Analysis & Insights on Ferrari’s 2022 Results

Analysis & Insights on Ferrari’s 2022 Results

Ferrari had a spectacular year in 2022.  Every single key financial indicator grew double digits vs. 2021.  In Q3 2022, Ferrari raised its guidance on every single key metric and then went ahead and beat even the raised goals.  With a broad and fresh product portfolio, they are poised to deliver outstanding growth in the years to come.  Ferrari enjoys an overflowing order book and seems to be navigating the move to hybrids seamlessly.  Ferrari’s 2022 results are a case study in what a highly competent management team, executing a clear strategy, that’s supported by wise forward thinking ownership looks like.  Since the Q3 results were announced, Ferrari stock has been on an upward trajectory and is just off its all-time high.  Today, Ferrari’s market cap is around $50 billion, putting it about on par with Ford, despite selling 0.7% as many cars (I guess the Ford GT didn’t do much for Ford’s market cap).  The recent share price rise is even more impressive when you consider the overall turmoil in the stock markets these days and is a huge vote of confidence in Ferrari’s performance.  The CEO transition to Benedetto Vigna has been flawless and Ferrari did a superior job navigating through the pandemic vs. all of its major competitors.  I believe this is reflected in the transparency that Ferrari demonstrates when it presents the results. 

Ferrari’s superior job of navigating through the pandemic has given it a highly advantaged competitive position moving forward.  In the two main “volume” segments of Ferrari’s business, the Sports Range and Granturismo Range, and the Limited Edition segment, two of its main competitors, McLaren & Aston Martin, have fallen back considerably.  In the Sports Range, McLaren has reduced production significantly and while its current range is still highly competitive, McLaren has struggled with the transition to hybrids.  On the Granturismo side of the business, Ferrari is now so far ahead of Aston Martin, I’m not sure Ferrari even still views them as a competitor.  On the Limited Edition Hypercars, McLaren has throttled back on production and while Aston Martin is still very actively collecting customer deposits for every idea they can come up with, production on AML’s flagship, the Valkyrie, has not exactly gone smoothly and its successor, the Valhalla appears to be mostly vaporware at this point.

 

The Ferrari earnings call was a lot less insightful than when John Elkann was the acting CEO and doing them.  Elkann, as he is effectively Ferrari’s controlling shareholder, was always willing to provide a bit more color and insights into Ferrari’s longer-term strategy I believe will be the norm going forward as it is a reflection of the new CEO, Benedetto Vigna’s style.  The CFO, Antonio Picca Piccon was also on the call and did his usual nice job of handling the various questions tossed his way.  Vigna comes across as a modest man who holds his cards very close to his chest.  The areas that I found interesting follow:

  • 2022 Key Results: The key numbers for Ferrari in 2022 were 13,221 cars sold, (up 19% vs 2021), Net Revenues of €5,095 million (+19%), and EBITDA of €1,773 million (+16%). Free Cash Flow set a new record at €758 million which is +18% vs. 2021 and +€83 million vs. the prior record set in 2019.  The FCF delivery in 2022 really highlights the strength of the business and how it has rebounded since Covid. In 2022, Ferrari returned €649 million to its shareholders via both dividends and the share repurchase program.  If I didn’t know any better, based on these results, I would suspect that Ferrari secretly discovered oil beneath the Maranello factory. 

Over the last several years, Europe received 46-48% of Ferrari’s production.  This rose to 49% in 2021 but dropped back to 45% in 2022 despite an 8.5% rise in deliveries.  North American deliveries accounted for 26% in 2022, flat vs. 2021 but still up 22% in terms of actual units given Ferraris overall increase in production.  Ferrari seems to quite deliberately adjust supply to take advantage of currency movements.  As the US dollar remained quite strong vs. the Euro in 2022, the US received a higher allocation of new cars.  Supply in the US, even with a 22% increase in units, is still short of demand.  As a result, residuals on recent model are still very strong.

