What's the cause of the car market slowdown and is it like other ones?

see my Carpocalypse post above

 

prices cannot and do not go up forever in straight line....

 

Stocks, bonds, commercial Real Estate, private equity all go up and down. They are investments.
My Ferrari 612 OTO is a passion. I don't think it is an investment. After 13 months of ownership, I can still spend hours inspecting, polishing, etc. it.
Of course the value goes up and down. Trying to understand why is like trying to understand why the S&P 500 goes up and down.

 

Boredom? People move onto different things. Today, there are so many things competing for our attention and dollars. The velocity that new content (and coverage of different interests) is delivered to us has increased significantly in the past 10 years. I believe that influences our attention and can steer markets in different directions. A good, car world example of that happening is the rapid, recent increase in interest around Japanese collectible cars from the 80s/90s.

And then there are all of the demographic and economic trends at play, but I'll leave that to the Carpocalypse thread...

2cam

 

IMO its the fact that new cars are such a leap above what we've ever seen in the past that unless you specifically love a car you're hard pressed to pay for it and take the costs of ownership. Money is also really cheap so financing new cars makes it very attractive, financing older cars is very expensive. I love my 575 dearly but I won't lie, its a PITA to own. I've owned it going on 16 months now(its been for sale for 3 and still hasn't sold). It was a dream of mine as a teenager to own one and when I finally bought it, it was one of the happiest days of my life, but after a few months it just became annoying. Everytime it went to the shop it was weeks to get the smallest thing handled, parts were always stuck in customs,etc. Seemingly 3-5 weeks for every repair the 575 needed. Then I tallied the receipts, I spent over $13k in a year on repairs, obviously that's an outlier and not a yearly thing but still pretty annoying. The newer Ferraris have 7 year warranties and such and as much as I love my 575 a newer california t is a better driving car, it has a convertible top, a better sound system, etc. Older cars are cool, but they're a PITA to own.

I still love older cars but I've spent so much time and maintenance over the last 3-4 years with my cars that I really just dont care anymore, Id rather take the depreciation on my 812 and have a car that has no issues. The mechanics seemingly enjoy my classics more than me.

 

Well, I'm no expert on the vicissitudes of Ferrari market prices. But the folks who are experts at Ferrari Market Letter would certainly seem to have a good understanding of the Ferrari market and how it behaves over time vis-a-vis Daytona prices. I think you partially answer your own question here in noting that Daytona prices are down ~20% over the last few years, which to some extent has likely had a pull-down effect on other Ferraris, and in particular other front-engine V12 Ferraris. Seems plausible to me.

As to the question of "why" have Daytona prices come down, we all know these things go in cycles. Ignoring more macro-economic factors, such as interest rates, stock prices, etc., I think the current down cycle mostly boils down to a simple question of supply/demand. When Daytona prices are rising some owners may decide to try and capture the rising market tide and sell their car at a premium. So, more Daytonas come on the market for sale. At some point the Daytona market becomes saturated with more cars for sale than there are buyers at elevated prices. So prices level off as potential buyers become much more discerning as to which cars are worth a premium. As a result, lesser Daytonas begin to languish unsold, and prices start to drop to move the cars. Potential sellers see the declining pricing trend and maybe decide to wait to sell their Daytona until prices stabilize or rebound (which could take several years). So, the supply of Daytonas for sale begins to contract until, at some point, supply and demand reaches an equilibrium, prices stabilize, and the cycle starts all over again. The same cycle is at work for other Ferrari models that tend to follow the Daytona market, maybe with some lag in market cycle timing, differences in pricing amplitude, etc.

As for more macro-economic influences on the market, no doubt some factors are at play here, too, but I'll leave that topic for others to discuss.

 

Also not fair to say all classics are going down in price, I paid under $30k for a 5600 mile SL500 in sept and last week one with 6k miles sold for $45k so some modern classics are seeing bumps still, but it’s seemingly the best,low mileage examples


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A quick spur of thought At the risk of being full of crap,

The classic car market has had its last big cycle.

In an instant gratification society craving autonomous artificial intelligent tech, trend cycles are completing faster than pre internet.

The classic car buyer market is shrinking fast. Guys in they're 70s & 60s are selling to the 50s & 40s who few are keepers and mostly want to have a moment then flip. The 30s are half not interested in buying an old Ferrari unless it makes a good you tube vid then flip. The 20s want new tech and are on the fence about whether they want to drive at all. The teens wear shirts that say “Nah, I’m guud”. As for your grandparents they are tweeting now and propping up over exagerated face book pages, Then catching an uber to the symphony or top golf. Thus no need to keep the classic car and the kids dont want it.

There may still be a spike in the market if you can start a viral movement convincing people there is a profit to be had like 2015 but again it will pass quickly after Ai analyses the trend.

If a profession or hobby then it holds a specific smaller market. But it will not be norm to have and restore a classic car in ten years. Even less of a market after restoration parts and skilled techs dry up for the Enthusiast living near backroad filled suburbs.

