Wealth report: why so few sales of exotic cars??

couldn't have said it better myself. I know plenty of people who can afford Ferraris, but they choose to spend their money on other things they like more.

 

The last thing wealthy folk need is for people to know they're wealthy With very few exceptions, there's only downsides to publicly displaying evidence of possible wealth.

 

Nobody "needs" a million-dollar+ house...

 

My sentiments exactly. You're not a millionaire until you have one million dollars in cash in the bank (I'm tempted to say cash equivalents as well but pause... )

Many used a flawed process to determine wealth.. it factoring in house and illiquid assets shouldn't count IMHO. Assuming one could sell their million dollar house for the million it's "worth" has been disproven of recent..

 

If I was wealthy I would have a bevy of fine automobiles. My mom on the other hand would buy books and donate the rest to libraries. Different strokes.

 

Five million is rich? You've got to be joking. If you live in a large metropolitan area, like either New York or the California coast, you are essentially middle class, maybe even lower middle class. Might be able to buy a used 360, but not a 458.

You start to get comfortable at 10M, and then you are probably able to get into a new Ferrari.

Of course none of this applys to the fly-over portion of the US, where 5M is maybe of substantially more value.

As for the actual topic: these cars have been a pain in the a$$ to own for years. Weren't reliable, cost a fortune to maintain, and were very fragile. All of that changed in about 1999, when the 360, and it's competitors came out, and it's been a major improvement with the 430, and it's competitors. The 458 takes it to an entire different level. I am surprised that the demand for the 458 isn't a whole bunch greater, but I suspect the "great recession" is the reason.

At any rate, the 458 is an absolutely great vehicle, one that will set new standards. Too bad they cost so damn much. Talking one's bride into allowing a purchase like that is very time consuming, and that may be the reason the sales of these types of vehicles are slow.

Art

 

It isn't "sad and meaningless" if one derives personal satisfaction in acquiring it.

There are many examples of people who had a knack for acquiring money, but not spending it, usually because their needs were pretty simple.

Nothing wrong with that.

Remember, there won't be any "old money" if the "new money" is all spent.

 

I agree with the rest of your post, but FWIW I suspect the new generation of cars will cost a fortune over time to keep in good running condition.

I don't know what it costs to replace the 599 video screen dash, the California's retractable top mechanism, 360 windscreen ($6000?) or even the F430 convertible top ($10K?) Assuming the engine bay fire problem has been fixed, the jury is still out on the 458. How does the clutch replacement compare to the 328 (~$1000)? Brakes? Steering wheel?

Early 360s also tended to expensively destroy their engines due to defective variators -- a friend here in San Diego lost his engine for that reason at ~10K miles and bought a Gallardo, unimpressed with Ferrari 360 reliability.

Modern high-end cars are stupidly complicated, and if anything parts prices have escalated. I think the same is true generally of all highline cars -- Merc, BMW, Porsche, Ferrari, Audi, etc., as the parts have become specialized and expensive. And that's without getting into $20K carbon ceramic brakes, which had better "last forever".

Yes, the 458 takes it to a new level, because it's a new car. It looks a lot better than the amoebas it replaced, but it is an intricate piece of work. If anyone thinks that it's somehow going to be low maintenance and economical to own, they need to take their red mist medication. You have to be (a) wealthy and (b) enthusiastic enough about Ferraris to put up with the full ownership obligations.

 

+1. Although a significant reliability improvement and lower maintenance cost on the 458 (since the 328) would be great, I'm expecting this to not be the case. History seem to show otherwise. Time will tell as it takes a number of years of data to ascertain reliability, etc.

With regards to the wealth-versus-exotic car relationship, the wealthy (even wealthy car enthusiasts) do tend to manage money well. This may include balancing and being prudent on spending on depreciating assets versus investing in appreciating assets i.e. new car versus old/collectible car (which I believe is not reflected in exotic car sales).

 

My take on the subject: Many people from all walks of life are able to appreciate things of fine quality. In the case of cars or any fine object, while one can appreciate it's beauty, rareness, and overall qualities, it doesn't necessarily mean that they have any desire at all to own one at all. Although at the same time, they can see the reasons why one would aspire to own a special car. As others have said, people spend money on different things. While being a car guy, I know it's hard to fathom how somebody wouldn't crave to own such an exquisite car, but we have to remind ourselves, not everybody is a car lover.

 

Some people do. Ever tried to find a decent place to live in the Bay Area or Southern California or NYC? (obviously could list other places). Of course I define "need" as a neighborhood consistent with your demographic, solid schools, a bedroom for each family member...nothing more.

