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Whiter the Spider?

Discussion in '360/430' started by Texas Forever, Feb 7, 2004.

  1. Texas Forever

    Texas Forever Four Time F1 World Champ
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    Texas!
    I haven't asked for permission to do this, so I may have to hire Bill Hart to defend me. :)

    But the FML recently posted a question that has been kicked around here before, but I'd like to thrash it some more, with your permission.

    Namely, how do you explain the 360 phenomena, particularly the Spider?

    Whenever a new Ferrari (or any hot car such as the SL55) comes out, initially there is a spasm of lust that proves, once again, that crack is whack. Given this, the initial feeding frenzy when the 360 first came out was no surprise. Not only was the 360 THE hot car in 1999, but Ferrari probably priced it too low at roughly $140k.

    But how do you explain the still current 360 Spider madness over 6 years later? Bottom line that if you want to buy a 2004 Spider at sticker, you need to be a FOD, i.e., Friend of the Dealer. Amazing.

    Please note that I'm not asking whether you think Spider prices will come down (of course they will) or whether a Lambo or a Gambo will hold its value better than a new Spider. At any given time, there are at least 2 to 3 flame wars raging on F-Chat over these issues.

    What I'd like you to do instead is to look in the rear view mirror and share your thoughts on why the 360 has been such a huge hit for Ferrari. Was it because the 360 was the first Ferrari that even approached Porsche-like quality? Was the 360 underpriced? Was it the F1? Did the 360 bring in new players to the Ferrari game? Is it the gold chain poseur crowd that has been propping up this car?

    Again, here is the actual question posed in the FML

    "But the basic question we are asked is why have prices not yet dropped? The theories learned in Econ 101 do not seem to be working as dictated."

    I'll put this another way --

    1. A 1999 Maranello went out the door for $210K new. Today, a 550 with 12k miles will probably sell for around $120K. This works out to be a 43% depreciation hit, which is just about right for a 5-year old car.

    2. A 1999 Modena that sold for $150K new and has 12k miles might sell for about $100k. (I'm guessing here. I don't follow 360s all that well.)

    Uisng percentages, the 360 depreciated 33% in 5 years versus 43% for the Maranello.

    The dollar story is even worse. 33% of $150K is $50k. 43% of $210K is, ouch, almost double at $90K. (And no, I ain't gonna figure this in Euros.)

    So what are your thoughts? And please, no hijacking this into a another Lambo v. 360 thread.

    Thx, DrTax
     
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  3. zjpj

    zjpj F1 Veteran

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    A few thoughts:

    1. Good point about the F1. That definitely helps. I think some people people (the poseurs you mention) may have been scared off by previous Ferraris thinking that they would just be too hard to drive. F1 changes that.

    2. The market for convertibles will always be stronger. The thing about the 360 is that it was the first Ferrari convertible which was totally automatic. The 355 was to an extent, but then if you didn't want a big puffy black mass of convertible top, you had to snap on the cover which took some amount of effort because you had to stretch it on to the snaps, etc. - it really was a pain. They improved that.

    3. The reliability, as you say, is the best with the newer cars. But that doesn't explain the 360's smaller depreciation (proportionally) to the 550. Also, I don't think that 360 buyers now were thinking "gee, I really want a 355 spider, but I don't think Ferrari is quite there yet with build quality. Maybe I'll wait until the next model.."

    4. The clear engine cover is really cool. And people who want a really cool car (which I think is your question, really - why is the 360 spider so darn COOL in people's eyes), then the engine cover thing is just one of the added bonuses.

    5. Cumstomizing. There's a lot of options now for these cars. A lot of different paint and hide schemes, and a lot of different options - more than ever before. That's a plus, but, again, same applies for 550, so doesn't quite explain the difference in depreciation.

    So, in conclusion, I think there's a lot of factors, but number 4 is the biggest. Couple the fact that it's a "cool" car with a workable convertible top with the fact that Ferrari made fewer cars than the demand dictated, you get cars still at MSRP or higher.
     
  4. Mark(study)

    Mark(study) F1 Veteran
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  5. zjpj

    zjpj F1 Veteran

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    Mark (or anyone else),

    Very true, obviously, about speed of production. Is Ferrari "inefficient" as you suggest? What are the reasons behind the speed of production?

