things are getting bad

Even in Greenwich.

Best

 

Jim is right- I have had a number of dealers calling me about Gallardos and F430's (not Scuds) because they know I have cash and am looking. The prices are dropping every time they call. Now here is where the sociological/psycological issues comes into play:

I am a willing and serious buyer, with cash and secured loan (bank) behind me. So I can drop the dime any time I want to get a car....but...I say to myself--maybe better to wait--prices may still go down so better to wait. I doubt they will go up much, if any over next 6 months so best for me to wait longer. And because I wait longer-those cars on the market have one less buyer right now. Multilply this scenario by many buyers who are waiting, and spread this from cars to houses to stocks to everything and we have two types out there right now. Those leveraged too much and need to create cash by selling stuff (cars, houses stocks etc.) and those who are not leveraged too much but are waiting (hedging)for prices to come down further so they are not buying (injecting capital) into the market. Result-prices on everything drops. We see it in stocks, bonds, oil, so why not stupid silly cars like Ferrari? This whole scenario is true for corporations as much as individuals. We will see a drop, across the board, on all Ferrari, old or new. Some will tank, some will drop proportionally less. But he super expensive will go also. A falling tide lowers all boats-whether a dingy or a liner.

 

I believe the deal as presented.

I also believe that, as bad as everyone thinks it is out there, the reality is that it is WORSE. And it will get much more worse, before it gets better. We are not at the bottom. The current market troubles are related to the subprime, that is obvious. But the reason that the market is reacting like it is has much more to do with the forward look. Neither McCain or Obama have a plan that understands "money." And, the "money" knows that and is fleeing.

The whole subprime issue could have been mitigated by suspending the requirement to 'mark to market' the securities held in subprime portfolios. That occurred with the $850B bailout bill, but the market continues down. This is not because of the bailout, but rather that the 'money' has no confidence that we are avoiding socialism.

China is more capitalist than the US right now.

 

Totally agree.

I think people are perpetuating these stories to scare people into selling their cars cheap, so that they can steal them.

 

Even if dealer would pay more, why would dealer buy more cars if the ones they already have arent selling ?

 

oh yes...that must be it (rolls his eyes). the world markets are selling off as they are out to steal your 430. it would seem that with your help...we have figured it all out!

 

Our company has been around for over 50 years. According to our chairman, in that time we have not missed a single debt payment. In fact, he says that he cannot remember us ever being a day late on any payment--for over 50 years.

Just 3 weeks ago, Wachovia pulled one of our lines of credit ($100 million). It had a -$0- balance and we had paid a $1.2 million fee to keep the Line open. They pulled it in violation of the covenants, and suggested we sue them to get the fee back.

One of my employees had to take an advance on his salary--he makes about $250K per year, has a house (with a 20% down payment) and has never missed a payment. He has 2 cars with no debt. He has no credit card debt. He has a credit score of almost 800. Last week, he needed $10K to pay for some things--he got a big property tax bill and a big insurance premium bill at once. He went to his bank to get $10K on one of his cars (a $50K Range Rover with no debt) and was turned down. The Bank said they were not making consumer loans for the forseeable future. Rather than run up a credit card, he took an advance.

(Some of you may ask whether he has "saved" any money in this situation--but his mother has been having Chemotherapy and he is paying a lot of money out of pocket for in-home care.)

He is a good guy and a reliable borrower with 8 years at his current job.

If you publish the name of the bank that is making the loans you suggest, I bet they would be flooded with business.

 

The arguments set forth is this thread can be a bit confusing and distracting, but what else is new?

Here is the bottom line as far as I see it: The reason for the collapse of the late model Ferrari market is the perfect storm of woe, and no single issue is to blame. Scarcity of a commodity usually drives it's price. That's why gold demands a higher price than dirt; anyone can get dirt, but it takes some doing to get an equivalent weight in gold. Fact is, for a time, there were more buyers than the late model Ferrari market could service. Thus, the prices go up as lots of dollars compete for fewer cars. Those days are over. The pendulum swings both ways.

