Since I did the last Supercar Market update in July 2022, the world has changed……again. Money is now quite expensive, used car prices have started to contract, car loan delinquencies are rising, The NY Giants have made the playoffs for the 1st time in six years, Prince Andrew has a new permanent roommate in the House of Windsor doghouse, and the UK is on its third Prime Minister. I summarized the situation in July (Supercar Market Update July 2022) as follows:
Right now, we have a sport & supercar market that is beginning to deflate. Inventories are way up, even if prices haven’t moved much, yet. The bill from Covid-19 and many of the excess of the last decade has come due. Money, while still fairly plentiful, is no longer cheap. Those models that have exploded in value during the Covid era are the ones most likely at risk of a rapid decent. The Hypercar bubble is history and values on the LaFerrari, P1 & 918 have been stable for quite a while now. The older vintage cars are either holding or in gradual decline. Demographic shifts, as the percentage of the population that knows how to drive a manual car continues to decline, will likely accelerate this trend over the coming years. To end on a positive note though, if you have the cash, the next 6-18 months could be a great time to buy.
The Macro Situation
Which brings us too today. We are still a long way from the old normal and I doubt we will be getting back there anytime soon. Today’s reality feels like it’s the new normal whether we like it or not. Covid is here to stay, and even the flu has made a comeback. On the economic front, the decade of cheap money is over. Inflation is at a 40 year high, the stock market has tanked with the S&P 500 down 19.4%, and the Fed raised interest rates 7 times in 2022 after 4 years of zero rate increases. The US $ hit parity to the € back in Q4 2022 for the first time in 20 years and is sitting near a 40 year high vs. the British £. The Russian’s have invaded a neighbor again, and just like the last time, it’s not going well for them. Turns out that corruption and disciple in the Russian Army isn’t much different today than it was under Brezhnev.
Back in July, I indicated that the final warning sign that markets were about to implode was the re-emergence of the human Cicada of financial doom, Michael Saylor, in the national news. Saylor is the majority shareholder and CEO of MicroStrategy, a mid-size software company based in Virginia. Back in March 2000, the U.S. Securities and Exchange Commission (SEC) brought charges against Saylor for cooking MicroStrategy’s books for the preceding two years. This event helped kick off the bursting of Dot Com bubble in 2000 and within a month, MicroStrategy’s share price had tanked by 90% and Saylor watched $6 bil. of his own wealth vaporize in a single day. Roll forward to 2022 and Saylor has reemerged in the national news as one of Bitcoins more vocal public cheerleaders. MicroStrategy, with Saylor still at the helm, has bet heavily on Bitcoin. As of December 2022, that bet is $1.99 bil. in the red and in a bit of deja vu MicroStrategy’s share price was down over 70% in 2022. To top off Saylor’s great year, Washington D.C. Attorney General Karl Racine accused him of evading $25 million in D.C. taxes in a lawsuit filed in August. If I didn’t know better, I would say he’s positioning himself for a political career. If we can have 6 months of Saylor out of the news, then I would surmise that a recovery is around the corner.
Instead of going through a methodical analysis of different parts of the Supercar market, as there are plenty of better informed people who already do that, I thought it might be more interesting to layout a few things that have caught my attention.
Porsche Carrera GT
If there is a poster car for the COVID supercar market price jump insanity, the Porsche Carrera GT would be a leading contender. For most of its first decade of existence, Carrera GTs were $300k-$450k cars. In 2014, they started climbing and by late 2015 the new range was $600k-$800k. This held until the beginning of 2022 when suddenly Carrera GTs jumped by $1 mil. to $1.8 mil before finally hitting an all-time auction high of $2 mil. in March 2022 for a 182 mile grey car. Since then, it’s been a downward slope with the latest yellow Carrera GT to appear at auction being a no sale at a high bid of $1 mil. this week and a black Carrera GT was sold at the Mecem auction yesterday for $975k. I had one Porsche expert tell me recently that he believes they will drop back down to the $800k range by the end of the year. Based on current trends, it might not take that long.
