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Sheehan's recent SCM article on Ferrari values

Discussion in 'Ferrari Discussion (not model specific)' started by robbio99, Feb 20, 2009.

  1. robbio99

    robbio99 Formula Junior

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    As appeared in:

    Sports Car Market--February 2009 issue

    Sheehan Speaks

    by Michael Sheehan

    Thorson_s Lusso, worth a fleet of VWs now


    In last month's column I discussed how Ferraris have evolved through three distinctive eras in the past 60 years:

    1. Racing-based evolution of the Enzo Ferrari era
    2. Mass production of the Fiat years
    3. 3. Even-higher-volume of the di Montezemolo era

    I concluded, in part, that the Enzo-era cars are the most collectible and highest valued, while the Fiat-era cars long ago flat-lined in value, and the Montezemolo cars quickly become used cars.

    From the day they left the factory, the Enzo cars were sought after, and even as they aged, the most desirable commanded prices that went far beyond transportation value.

    As an example, fellow SCM writer Thor Thorson bought a battered Lusso, s/n 5471, with a 275 engine and a crunched fender, in Seattle in 1969 for $6,000. While it's a pittance today in the world of collector cars, in 1969 that sum would have bought a trio of new 1969 VWs, at $1,799 each, with lots of cash left over. The same $6,000 also represented 30%-50% of the cost of a house in middle America in 1969, so again, a lot of money.

    Even in today's unsettled economy, the same project Lusso would still bring an easy $250,000, now the price of a fleet of new VWs, or the cost of a moderate house in middle America. Although prices are down from six months ago, the Enzo-era cars remain the Gold Standard of collector cars.
    Fiat era less collectible, more affordable

    The Fiat-era cars play by a different set of rules and have always been less collectible and more affordable, as many more were built. Thanks to depreciation, 50% was usually knocked off the purchase price within three or four years. Over the last two decades, there have been booms and busts and inflation-related appreciation, and so today a nice Boxer will still set you back over $100,000. That number is beyond its new price and well beyond transportation value, but far less than an equivalent Enzo-era model.

    Indeed, most of the Fiat-era Ferraris have maintained much of their panache, and (excluding the clumsy 400s and 412s) most trade for close to or over their "new" purchase price. Their value validates these cars as collectible, although at a large discount behind the price and desirability of their predecessors.
    Putting on the brakes

    The expansion of the Montezemolo era continues, and only last year Ferrari told its U.S. dealers that it expected to build nearly 7,000 new 612s, 599s, and 430s for the world market in 2009. Ferrari also planned to build nearly 3,000 new California Spyders for the 2009 world market, a major jump in Ferrari production.

    At that time, the bigger U.S. Ferrari dealers had allocations of about 50 cars per year, while the smaller dealers got about 25 cars. A typical 50-car allocation would include two or three 612s, six to eight 599s, and about 40 430s. Four to eight of the 430s would be Scuderias and another six or eight would be 430 coupes, the rest being 430 Spyders. Only last year, U.S. dealers were told to expect about one half their allocation in additional California Spyders, effectively increasing every dealer's quota--and profits--by about 50%.

    Times, economies, and business plans change, and now that Ferrari sales have slowed, the U.S. dealer network has been told it will not get its quota of new V12 and V8 Ferraris for November and December. Those cars either will not be built or will be allocated elsewhere, and they will not arrive as part of their January and February allotments.

    This slowdown gives Ferrari dealers a chance to sell existing inventory while hopefully creating some level of demand through lack of supply. Dealers who had expected to receive 50 V12s and V8s plus half that number of California Spyders will now get only 40 cars in total, broken down to two or three 612s, six to eight 599s, three to five total 430s, plus 25 of the all-new (and hopefully fast-selling) California spyders.
    What price exclusivity?

    No one knows how long or how deep this recession will be, but it is interesting to see how quickly and dramatically Ferrari has responded. Hopefully the company's revised marketing plan hits its target, but if not, Ferrari is small enough and nimble enough to change direction. Once the economy does rebound, there is little question that Ferrari production will soon hit 10,000 cars a year. Of course, as production increases, exclusivity and collectability decreases. But as always, the reasons to buy a new Ferrari have far more to do with exclusivity and a statement of success than with collectibility.