I have a theory that during recent years, one of the knee-jerk demonstrations of wealth for the uncreative was to "buy a Ferrari." The high rollers adopted this culture, and "buying a Ferrari" became de riqueur for the big money guys. Fact is, many of them were not true car guys, they were just conspicuous consumers. What's the first thing to go when times get lean? How 'bout the bling that has no real meaning to the owner? Time to dump the Ferrari.

I have conducted MY OWN research, and I am convinced that the late model Ferrari market has indeed imploded. However, I don't think the problem is financing for well heeled clients. Case in point: I called Woodside credit, who loan regularly on exotics. I gave them my credit score (above average) my income (well above average) and my debt to income ratio (well above average) and they said there would be no problem and they could have me approved same day. They were foaming at the mouth for the laon. No problems there. So why don't I buy? Read on...

There seems to be no shortage of denial right now regarding the market. The reality is that if a guy were forced to sell an F430 TODAY to avoid a foreclosure or losing a portfolio position, he would be very hard pressed to do so. Try calling a dealer and asking them if they want to pay cash (as opposed to consign) an F430. The answer would be no.

So, what does the anxious F430 do? List it on ebay? Hah! Have you seen the 430 listings on ebay? Over 60 at last count, no bids, all still priced where no one who is smart enough to have cash in this economy would ever touch them. I contend, just as Napolis as observed on multiple occasions, that if you have to sell an 430 quick, you are looking at a price well below $200,000. And that's for a spider.

Perhaps the only real evidence I have for myself IS myself. I have the money right now to buy an 08 F430. I won't touch a car at the present absurd dream prices most dealers have posted. Why? Because I know that If I ever sell, I WOULD BE SELLING INTO THE SAME CATASTROPHIC MARKET. I've owned about every exotic make out there, and I would consider myself a pathological car guy since grade school. My days of being gouged for a Ferrari are permanently over. I'm sure I'm not the only true car guy who feels that way...

 

Ditto. If you had to bail IMO you'd be lucky to get 150K right now.

 

nice post walter mitty! i think you summed things up well. this post should be locked down on that note!

 

Originally Posted by Joe Macchione
Certainly the economy is bad, but I get a kick out of all the non-owning Ferrari fanatics who come on FChat and profess to know the "true" market. I just purchased my Scuderia last week and was offered financing and lease terms in the 6% to 6.5% range. Short and long term financing. So, where do you get your knowledge from on financing and leasing?

To clear things up where I am getting my info from (sorry I am not one of those non owning Ferrari fanatics):

just sold my personal 07 430 Spider. 08 Scuderia coming in a month. In addition I have a dealers license buying and selling highline exotics retail and wholesale and I talk and deal with lots of people in the car business: new car dealers, wholesalers, collectors, car fanatics and finance companies.

Just trying to be realistic.

 

I completely agree, there are a large amount of internet jockeys on this board that THINK they know what they are talking about.

 

Right on, brother. I brought my first Ferrari (a 550) a little more than five years ago. I sold it a couple of months ago. Soup to nuts, the car cost me $50,000. I'm not poor, and I'm not wealthy. But I am embarrassed that I blew so much money on a toy.

In Texas, we say that, "I'd rather be lucky than smart." Fortunately for me, I'm in the lucky category. Over all, I broke even on my Ferrari ownership experience. In 2004, I brought, drove, and sold a Stradale for free. In 2006, I brought, drove, and sold a Maser Spyder for free. Finally, last Spring, I made $50,000 by selling my interest in a 330 GTC.

Like I said, I got lucky. But I don't feel so lucky on a going forward basis. Maybe if in a couple of years I can buy a 599 for $140k, I might have to jump back into the game. Until then, it is me and my Miata.