Bring A Trailer (BAT) & the BMW Z8 Craze
BMW Z8s have been a very hot BAT car for a while now and it looks like just about every Z8 in the US has changed hands on BAT in the last 2 years. In the BAT driven frenzy, average values have steadily risen by $50k to peaking at over $200k for a well-maintained low mileage (under 20k miles) Z8. Blue Z8’s command even a large premium with two sold in the last six months. The first made an insane $445k and the second, and almost reasonable sounding $297k. In the last several weeks though, it looks like the music has stopped and the last two cars to go up for sale were no sales at high bids of $151k and $161k. Both of these would have been sold for at least $200k 12 months ago. As a benchmark from the same 1999-2004 time frame, a Ferrari 360 Spider is a $70k-120k car these days. A total 2,543 Z8s were sold in North America which is roughly on par with the 2,389 360 Spiders Ferrari sold. Prices ($128k) and performance stats on both the Z8 & 360 were nearly identical when new. This begs the question on why the far less exotic BMW Z8 is worth roughly 2x what a Ferrari 360 Spider is today. I suspect Z8 prices will slowly converge with 360s.
The Ferrari F12 & 812
I have been following the Ferrari F12 and 812 market fairly closely for about a year now. Adding a Prancing Horse badged V12 GT to the garage has been high on my list for quite some time but I am not in a rush and refuse to pay a premium for a car that has traditionally been the depreciation champion of the Ferrari line up. Just 6 months ago, if you did a search for F12s across Ferrari US dealerships, you would be lucky to find 6 cars for sale. Autotrader normally had 15-20 F12s but that was it. Today there are 17 F12s on the US Ferrari preowned website ranging in price from $209k to $332k and 42 on Autotrader. Prices on F12s look like they have dropped by at least $20k. The 812 Superfast, which replaced the F12 in the Ferrari line up, is going to put further pressure on F12 values as the 812 market is completely saturated now. Today there are a whopping 38 812s on the US Ferrari preowned website ranging in price from $370k to $450k and 75 on Autotrader. A glut of aging cars on the market that aren’t moving is a pretty good indicator of where things are headed.
I would not be surprised to see another $30k drop in F12 prices in the next 12 months with 812s taking an even bigger hit.
Classic Ferraris (the 90’s & 00’s)
This one’s a bit painful to write as we sold our Ferrari F50 back in 2014, but over the last decade, F50s have gone from the ugly unloved step child in the Ferrari limited edition line to the most lusted after of the group, and for good reason. An hours drive in one provides all the proof needed. F50s have risen from just under $2 mil. to $5 mil. and the march up has been very consistent over the years. Ferrari Enzos on the other hand have been trading in the $2-3 mil. range depending on color and mileage for most of the last decade and it doesn’t look like this is going to change anytime soon. While the F50 has aged brilliantly, the Enzo and its first generation F1 gearbox has not. Another good positive example of this corollary is the 430 Scuderia. In fact I would rate the 430 Scuderia as the gem of all the 2000-2010 Ferrari models. The final generation F1 gearbox in the 430 Scuderia is a joy to use and has aged well. Prices on 430 Scuderia’s have risen from around $180k in 2019 and now the similar car will cost you $100k more. Given that there is still a huge price gap of $200-300k between the 430 Scuderia and its successor, 458 Speciale, at a minimum I would expect values to hold fairly well even in a poor economy. Probably the biggest head scratcher though is the huge jump in values in 2020-2022 on the Ferrari F355 GTS. They have gone from $70k to a high sale at $300k. The F355 GTS was the first Ferrari I owned and of the three F355 variants (Berlinetta, GTS, Spider) I would not have put it at the top of the pile. Leaky roof panels just don’t have that much charm. A few years ago, I had the F355 as the perfect starter Ferrari, but with the recent price increase, that crown now passes to the 360 which while it has had a modest rise in values, good examples can still be found for under $100k and maintenance costs are much more reasonable vs. the F355.
70’s Ferrari Fiberglass
Ever since I owned one well over a decade and a half ago, I have always been intrigued by the Ferrari 308 GTB “Vetroresina”. These are the 1st generation Ferrari 308 GTBs produced in 1975-77 with fiberglass bodies. Just over 800 were produced, making them rarer than either a similar era Ferrari Daytona or a Ferrari 512 BB. In fact I would put it in a similar category with the Dino 206 which preceded the hugely popular Dino 246 GT. For the better part of the last decade these “glass” 308s have commanded over a 100% premium vs. the far more common steel bodied 308s. In the Covid era, they have traded hands remarkably consistently in the $150k range up until the last year. After sales at $155k in both Feb and March 2022, the next sale was at $135k in May, followed in July with a no sale at $115k, finally in December one sold at $108k. Whether $105-120k is the new market price, or if the slide continues should be clear in a few more months.