  • Product Mix & Profitability: Ferrari’s 2022 profits were €939 million up 12% vs. 2021. Portfolio mix was a negative €16 million driven by the Icona range Monza SP1 & SP2 phase out and partially offset by range model mix (812 GTS and the SF90 Stradale).  Historically it’s been the big V12 GTs that have driven Ferrari’s profitability.  This has now all changed with the introduction of the Icona range and hybrids. The SF90 & 296 ranges are highly profitable and as hybrids grow as a percentage of the overall mix, they will continue to drive margins up.  When the first EV is delivered in 2025, the timing of which Vigna reconfirmed on the analyst call, I would expect that will give margins a further boost.  With the Icona SP3 Daytona & Purosangue SUV deliveries starting in 2023, product mix should be quite positive going forward and help drive long term profitability.
  • Cash Flow, CAPEX, & Debt: 2022 Industrial Free Cash Flow came in at €758 million. This is a €116 million improvement on 2021 number, and this is well ahead of the previous high of €675 million in 2019.  If you are looking for a sign on whether Ferrari has fully recovered post Covid, this is it.  Ferrari has very ambitious plans and is generating the cash needed to bring them to life as demonstrated by the €806 million in 2022 CAPEX spending, up 9% vs. 2021 with a further increase planned in 2023.  As per auto industry norms, Ferrari only capitalizes around 50% of its CAPEX spending, with the balance hitting the P&L in the current year (unlike a certain other public Supercar manufacturer which capitalizes a much higher percentage which helps inflate EBITDA).  I don’t see any concerns with Ferrari’s current debt load.  Total debt is up slightly to €2.8 billion and cash and equivalents are up slightly as well to €1.4 billion with total liquidity of €2.1 billion.  Ferrari does have €905 million of debt coming due in 2023 and has enough cash on hand today to retire all that debt plus the debt maturing thru 2024. 
  • Portfolio: Ferrari’s current portfolio is by far the most complex in its history with still more to come this year. The strategy that’s delivered the current portfolio was first articulated back in Q3 2018.  It was then that Ferrari changed the way it segmented it’s portfolio from V8s & V12s to Sport Range, Gran Turismo Range, Special Series, Icona, and Hypercar.  This change in thinking gave Ferrari the license to build out its portfolio in a way it never had been able to in the past.  Redefining the old V8 segment to Sports Range has allowed Ferrari to counter the threat from McLaren’s emergence in the past decade and while building a significant front engine V8 business that has served as the entry point into Ferrari ownership for a new generation of customers.  Redefining the old V12 GT segment to Gran Turismo has really put a fork in Aston Martin’s core front engine GT car business and Ferrari is now at least a generation or two ahead of Mr. Bond’s preferred purveyor of automobiles.  With the Icona, Ferrari has brilliantly created an avenue to leverage the nostalgia around its back catalog while spinning out an ongoing series of high margin multi-million dollar limited edition specials utilizing existing platforms.  Other than stating that there will be 4 models launched in 2023, Ferrari has been quite tight lipped about what they are.  However, I would expect to see a Roma Spider launched in the 1st half of the year followed by the 812 Superfast replacement late in 2023.  The other two models referenced will likely will include a track focused/Speciale version of the SF90 or F8.
  • Hybrid & Electric Cars: Back in Q3 2021 analysts call, Ferrari indicated that they will be launching the first fully electric Ferrari in 2025. Vigna has reconfirmed that this is on track.  He has also stated that Ferrari would continue to produce internal combustions engines for as long as there was customer demand for them.

 

  • Racing & Stores: In 2022, total “brand”, which includes both racing, licensing and stores, was up by €28 million. The Formula 1 team has been steadily improving over the last several years.  From a 6thplace finish in 2020 to a 3rd place in 2021, further improving to 2nd place in 2022.  With Charles Leclerc & Carlos Sainz, Ferrari has both an excellent pair of drivers and looks to be set for the next several years.  Where Ferrari’s challenge lies in the team’s management.  Ferrari is now on their 5th team principal in the last decade after only having one in the 15 years prior.  Given the last team principal had a similar grasp on strategy as did Lieutenant Colonel George Custer, the opportunity here for improvement is vast.  In October 2022, Ferrari also revealed the 499P, the new Le Mans Hypercar with which Ferrari will enter the FIA WEC World Endurance Championship in 2023. 