    I had a few separate theories, but I was wondering if you knew the answer. Possibilities:

    1. They are more handmade than, say, an SL55. Thus, more man hours go into production.

    2. The factory is smaller than Ferrari needs.

    3. Ferrari purposely isn't building many. They could build more and choose not to.

    4. None of the above
     
  6. Mark(study)

    Mark(study) F1 Veteran
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    Quote "Is Ferrari "inefficient" as you suggest? What are the reasons behind the speed of production?" Quote


    They aren't inefficient.... I was kind of talking tongue-and-cheek
    Ferrair has a great business model but they put lots of loyal customers in pain of long waiting list.. to preserve the value of the cars.

    But as other manufactures enter the market... this slow way of doing business is going to be harder for Ferrari to continue doing.

    My main point- in playing with the words... is to understand-
    Ferrari is not magic with the 360 spider (although it looks that way).
    Once they get to 4000 units the price starts to drop like a all cars do.

    Ferrari's magic with keeping the spider price high,...is like all magicians tricks, a bit of slight-of-hand.
     
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  8. Steve Magnusson

    Steve Magnusson F1 World Champ
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    Mark --- OUCH!!! Can't one argue that a 5 liter 12 cylinder in more akin to a 3 liter 10 cylinder than a 3.5 liter 8 cyl on a displacement per cylinder basis?;)
    But I agree with your basic idea -- it would be better if the 2 seat 12 cylinder was more like the 2-seat 8 cylinder in terms of overall size/weight rather than the 4-seat 12 cylinder (and they should all be more visceral -- they've done too good a job isolating the cabin).
     
  9. zjpj

    zjpj F1 Veteran

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    Taking other manufacturers out of the picture for a moment, let us address a hypothetical. Do you think that if Ferrari increased production to meet demand, that they would, in the long run, actually lose customers and sell fewer cars than they do NOW (at a level of underproduction.) That is the question. Because if the answer is no, then they aren't making as much money as they could and it's a stupid business plan. If the answer is yes, then good for Ferrari. But would an increase in availability really drive numbers below what they are now? I'm not convinced that Ferrari is making the right business move there.
     
  10. Mark(study)

    Mark(study) F1 Veteran
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    Yes, you guys that love the 12's I think they are great! Sorry don't mean to pi$$ anyone off.

    But I only see one way for the HP WARs to end... and that is for everyone to turn the corner and start a WAR for who has the lightest weight car :)
     
  11. Mark(study)

    Mark(study) F1 Veteran
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    Ferrari was doing it right. Even though it was a pain-in-the-ass with getting on the stupid list. Ferrari protected the value of its loyal customers cars.

    But Ferrari's problem is that they were so successful that they have awoken a sleeping giant. Everyone is pouring into the $180k range. Making rich guys wait on list in the future, is going to backfire. Guys are going to say..."well I'll pick up a Ford GT while I'm waiting. Then how many will drift away from ferrari? It is always better to keep your customers then try to recruit new ones.


    The 360 is wildly successful because its the only sports car. Why Ferrar/Masser is making 6 cars right now and 5 of them are GT's that is crazy. They need to re-proportion their sports cars -vs- GT's ratio.
     
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  13. nberry

    nberry Formula Junior

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    It really isn't surprising that the Spider has held its value.

    Approximately 400-500 are shipped to North America each year. The car in its debut (2001) was acclaimed as the sport convertible to have. Its styling and performance were groundbreaking and breathtaking.

    The price was reasonable and knowing Ferrari business model many were willing to wait years to order the car secure in the knowledge the value will hold up to depreciation.

    Limited production, coveted marque, and a growing affluent buyer segment has maintained the value of the Spider.

    Think about it, if you waited two or three years and your Ferrari dealer called you to come in and spec your new Spider are you going to say no?:D
     
  14. ryalex

    ryalex Two Time F1 World Champ
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    An economist would say that any price increase for the used car shows as proof the 360 was underpriced. Coupes should have been $175k-$185k, and Spiders a little over $200k. It would have cut out the speculation on the market: shown on a price/demand curve this would reveal Ferrari was too low on the price curve for the demand (losing all the $ in the squared off area, if you can picture this).

    A problem here is that this used-car-hike was only in America - the Euro market wasn't nearly as speculative and you could argue that US prices any higher would have caused a FNA-crippling flood of gray market Euro cars; higher prices worldwide would have cut out the Euro and Asian markets in a large way. Then you could argue back that if prices were higher worldwide BUT there was no 3yr waitlist in the US, perhaps Ferrari could have sold their entire production run in the US alone (and pi$$ed everyone else off).

    As for 550's, it gets harder to say how overpriced it was. Since they only built what was ordered (following the market and not *finding* it), they could easily say that it was priced right because 100% sold. However, my gut would say that 550's should have only sold for around $200k, and their depreciation would have been more bearable.

