Are ferraris holding value better today or not? An example

Just off the top of my head I bought a 98 F355 spider in 06 for $100k more or less, that model had 8 years depreciation. If I calculate today buying an 8 year old Ferrari that would put me into a 430 spider 06 all things being equal of $125-130k.

What accounts for this, even if adjusting for inflation?

 

Ferrari base prices have been creeping up in excess of inflation for a long time. This chart I did in 2010 shows base prices in 2010 dollars over 55 years or so of production. Excluding the special editions, the early vintage model base prices were about $80-100K in 2010 dollars, while current model base prices run $250-300K in 2010 dollars.

A 355 Spider had a base price of about $175K in 2010 dollars, while a 430 Spider had a base price of around $230K in 2010 dollars.

A $100K used value on a $175K base price is 57%. A $130K used value on a $230K base price is 56.5%.

So the depreciation (or value retention) seems to be consistent relative to base prices.
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I bet the TR's don't fit the curve too well. Base price of about $190k in late 80's (3% inflation/year = approximately $400k today right?). Same car in sweet condition would now sell for about $80k tops. Would this suggest they're undervalued?

 

collector cars are not holding their value worth a flip... THEY ARE INCREASING :=)

Hagerty Insurance had collector F cars up ~30% last year and are looking for more this year

value really depends on which car is being referenced and the demand for it... the new cars from general production depreciate from their purchase price... there are occasional exceptions, but depreciation is the norm for new cars... good example is the TR, a few sold at last week's auctions in the $60,000 range which is a small fraction of their original invoice...

 

A lot also depends on the upkeep cost of some models like the 355 and especially the Testarossa that might drive down the price on them. Can you imagine the current crop of cars with F1 transmissions, ceramic brakes, and hybrid tech? That's going to be interesting the next few years.

 

Never accounted relative to base price, now that makes sense. Thank you for the exercise.

In addition Yin, is there a correlation between base price and production numbers? Is this a factor of demand, supply, cost of technology and/or margins?

 

cool regression analysis
wish I had done this topic/data instead of the ones we did in the MBA program i attended

 

I see some outlyers in your data. Are they included in calculating the curve?

Outlyers (high or low) often follow a different set of rules so many correlation studies will exclude them if the point is to predict behaviour in the core group. Neat data all the same.

 

Just got my Motor Trend and saw that the Chairman of Ferrari said that they plan to make less cars. This seems to increase competition which can increase prices for new.

I wonder how much this new approach will affect the resale of other Ferraris as it's harder to get into a new Ferrari so people will have to "settle" for used.

Could a 8 year old Ferrari be a nice financial investment with a moderate return? haha

 

The newest mass-produced (over 2,000 units) collecor car is a Boxer, that ceased production in '84.

 

The outliers are included in the linear regression line, but I wasn't reading data off that line for my earlier analysis, but the individual data points in the underlying table.

The high outliers are the super Ferraris and the Fxx and 599xx. It's interesting to see that, through the Enzo, the super Ferraris consistently sold at $700-800K in 2010 dollars. From the Fxx to LaFerrari it has broken above that plateau.

I haven't investigated the correlation between base price and production numbers, but we know that Ferrari production numbers were generally increasing in the period that base prices have been rising. Further, we have Luca's statement that Ferraris market strategy is to build just short of demand. If Ferrari can be consistent in that goal, then the supply/demand curve is relatively constant despite increasing production numbers.

What's also interesting is to look at Ferrari prices relative to Median Household Income. Effectively affordability. New Ferrari base prices have been rising from 2x to a range of 4-7x of Median Household Income. If the supply/demand curve is constant while prices are rising relative to Median Household Income, that means that the people who CAN afford them are getting wealthier relative to the median population. Ferrari justifies the increase in prices via new technology, but they wouldn't put in that expensive technology (carbon fiber panels and seats, ceramic brakes, aero, etc) if people couldn't pay for it. This just means that Ferraris are "luxury goods" (a good that people buy more of as their wealth increases).
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This is the politically correct way of saying that the sales aren't there

Europe sales have plummeted.

 

Yup, the opportunity cost of buying a late model Ferrari (i.e., spending $300K+ on a new 599 versus buying two 246s in 2007) would be interesting to analyze.

That's the longer term question. I suspect that depreciation curves for modern Ferraris won't be directly comparable to something like a 275 GTS. Ever.

The assumption is that there's an inflection point, where an old Ferrari stops depreciating and begins to gain value. We know that is true for the Enzo-era cars, the fibreglass 308 (which is a pretty analogue car) and the supercars (288 GTO et al). The jury's out on the newer, digital mass-production cars (599, F430, 612 et al.)

 

This looks like a STATA graph