Ugly day for 575 owners

Nobody has brought up the macro issue. I think a credit contraction has begun. Lines of credit are being pulled for for the margi am customers even if they are not behind.

That will impact some marginal buyers. And prices are set by the marginal buyer.

 

The Fed is actually talking about lowering rates now.

 

Kind of a funny idea...a Ferrari buyer being a marginal buyer. None of this matters to the vast majority of those who aren't selling their 575's. It is kinda cool to have a high dollar car when you did not pay big money but if you aren't selling or aren't buying it just does not matter.

Let's say you pay 100 today for a 575 and a new mercedes. In a year you have to sell them both. Which do you think will have a higher value? In 10 years the merc will be near worthless and we all seem to accept that because we buy mercs and bmws. Somehow we expect a Ferrari to only go up in value? News flash a Ferrari is a car. It is a miracle that after a decade we can get any money out of it at all.

 

Mercedes is just a mass produced car. It ain't the same Mercedes from the 1970's. Almost every major freeway in-town has a huge M.B. dealer just off the road. The production #'s from the 12 cyl F cars, is nothing compared to what is available from M.B.

Value is set by supply and demand.

 

I’m talking macro. Supply of credit generally. Not Mercedes vs Ferrari. Less credit means leas activity. It’s deflationary to set prices in general.

What happens is in front of a downturn lenders start cutting lines of credit because they don’t want struggling businesses to pull it down just to hang on a little lionher. They also do it to clean up their stress test numbers.

Rates really don’t matter when credit is unavailable.

 

Credit really does not matter when you are paying cash. Just like credit card rates do not matter when you pay the full bill every month.

 

Prices are set by the marginal buyer. Many dealers use credit lines. People pay cash from home equity lines.

It’s basic credit cycle economics. Credit expansion leads to asset price inflation. Credit contraction asset price deflation. It has really noting to do with the underlying assets.

Time will tell.

 

There will always be a market for a well maintained 550/575 regardless of the color. Personally, I think silver and gray are the best.

 

It is also promoters and 'others' which 'may' drum up asking prices.

Low production #'s and hi-demand will result in appreciation.

In seven years, the LP 400 Countach (the clean Countach) went from $90,000 to the bottom seven figures and more. With this car the market peaked in 2014 and has receded.

 

I never said Silver shades for 550/575 is bad. I own one

 

Agreed. We mentioned this a bit in the vintage section. I posted on it last year a few times:
https://www.ferrarichat.com/forum/posts/146053561/
https://www.ferrarichat.com/forum/posts/145803028/

Funny timing as the short term US bonds inverted on the 10 year just last Friday. Last time it happened was 2007. https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield

As far as the others here not sure how easy credit will push prices up, it's because of the marginal buyers as stated having an easier time getting into a "purchase." For exotic cars, it's the ease of getting money via leasing/lending. Cash buyers will not set this price during easy lending, but they will during credit market contractions where cash buyers reign supreme.

This applies to home buying with easier credit (see housing market boom followed by crash in 2005-2007). It's also playing too much of a part in college tuition prices, but a lot of people don't notice that unfortunately. The government has made educational debt too attainable and all it did was drive up tuition very quickly.

 

I don't think there's anything wrong with speculating to an extent. Buying a depreciated asset and hoping to lose as little as possible isn't an unreasonable plan. Buying any brand new asset, particularly an average luxury car, and expecting to not lose money is foolish. As long as you get enjoyment out of what you spend disposable income on, power to you!

 

Everyone back off and do not buy anything. Been watching 550 market on continent for years and hopefully will finally buy one this summer. There are three cars I'm thinking and all of them have been available for nearly a year or even two. Seems even visible 15-20% price reduction will not help to move them fast. Few more months, some more bad news on economy and it really is buyers market like we have not seen in years.

 

As long as rates are low.... market will not drop substantially! Easy low credit drives up costs for many reasons

 

Just don't go shopping in Australia: prices there still seem to be on a high. Not sure about 3x8s, but I noticed a 550 and 575F1, both around 40,000 miles, both asking nearly £140K - about £30K or more over what they would be asking here in the UK.

 

...both Australia and Canada share poor international currency values!
Local markets are a function of the fx

 

I'm in the same boat really! New project delayed buying once again, but should be buying this summer.

 

Surely that should make them cheaper in £, not more expensive?

 

not in their own local market...cars are priced based on imported values into the local markets, that is why Canuck cars and Australian cars are priced high for local residents, impossible to import a car from over seas into these countries for residents, Ferraris are global cars
However, both markets lend themselves to be a cost effective route for UK, Euro, US markets to buy from and import into due to weak canadian and australian currencies , baring import regulations of course

If I were a USA buyer I would look for a car 25+ years or older in Canada especially a former US car, bring it in...I can see a few models that are way more cost effective for a US buyer purchasing from Canada vs buying in the US

 

I don't know enough about the first point to comment, though I thought the only issue with imports into Oz was the fact that you cannot import LHD cars.

However, I don't understand your second point, especially in relation to UK buyers sourcing cars in Oz: it doesn't make any sense to me to pay £30K+ more for a car than you would pay for a similar one already in the UK, and then have to pay the costs of transporting it half way around the world.

 

Correct, but not everybody that buys a Ferrari does it in cash, or purports to do it only in cash. Some / most do it with credit or financing.

 

First point directly relates to my second point which you made...I lived in OZ many years ago import tariffs on cars dropped to 0 over the years auto industry walked out of the country no more manufacturing basically due to no import tariffs. Each Higher cost region has a low
cost region that will make sense to import from....

In your case, I am uncertain of import regulations in UK, look to Japan cars with VAT rebate for export...RH drive ones, bet they are substantially more cost effective then UK cars
In a nut shell...Ferrari's are global commodities that can be purchased in a global market by evaluating fx and costing / pricing accordingly
As it is with all desirable luxury items, art, watches etc....

In north america luxury items are commodities based on the fx and one can buy and sell based on this as discussed earlier

 

My understanding of importing a car into the UK is Price of vehicle (including shipping costs) + 10% Import Duty + 20% VAT. The car then has to be inspected and pass an MOT with all lights complying with UK regulations.

IMO there are two distinctly different world markets for modern Ferrari's LHD and RHD. For older rarer cars the side of the steering wheel matters less, they are that rare.

I was of the understanding that OZ had punitive import duties on cars, particularly high performance cars?

 

I don't agree. There is no global market for Ferraris. Because of differing specs. (e.g. USA and RoW, RHD and LHD), transport costs, import duties and regulations, etc., there is in fact a number of distinct and separate local markets.

To take the example of the UK buyer for a 40,000 mile 550 considering whether to source a car from Australia, he could, for example buy this one: https://www.foskers.com/used-cars/7240517-ferrari-550-maranello/?utm_source=CarandClassic.co.uk&utm_medium=portal , asking price £90K in Kent, and drive it home, or he could buy this one https://classicthrottleshop.com/1998-ferrari-550-maranello-argento-nurburgring/?currency=GBP , asking price £158K in Sydney, and pay shipping costs and import duties on top. No contest, is it?

 

All I see globally ,are many Japan cars in Europe and Canada, euro cars in Japan
Many Canadian cars in USA and many USA cars in Canada
Same goes for the Middle East
They are global....
May be more a function of Uk import rules, taxes, duties and drive side, which precludes imports into the country?
Uk may be the isolated case
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