    The problem for Ferrari is that their "entry" model was far more popular and desirable overall - I'm sure MANY 360 buyers could have bought 550's, but weren't drawn to the larger "flagship" model. The sports vs. GT nature of the two is also a factor. Also, the 456 was a good $50k overpriced. The 612 will also tank in price spectacularly. I might trade my Subaru in for one in 3 years.

    While I'm on the subject, I'll argue that the Enzo was also underpriced by several thousand dollars. Ferrari' Marketing Dept brags that is found a worldwide market for 350 cars, and built 349. Then they ate their words and found the market was 400, and built 399. BUT, all these Enzo's trading hands for $1M+ shows that the Enzo should have been near $750k (my guess) instead of $670k. Obviously, when people pay over retail, the demand is not met, especially when you're bragging about shooting within one unit. They should kept the list open and accepted EVERY order for 2 years, and then just told the very last guy "too bad." But maybe the inobtainable mystique is worth $$ for Ferrari, since it wasn't profit.
     
  15. Texas Forever

    Texas Forever Four Time F1 World Champ
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    Zack, quick question --

    So are you saying that the 360 sold so well because it brought new buyers into the Ferrari tent or ?????

    You may now return to your beer and pizza, DrTax
     
  16. Texas Forever

    Texas Forever Four Time F1 World Champ
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    Okay to summarize, what you are saying is that Ferrari hit the sweet spot in the luxury sports car market with the 360. So if they had priced it at, say, $225K, the demand would not have stayed there?

    Also if the Maranello had weighed 500 pounds less, it would not have depreciated like it did?

    BTW, it is best to keep your Dino bias quiet. Frank P monitors this list for Dino Trolls. :)
     
  17. Texas Forever

    Texas Forever Four Time F1 World Champ
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    Ah, Ryan, a legal economist. Now, there is a scary thought.

    You bring up a good point though. It is my understanding that the 456s and 550s are more popular in Europe than in the US.

    Okay then, why was the 360 the American Ferrari? What was it about the 360 that captured the imagination of American car guys and made them open their wallets wide?

    I'll give you some of my hints --

    1. Timing in life is everything. When the 360 came out in 1999, life on stock option street was good. It was very, very good. Plus, the only real competition was Porsche and, hey, why buy a VW when you have the stoke for a Prancing Pony?

    2. The 360 was a luxury sports car. It is kinda funny to hear folks talk today about how Ferrari has lost its loving feeling. But at the time, the 360 may have been the first Ferrari with the perception (note the word here, perception) that you didn't need to have a mechanic on retainer to own a Ferrari.

    3. I think the F1 opened up the market to many younger buyers who had never learned how to drive a stick. One of these days I'm gonna start an "Old Fart" driving tip thread about how we learned to survive driving POS cars at insane speeds.

    Your thoughts? DrTax
     
  18. MS250

    MS250 Two Time F1 World Champ
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    Dr.Tax,
    Not sure how old you are, but I remeber as a kid intrest rates being 10% and as high as 20%. My parents would not buy anthing unless it was cash. Todays life is much different, rates are 2% and everyone spends. How does this relate ???

    Simple, more people with more money, I cant count the amount of Bimms and Benzs I see on the road today...everyone has one, even high school kids, I took the bus and my parents walked.

    The 360 and 355 both came in at times when the economy wss strong, ferrari made a more user freindly product. And people wanted something different. Hence, the 360 is big because you can't find one quick enough.Supply and Demand, even the 5 yr span doesn't help.

    So the answer is yes...more people into ferraris because of a status thing and the promotion of F1.
     
  19. zjpj

    zjpj F1 Veteran

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    I think it definitely brought new Ferrari buyers, more than any other model in the past. That's my main theory for its success. It was also "cool" enough to get owners to trade up 328s, 348s, testarosas - or keep the old model and add a 360 to the stable.

    And why would you think Saturday night means beer and pizza???? I'm obviously getting ready to head to the library... :)
     
  20. Texas Forever

    Texas Forever Four Time F1 World Champ
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    Ah, Big Red, you made my day. I too remember when interest rates went over 20%. Sadly, I was no kid at the time....

    Dr "Over The Hill and Under the Bridge" Tax
     
  21. Texas Forever

    Texas Forever Four Time F1 World Champ
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    You can fool some of the people some of the time...

    Oh, BTW, did you hear about the PA football players who got arrested in California along with some Dartmouth football players just because somebody told them to leave a party? Jocks, gotta love em.