Dale

 

here is a different perspective: if i paid 250 MSRP last year for an 07 spider, and i have to liquidate it now at 175, that would be a 30% loss. Even at that level still better than having owned SPY and u got to drive a 430 spider!

 

Branch Banking and Trust (BB&T)

Point Breeze Credit Union PBCU (Maryland)

PBCU just did me a loan of 35K for 3 years at 5.5%. By just I mean last week. Not a huge amount of money-but they did it without blinking an eye or any grief at all. But I have good credit and cash in the bank as backup.

I offer my condolences to your friend and his mother's chemo--My mother died from cancer when I was in my early 20's-so I have some personal experience here-I say this because I am going to ask a difficult question next:

The guy makes 250K a year, has no debts (other than house) and can't find 10K for an unexpected bill? Yes-he has a big hit with his mom but it frankly this sounds odd. How about a home equity loan, how about sell the Range Rover for 30K, pay the 10K and buy a used Honda? Why does he go and put himself in debt? Not very smart, really.

As far as your company goes-you suffer (unfairly it would seem) from the fallout of the Wachovia demise. So Wachovia is not willing to do loans. How many other banks have you tried? What is your companies debt/equity ratio. In todays market banks want a zero (or so) ratio. Why does your company have a $100 million line of credit? How does that compare %-wise to your income/asset value? If it is a big %, then right now no bank will loan you or cover such a line of credit.

The company I do work for-they are about a $750 million/year company. The owner has been smart enough to keep the dept/equity ratio low. (Zero) and never borrowed money from any bank for expansion or capital. Always out of cash on hand. But he has gone from nothing to where he is in about 17 years. And he has a war chest of many millions in the bank as a cash reserve. And we have banks begging to loan us money. So the moral is that, as always, whether as a business or a person, live below your means, invest conservatively, have cash on hand-keep your debt to a minimum and you will grow, prosper and survive in just about any market.

 

+1

That is the problem. When people overextend themselves, they always have one finger on "sell" trigger. Not true when people paid cash.

I'd bet the guy couldn't afford it to start. He borrowed his lifestyle, and the number of potential cash (e.g., real) buyers for his car went down. It's scary, but not complicated.

Well, then I couldn't have posted my valuable "+1" comment above.

 

Those Ferrari numbers are light years ago economically speaking.

Exotic dealer I know said sales have fell off a cliff last week of Sept. If they are not selling, they sure as hell won't be buying.

Dave

 

There are also people on this board who have had private conversations with the CEO of Ferrari where pricing was discussed that resulted in changes to Ferrari's msrp.

The key has always been being able to sort the wheat from the chaff...

 

Another example of a good deal is hear,

'06 Gallardo with less than 5k miles for $120k on one of the Lamborghini forums, the owner has health issues and need to sell. I think that it started out in the mid $130k and fast down to where it is today.

 

I do not disagree with you, but there should be whole lot more cars going through the sale, and other sources, but this is all we have to go on the current MMR results..so either dealers will wait it out, or they will wholesale...seems like the latter...

 

Remember all the arguments here over wether to pay cash or finance? Us cash guys were seriously outnumbered. If a quarter of the financers/leasers have to sell or default, that puts a lot of cars on the market and potential cash buyers are reluctant to jump on a sinking ship and with credit tight, what lender would finance a used exotic? No more home equity to buy either. More sellers, fewer buyers. The result is as predictable as the sun rising in the east.

Dave

 

....

 

"There seems to be no shortage of denial right now regarding the market."


Amen. Will be interesting to see how the older cars are affected. Depends on the car, no doubt; there are an awful lot of cash buyers for, say, a 275GTB4 - I'd think too many for prices to drop to mid six figures. I know where I'd pull the trigger and I suspect there are a lot of folks like me.

 

275 GTB's back at $400 would be great !

 

Funny, that is what FOUR years of my wife's S class Mercedes cost us.

By the way, over 7 years with 5 Fcars, I'm at breakeven too. A bb512 was my uptick.