity and puts them in McLaren (who at least number many of their multitude of cars) territory. Surely they should have gone more exclusive and bespoke . In a few weeks we get a Portofino coupe. Why ? They don't need to add a lower price point car, aimed at Bentley and Porsche, they have it already. Any of the current cars 6 moths old with delivery miles is priced to compete. It took decades to create the business model that had stability, clarity and exclusivity.

Every cloud has a silver lining though, and used Ferrari bargains are there to be had .

The product is exceptional . It is just overpriced and overproduced new.

Back to batteries

 

Great post, Paul!

You can already see the affects of this market saturation and it is creating a self-perpetuating cycle of diminished interest in the new cars and steeper depreciation curves. You can see it in posts all over F-Chat - some "big hitters" saying they're passing on some new models due to lack of exclusivity, which - let's be honest - means lack of market premium to MSRP and actual depreciation, just like a normal car - except the stakes are higher at these price-points.

Ferrari is absolutely shooting themselves in the foot with their new approach. With a more limited supply of new cars leading to a higher resale value, the cars are more accessible to a broader range of people. I've been saying for a while that it's not the cost of entry that's a barrier to Ferrari, but rather the cost of exit - there are lots of 'regular' professionals that can afford a $300k F8... as long as they can sell it for close to MSRP... Those same buyers have no appetite for a $100k loss over 2 years (or less!) and will either look to lower priced alternatives or stay out of the "toy car" market altogether.

 

Unfortunately, montpellier & Prancing 12 are spot-on. At least, the cars are spectacular and starting to represent very good value to those wisely shopping on the secondary market.


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