    Dr "I'm outta here" Tax
     
  22. whart

    whart F1 Veteran
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    Dale: I'm glad you don't have to be a Friend of Dorothy's to buy one at sticker. I can't disagree with much that has already been said here, but if the car were truly underpriced, or demand far exceeded supply, i would think that few cars would be available on the market, when there are (and have been) many. Ferrari certainly doesn't meet the demand that does exist, and has forced a speculator's market that exists far beyond what one could have reasonably expected for any "production" car.
    I do think that the 360 drew on a market that was not there for it before. One car guy i know, was in the aftermarket business and spent alot of time around expensive customer cars, went with me to a ferrari show a few years ago. He thought, hands down, that the modena coupe was killer, despite the fact that the lawn was covered with things like the Daytona, a 275GTB and a variety of other 70-90's ferraris. There is an appeal to this car that some of us might not fully appreciate. (Actually, despite the fact that i generally prefer convertible ferraris, i do think the coupe 360 looks far better than the spider, but i'm sure i'm not the typical buyer, either).

    My point: there is some irrationality here that could be attributed to the design, its market and timing (-think abou it spiders really became available in the US as the economy was going south) that might just not be explicable by textbook economic terms.
     
  23. Texas Forever

    Texas Forever Four Time F1 World Champ
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    So you think the 360 expanded the tent, yes? That is, it brought in buyers who before would have never even considered a Ferrari?

    Dale
     
  24. Gary(SF)

    Gary(SF) F1 Rookie

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    >>Whiter the Spider?<<

    I've never liked the 360 in white, even the Spider. Oh, wait a minute, WHITHER the Spider? Ah. In that case, I would say, pure and simple, supply and demand. Ferrari either a:) underpriced or b:) underproduced the 360 Spider, given its relatively accessible price and almost universally excellent magazine write-ups.

    Gary
     
  25. Texas Forever

    Texas Forever Four Time F1 World Champ
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    Geeze, I knew that shouldn't of tried to be literary about a bunch of car guys.

    Ok, I'll translate the title into car guy talk --

    Whut the fock is the deal with the 360?

    Better? :)

    DrTax
     
  26. Gary(SF)

    Gary(SF) F1 Rookie

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    Much!

    I've always had a weakness for the word "fock". :)

    Gary
     
  27. Jason

    Jason Karting

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    Well, it comes down to a common topic on this board, that a Ferrari sports car is more appealing than a GT to most people. Again, this doesn't mean the 456/550 are bad cars, just that simply more people want a sports car and the 360 is the only sports car model Ferrari makes now (exclude the Enzo as it's a limited run specialty item). Back through ~1994 you had both an 8-cyl AND 12-cyl sports car models for sale (348/355 and TR) to spread sales over those two.
     
  28. sherpa23

    sherpa23 F1 Veteran
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    Okay, I'll admit that I didn't read through the posts first but here's my thoughts:

    When the 360 was coming out, the dot com thing was booming. There were a lot of younger people with money that they didn't necessarily have before and they wanted something to show that. Yes, a big house, yes, other things, but many people wanted a rolling status symbol as well. Many of these people are car people, many are not. Lots know about Ferrari.

    So Mr. Jones is looking for a sweet car, maybe a little bit status symbol, maybe a little dream fulfillment. So he's looking for something he always liked, something that not everyone has, and something that everyone will know what it is. Remember, these aren't all car people. Then there's a new Ferrari coming out and things come together: "wow, I could have THE new Ferrari - I want it."

    Then Mr. Jones has the new Ferrari and Mr. Smith looks at him and says, "hey, I like the way people look at Mr. Jones and his new Ferrari. I like Ferraris, I want one, too." Mr. Smith goes to FoX and is told that he can get one but he has to wait on the list for a bit. He says, "wow! A list! It must an awesome car then. I definitely want one and I want one now." Well, the dealership just sold one to a guy who's had a bunch of Ferrari's and he figures that if someone offers him significantly more than he paid for it, then he won't mind parting with it. Besides, he has other Ferraris that are more like the Ferraris he's used to, anyway. So he sells to Mr. Smith, who wants to keep up with the Joneses, and this goes on and on.

    Spider comes out. People want something even more special than what Mr. Jones has. They line up. You get the picture. All this demand has created more demand because the people feel that the 360 is THE car to have. Anyways, that's my take. I do think that this effect will carry on for a couple more model cycles, almost solely because of the economy of the late 90's and the effect it had on the 360.
     

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