$1M and hoping to have a sub-45 minute commute in the Bay Area (even now with the price declines of the past few years) gets you a very, very small house. If you are willing to spend 2-3 hours per day commuiting on top of a long workday (I could not imagine), then you could spend closer to $500k and live in a remote town with demographics/schools that might not appeal to you...

To live in a good community and be reasonably close to work in these areas costs anywhere from $1M and up. And, before you think I'm saying for a masion...I'm not. Middle class (that's what we call area's with houses from $1M to $2M in some of these areas) houses are 2000-3500 sq feet. There is a great report by Coldwell Banker that compares (for relocation package purposes) the "same" quality area in many metros in terms of demographics, schools, commute time, etc and I've always found it very illuminating and far more useful than the government and RE industry "median" and "mean" price by metro area (which are virtually useless).

 

I disagree.

Anyone with credit access or cash or a combination of $275k could get a new 458. I would bet there are folks on this board without total net worth equal to $200k that own a Ferrari (likely not a new one).

Everyone has a different "utility" curve of what they value and want. Some value savings accounts, some value large college funds for their many children, some like art, some like cars, some like planes, some like charitable causes, some like having many wives and paying alimony to several women...and on and on...

Using me as an example, I recall right after graduation from undergrad having tons of debt, no assets of anykind and a starting salary of $25,500 exactly...and what did I do? I went to the BMW dealer and bought a new 325i with a sticker price of exactly $25,500 using credit (I kept a copy of the sticker and my offer letter to document my, ummm, choice). Made sense to me and made me very happy for the period of time I owned it! My Dad thought I was nuts (although I'm pretty sure he bought a T-bird that cost more than his annual salary in 1958, but somehow he forgot that!).

Simply put, someone can put whatever % of their net worth/credit capacity as they want into a car or a house or whatever. There is no "must have" checklist before owning a fancy car....I think car nuts often put a large % into their passion...

 

That is not middleclass housing in the Bay Area. That is decidedly higher end, especially in the Peninsula side.

 

1. The "worth" figure doesn't mean liquid and disposable.
2. Lots of people couldn't care less about cars
my $.02

 

Yeah, good point. I was trying to capture the whole "bay area" and I put a larger sq ft than I actually think so that folks from out of the area woudn't think I was making it up...sadly I know you are well below 2000 sq ft in many of those cities for $1-$2M. My real (attempted) point was the $ amount of house that gets you middle class living, not so much the size...the Penninsula is another world from most of the rest of the Bay Area...I've turned down jobs there more than once because I couldn't see moving there or commuting (did spend 1.5 lovely years living in a crapy motel in Sunnyvale during the bubble though...good times).

 

You ain't kiddin'... I have a friend renting a modest duplex in Mountain View for $3k a month (not including utilities etc.). Still 'cheap' by Manhattan standards tho...

 

I know many, many people in the 1- 5 MM net worth category, and none of them would even consider buying a new car of any of the brands you mention.

New Honda, VW, Prius, Suburban, yes. Used Lexus, M-B, BMW, Jag, Porsche, yes.

A couple who are real fix-it-yourself car guys have bought used F-cars. because they are F1 nuts, and Italophiles. This would be my entry point, if I were to get one.

Movie stars, rappers, pro athletes, Middle eastern royalty, new money russians and chinese are likely buyers of cars like that. I think the Wall streeters may be keeping a low profile right now.

 

As mentioned its what one values in life. Some people see there home as an example of showing off what they have achieved, some there car or wardrobe etc. As mentioned in previous posts wealth gets measured sometimes by your region. In So Cal or NYC 500k gets you very little, but where I live in Dallas I get to live in one of top condo buildings in downtown! Granted I dont have the beach or the excitement of NYC around me. But I feel very happy,content and thrilled living in my little pad in the sky and a gorgeous CS in the garage. I'm 29 and with some hard work and some luck along the way I feel very fortunate and grateful to be in the shoes I'm in. I work hard every day to to be satisfied with what I have and not always yearning for more as I feel that will just leave you feeling like the grass is always greener in every aspect of life. Just my 2 cents.

 

+1

 

In occurred to me that one analogy might be sailing. Like high-dollar sports cars, you're either into sailing or not. The investment in time and money is considerable, and no one does it half way.

Dale

 

I suspect (no evidence: merely an opinion) that the bulk of Ferrari buyers are NOT from this group.

Rather, they come from a group I'll call The Invisibly Successful: entrepreneurs, business owners, professionals.

Notwithstanding the economic downturn, there are still a whole lot of people out there with a whole lot of money.

 

+1

 

It also occurred to me that the number one car in status symbol land is a Range Rover.

Dale

 

and this is why i am starting to love f-chat.
the insight presented is great.
I'm actually living in SF now and the opinions put forth about the place are spot on.
As much as I am car geek I am also a business/econ geek, so both topics coming together is great reading.