    For many years I had opined that the 456 GTs would bottom out around $75,000, the 456M GTs at $95,000, and the 550s north of $100,000, as these are fast, beautiful, user-friendly supercars. Much to my amazement, even the last few boom years have proven me wrong. Now 456 GTs can be bought with asking prices of $45,000 through AutoTrader or eBay, 456M GTs are offered with an ask of $75,000, and a 550 with 25,000 miles can be bought for $75,000. Unless meticulously maintained, these models are now seen much like a ten- to 15-year-old Mercedes S600 or SL600 V12--overly complicated, with high maintenance costs, dated styling, and a black box syndrome of ever-more-difficult maintenance problems to come.
    The miracle of massive depreciation

    With a "new" cost of $220,000-plus for the 456 GTs, 456M GTs, and 550s, today's radical drops in value are breathtaking. While the good news is that massive depreciation has or will make these cars more financially accessible, those who wrote the first check, and even the second or third checks in the ownership chain, have to question the value of exclusivity, especially as it goes away. Late-model Ferrari price declines also apply to other marques, be it the Chevy Suburban, Bentley Continental, Nissan Pathfinder, or Lamborghini Gallardo. As the economy has declined, they have all suffered major price reductions.
    More affordable for enthusiasts

    My crystal ball was long-ago recalled for defects, and so I will not guess where used 599s or 612s will be priced in another five to ten years, but based on what has happened to 456, 550, and 575 values, it doesn't take a crystal ball to see where we are going. As for the 360s, with over 17,500 built, and with anywhere from 80 to 100 for sale in every issue of the Ferrari Market Letter, plus an equal number on eBay, they clearly have nowhere to go but down. Likewise the 430s. Stealing a line from Monty Python, and "looking at the bright side of life," the good news is that all of these late model supercars will soon be far more affordable to the enthusiast who doesn't mind driving last year's model--and experiencing mind-boggling performance at a relatively entry-level price.
     
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  3. LightGuy

    LightGuy Three Time F1 World Champ
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    Article has to be a fake. Author sez something nice about the Boxer. That's not Sheehan. ;)
     
  4. Senna1994

    Senna1994 F1 World Champ
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    Excellent article, thanks for posting it.
     
  5. Dodici Cilindri

    Dodici Cilindri Formula Junior

    Feb 21, 2006
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    I most definitely agree with Sheehan. While the Enzo era vehicles become the "grand masters" of collectable motoring. The vast majority of today's production will just become "used cars".
     
  6. 512bbnevada

    512bbnevada Formula Junior
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    Wow I actually agree with him. Good article
     
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  8. TheMayor

    TheMayor Eight Time F1 World Champ
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    When I drive a car --- any car -- I don't think about how much each mile just cost me.

    I think about the ride and the noise of the engine and the wind in my hair and the excitement of the acceleration and how I feel happy driving it. If I did think about how much it cost, I'd probably keep it at home and take a bus.

    If you want to worry about your money, better to take a second look at the world's biggest casino: the stock market. And, if that doesn't scare you, get yourself a financial advisor. Like, Bernie Madoff, for example.

    Here's some good financial advice:

    1) If you can't afford to buy a home, rent.
    2) If you can't afford a Ferrari, don't own one.

    If you are going to be worried about every mile and what it just costed you, I suggest you refer to item number 2. You may not be satisfied, you but you definately have more cash in your pocket.
     
  9. LightGuy

    LightGuy Three Time F1 World Champ
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    Just sat in a 430 scud yesterday. Somehow I cant see this car as being just a used car.
     
  10. hardtop

    hardtop F1 World Champ

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    The next model will make it yesterday's news plus it appears Ferrari is making a lot of them. Why not, I'm sure they make a killing on each one.

    Dave
     
  11. Neonzapper

    Neonzapper F1 Rookie

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    Interesting economic times in which we live, Gentlemen.
     
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  13. PhilNotHill

    PhilNotHill Two Time F1 World Champ
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    More affordable???

    If your income drops faster than the value of Ferraris... not gaining on it. sorry.
     
  14. Sfumato

    Sfumato F1 Veteran

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    Ferrari and any car company is in business to make money. Not icons, grails, whatever. Far more people could afford new Ferraris in recent years than ever before. Ferrari built them and sold them to make money.
    The Enzo era/Fiat era/ LdM era just demonstrates how a cottage maker turned into a serious maker, made far more money and won more world championships at far higher costs than when Enzo was here.
    Brokers have made far more money in the last 30 years than ever before. I don't see them selling Fiat or LdM era cars at wholesale, or refusing them as trades.
    The comparison with SL's, which sell 15-18k year or more, is obtuse. Ferraris are actually far easier to maintain, are far more simple than those overly complex cars. The depreciation curves of Lambo, Bentley, AMG are far steeper than any Ferrari. Suburbans and Pathfinders? WTF do they have to do with anything? Doubt there are Suburban or Pathfinder collectors.
    So financial viability brought by Fiat and LdM is bad for the marque. Elitist BS.
    MS thought sawing the roofs off Daytonas and 4cams was a good idea, so excuse me if I'm not convinced of reverence :)
    Hope Ferrari survives this economy better than GM and Chrysler do. All they have to do is make money, not impress chat boards.
     