Vintage Ferraris (the 60’s)
If you look at the longer-term trends on a few of the better known of the 60’s Ferrari models, it is a bit of a mixed bag but the direction does seem clear. Ferrari 365 GTB/4 Daytona’s have bucked the trend and do seem to have risen a bit and now sit in the $500-$600k range. Ferrari 275 GTB’s look to be $1.5 mil. to $2.5 mil depending on length of nose and number of carburetors. 275 GTB’s had been on a very gradual slide backwards for the last several years but do seem to have stabilized. The Ferrari 250 Lusso is on a similar path. Back in 2015 they were $2 mil. cars and now $1.2-$1.5 mil. is where the market sits. One 250 Lusso did bring $2 mil at auction in 2022 but it was a rare perfectly restored car with a very well documented history. However I think the carnary in the coal mine is the Ferrari 365 GT 2+2. Ferrari produced 801 of these big 4 seat GTs during its production run. Back in 2005, these were $50k cars and demand was fleeting. Miraculously they rose to a high of $350k during the big run up in the mid 2010’s. In the last 12 months 4 of these have been sold on BAT at ever decreasing prices, $218k, $204, $191, and just today one at $156k. Trend is pretty clear, and I doubt we will be seeing the bottom anytime soon. Demographic shifts will continue to put pressure on the older cars with the less valuable or well know models taking the hit first. These Vintage Ferraris are less appealing to the younger generation of enthusiasts who did not grow up with them on their bedroom walls. These are also all cars that take real skill to drive and punish mistakes with massive repair bills. In addition, with each passing year, finding both parts and a skilled mechanic who can care for the car are becoming increasing difficult.
The Hypercar Trinity
Prices on the 2013/2014 Hypercar Trinity, which include the oddly named Ferrari LaFerrari, the McLaren P1, and the Porsche 918 have been very stable through 2022 with not a lot of cars changing hands, at least publically. LaFerraris now sit squarely in the $2-$3 mil. range depending on spec and mileage. Both P1s and 918s are up from an early Covid lows of $900k to $1.5-2 mil. now. Where prices go from here will be very interesting to watch. I expect Ferrari, McLaren and Porsche will be announcing their next generation of Hypercars in 2023. In both Ferrari and Porsche’s case, they are likely to be loosely based on their LeMans 2023 Hypercar entries. What this does to values on the last generation will be interesting to see but at least initially I doubt it will have a positive effect. All of these models are falling into the exploding maintenance costs category as their hybrid technology ages. When service bills start approaching the cost of a nice used Ferrari 458, it is going to have an impact.
The McLaren (Hamster) Trinity
Between 2018 and 2022 McLaren produced three hypercars (see: McLaren 1st Half 2021 Result for the explaiation on the “Hamster”). The Senna came first, followed by the Speedtail and finally the Elva. After an initial dip, Senna peaked at $1.5 mil. before settling down in the $1.2-1.3 range where they appear to be holding. Like the Ferrari F50, it was denigrated for its design initially, but it is aging well. The Speedtail in many ways is the forgotten hypercar. Deliveries started during the height of Covid and it never really generated much hype. Unlike the Senna which came with a very clear use case, the Speedtail’s never has been that clear. As a result, values have never really exceeded the original list price and values today sit in $2-2.5 mil. range. The fact that all the US Speedtails are here under “Show & Display” approval doesn’t help. Elvas, which I would put at $1.5-1.7 mil. today, are in a similar situation to the Speedtail and have the added baggage of a difficult “birth” with production numbers being cut twice before settling at 149 units. Long term though, the very low production number on both the Speedtail (106) and Elva should help values, but this could take a decade or longer.
Right now, we have a sport & supercar market that is slowly deflating. Inventories are way up. Interest rates have spiked, and the housing market, which made a lot of buyers feel much richer than they should have, is in decline. The bill from the excess of the last decade has come due. Those models that have exploded in value during the Covid era are the ones most likely at risk of a rapid decent. The Hypercar bubble is history, the latest ones launched are at best holding at MSP. Values on the last great set, the LaFerrari, P1 & 918 have been stable for quite a while now. The older vintage cars are either holding or in gradual decline. Demographic shifts, as the percentage of the population that knows how to drive a manual car continues to decline, will likely accelerate this trend over the coming years. To end on a positive note though, if you have the cash, the next 12-18 months could be a great time to buy.
Thoughts and comments? Please see the comments section below.
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