We all then pay $100 a head take our grandkids to a museum displaying the cars.

Please somebody refute this doom n gloom please!

 

Young people are up to their eyeballs in debt and thus have convinced themselves that they can
a) never afford a car like a Ferrari and will never get in the game,
or
b) can never afford a house with a garage and so a Ferrari is not appropriate for what they can afford,
or,
c) have bought into the notion of gren whatever........,
or,
d) they simply aspire to mediocrity.

 

im one of the guys in 50 s this good news for me im sad op s 575 is much trouble i thought they reliable cars ? why so much problems 575 ? i also thought build quality much better these V12s 550 575 599

 

There are a limited number of people willing to do cars of this price for fun and maybe profit. If you buy a new F car today you will lose money the day it leaves the dealer. On some models like 100k. I don't think many people have the means or desire to do that and are happy with a BMW. The market is saturated with cars now. Harley made the same mistake several years ago overproducing bikes. The mystique of owning a F car is now just like owning any other car. The game is ending for the dealers.

 

We should also mention that the immediate run up prior to the latest peak was rapid and the market may have just gotten ahead of itself.

 

The markets just have the ability to complete a trend faster with world wide interwebs in the palm of our little greedy paws.

 

The market usually peaks just about when the punter on the street who has no real knowledge is suckered into buying into a bubble. I remember thinking when the following article appeared in early 2016 promoting the 575 as an investment in GQ, a lifestyle magazine, that the end was nigh:

https://www.gq-magazine.co.uk/article/ferrari-575-modern-classic

Enjoy in posterity.

Not that I was any smarter of course. I bought a 550 in 2017 that is likely down 20% also!

 

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Supply and demand. Old farts dying off and the young farts don't like the old POS cars.

 

The old car market is generational. Next bubble will be the mid 70's to mid 90's cars. It's already happening. If you have the disposable income, by Camaros and BMW's and certain Benz cars. Park them and do nothing to them. Sell at the height of the frenzy and enjoy the profit.

It's a 30 year cycle.

 

Not too sure about that. I have to agree with the sentiment on this board that (MOST) younger folks do not have any desire to even drive an automobile let alone own one. And I think that is sad for all of us enthusiasts who enjoy everything from cars to recreational vehicles and the like. I know it is getting harder for today's parents to evict their children at the age of 25 or more and I think that is sad for the parents. Someone needs to wake this upcoming generation up and spell it out to them that the handouts will not always be there and they will have to be responsible for themselves at some point.

 

The whole generational thing is crap. 20 year olds have no effect on the Ferrari market.

People want the cars they dreamed of as kids. You dream of a car when you're in your late teens and then 30 years later you finally have enough disposable income to be able to buy it. Then your health declines or you die and you sell it. The only reason Ferrari's from the 50s aren't losing value is because there are so few of them.

The market is flat new because of the recent tanking of the stock market. The last upswing was driven by the long consistent rise in the market. When your portfolio takes a 30% hit in a few months you don't go out and buy a new toy, even if it recovers 30%. It's going to take awhile for people's confidence to recover enough where they are willing to go out and buy new toys again.

 

Some how, I think you just agreed with me.

Big buck cars will always remain big buck cars. However, even that may change in the future. Especially if they become outlawed to drive on public roads, which may be closer then you think.

 

Let's say you have a 45-year old guy who has done well. He can blow, say, $800,000 on a Daytona that has about the same power as a hot rod Toyota, so-so brakes, and no real A/C, or he can buy the latest hot rod from Ferrari that has 700 hp, weighs under 3,000 pounds, and guarantees you front parking at your local strip club. Who wants to buy the old stinky Daytona when you can buy a Rock "N" Roll animal?

Ps A Daytona is as old as he is.

 

My issue with people who think "manual cars" are the future "investments" ---

So you're a 20 year old today. In 20 years you're 40 and you have made enough money to buy a classic Ferrari. You have never driven a manual in your life. You probably haven't seen one in 10 years on the road.

Are you going to spend several hundred thousand dollars on a car you can't drive or worry you would break if you learned how to use a stick?

Us old geazers who learned how to drive in the 60's and 70's won't be there to grow that market.

 

What I have seen over the decades is that when there is a peak in prices, the bad deals are buying poor cars. Quality restorations hold up. Why ? There are few of them, and fewer people to do the work, and the good ones (restorers) are full of work for years. so even if you buy a project no one can rebuild it for you So in a slowdown, what gets really hit are the nice but not great cars that got over hyped.

2018 was a strange year, but I hear from trade that certain cars are now selling well again in 2019 at the current price levels, but not always with a clearly understood logic. The market up to 50 k is still very healthy for good cars, but they are being purchased for fun not "investment" or at least as something that will not depreciate greatly (offset with upkeep)

I have done very well over the years with older cars, but it is not a 6 month 12 month thing. If you feel it is the right car, that has some reason to be special, over a few years, then someone else or more than one will recognise that too.

The old advice is still the same , buy the best you can and what you like.

 

Article written by the thread starter - go figure !