  15. Bullfighter

    Bullfighter Two Time F1 World Champ
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    I agree with much of what Sheehan writes here, although what he overlooks is that for 99 percent of us the pre-Fiat era Ferraris are pretty much either toys, museum pieces or unattainable. Certainly a 250 GT SWB is going to hold value better than a 512 BBi, but one of them you can actually buy and drive.

    For the Montezemolo-era cars (348-California) -- including the 456 that Sheehan mentions -- values are going to be weighed down by aging and increasingly obsolete electronics, moreso as we get to the newer cars. His Mercedes analogy is spot on: a 25 year old Merc SL is going to be more desirable than a 10 year old one, and we're seeing that play out with Ferraris. Cars are now so dependent on technology that we may see value curves follow those of computer hardware more than the predecessor coachbuilt sports cars.

    I think he's right as well that exclusivity will be fleeting. Nor does performance equate to exclusivity any longer, because computer engineering has replaced cylinder count as the determinant of speed and, increasingly, handling -- the F430 is fast, but hardly has a monopoly on speed in the current market.

    If you want exclusive, you will ultimately have to go old. Very old if your checkbook can handle it, or back to '80s and Enzo's last years otherwise.
     
  16. parkerfe

    parkerfe F1 World Champ

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    I had always thought that Enzo was active in the design management of Ferrari road cars through the 288GTO...that would put some of the early so called Fiat-era cars also part of the later Enzo-era cars...
     
  17. Ak Jim

    Ak Jim F1 Veteran
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    Thank God they made the the "clumsy" 400s and 412s (and 365 gt4s) because if they didn't there would be no way I could ever afford a V-12 Ferrari with six Weber carbs!
     
  18. robbio99

    robbio99 Formula Junior

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    At the end he probably had the long term strategic plan for years to come in view. Final design details then get ironed out.
     
  19. Papa G

    Papa G Formula 3

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  20. brettski

    brettski Formula 3

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    really...you thought so ? aside from admitting how wrong he was and that he has no idea where we're headed, the rest was just commom sense that we've heard dozen times before from dozens of different people...the challenge for an 'expert' in this age is to say something that we're not all completely aware of, which is difficult because, for the most part, we are all very well informed thanks, in large part, to this very medium.

    Amen bro'...

    "clumsy" ?...right...um, compared to what exactly ? other 30-40 year old 2+2's ?

    you'll be able to judge for yourself when you're here in 7 weeks time Jim...and "clumsy" won't be an adjective you use to descibe the experience.
     
  21. 512bbnevada

    512bbnevada Formula Junior
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    Even a lot of posters are shocked to see 550s for a third there new price just 7 years old or 360s the same. This article brings it to light again big production numbers today make poor resale. 328s and TRs held there values well for years until the past few years so big depreciation is something new with Ferraris today.
     
  22. AMA328

    AMA328 F1 Rookie

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    #19 AMA328, Feb 22, 2009
    Last edited: Feb 22, 2009
    Guess Sheehan finally faced reality and 'fessed up as to the 'new world order'. 'bout time.

    Also makes me think he's fully sold out on inventory; wouldn't wanna trash the market until all of the merchandise has been peddled...
     
  23. AMA328

    AMA328 F1 Rookie

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    Just wait a few months...
     
  24. parkerfe

    parkerfe F1 World Champ

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    I agree. I once owned Al Garthwaite's personal 400GT 5mt and it was a hoot to drive. In fact, I kinda wish I stilled owned it so I could take all three of my daughters for a ride at the same time; which is impossible in my current BB512i. I traded that old 400 to Steve Barney for a 1986 TR.
     
  25. AMA328

    AMA328 F1 Rookie

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    Interesting how there's inequity in economically disastrous times...some get wiped out, some are relatively unhurt, some actually come out in better shape. I suspect there's a -few- out there with the ol' powder dry, just waiting to pounce when they think the time is right.
     
  26. utvi

    utvi Rookie

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    Even that's high. Good models can be had for well under $60,000 now.
     
  27. buzzm2005

    buzzm2005 Formula 3

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    Ha! I was thinking the same thing. Although with the 1984s turning 25 this year, the whole series is now no newer than 25 years old which has a certain intangible value to it.

    An occassional fchatter who I know has been a careful collector for some years. He chuckled when I gushed over his rare early 60s F that he bought in the mid 70s: "Are you kidding? When I bought this car Ferraris were Italian used cars that didn't work."
     

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