Other than Net Revenue, the 2023 targets do not look overly ambitious, given the start of the Purosangue & Daytona SP3 shipments.  Given how Ferrari blew away its initial 2022 guidance, this feels a bit like another round of under promise and then over deliver.

 

Risk

In a Bloomberg Interview in Feb 2023, Ferrari CEO, Benedetto Vigna was asked “What is the biggest threat you see for Ferrari?”  His answer, “I can’t see any specific threat for Ferrari.”  I think this is the biggest risk they have.  A bit of paranoia might not be a bad thing.  A decade ago, McLaren created a supercar business from scratch and Ferrari had to play catch up in terms of performance for years. While McLaren’s recent struggles are well documented, a resurgent McLaren lead by Ferrari’s former Chief Technology Officer could be a serious threat again.  Longer term, a Geely controlled Aston Martin could also prove to be a formidable competitor in the SuperSUV and Gran Turismo segments.  Given the success of the T.50 & T.33 there is also a potential threat from Gordon Murray Automotive if it continues to expand its portfolio.  While Ferrari might have plenty of space in-between itself and nearest competitors right now, that gap can close quickly.

 

Summary

The Ferrari machine keeps going from strength to strength.  It’s executed another CEO transition flawlessly and Ferrari’s hefty $49 billion market cap reflects this.  Vigna must lead Ferrari seamlessly through the transition to hybrids and EVs while protecting the core legacy internal combustion business for as long as possible. Getting the F1 Team back to the front of the grid would just be icing on the cake.  In 2022, Ferrari beat their guidance on every single financial metric for the 2nd year in a row, now they just need to repeat this in 2023, which given the current model portfolio, bruised competition, and overflowing order book, they have a very good chance of doing so.

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February 2023

 

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SuperSuvs: Should & Will McLaren Join the Fray?

SuperSuvs: Should & Will McLaren Join the Fray?

I’ve been hearing rumblings for a while now that McLaren is seriously considering launching an SUV.  How much of this is projection given the fact that basically every other sports and supercar manufacturer has now done so is hard to tell. The arrival of McLaren’s new CEO, Michael Leiters, who has a chronic case of SUVitis, having been deeply involved in the development of both the Porsche Cayenne and Ferrari Purosangue, is also feeding this fire.  I have consulted with a few medical professionals and all have advised that there is no known cure for SUVitis, it is at best a condition that can be managed.  With that in mind, the two questions that come to mind are:

 

  • Have SUV’s been the goose that laid the golden egg for those who have gone before?
  •  
  • If McLaren does launch an SUV what should its essence be?

The Golden Goose

Porsche created the “Sport” SUV segment with the launch of the Cayenne back in 2003.  The Cayenne both saved Porsche and transformed the company into a SUV manufacturer with a decent size sports car business on the side.  In 2022, Porsche delivered 182,328 SUVs and 58,613 Sports cars.  Without first the Cayenne and later the smaller Macan SUV, it’s unlikely we would have the 918, and last several series of GT2s, GT3s, and RSs.  Without a doubt, the Cayenne (and now Macan) is Porsche’s “Goose that lays the Golden Eggs”. Porsche’s SUV success has led to just about everyone else jumping into the SUV market.  Having now owned two Cayennes, a Turbo and a “S”.  They really are great, well built, highly reliable cars.  The Turbo is terrifc and something that big and heavy shouldn’t be able to take corners the way it does.  With the “S”, you get all of the Turbos gas guzzling capabilities without the performance.

A Goose & A Chicken

While the SUV has been a huge success for Porsche, it’s more of a mixed bag for VW’s Lamborghini & Bentley. When I looked at the numbers, the picture for the Lamboghini Urus & Bentley Bentayga, it isn’t exactly clear cut.  For Bentley, it mostly looks like they cannibalized sales from other models whereas Lamborghini’s SUV sales look to be almost entirely incremental.  One other fact, VW builds the Bentayga and Urus off of the same platform used for the Audi Q7 so the added development cost & complexity on the manufacturing side is fairly minimal.

 

A Goose

The Lamborghini numbers tell a bit of a different and much rosier story.  To give you an idea of the importance of Lamborghini in the VW Group, while even Seat and Skoda’s financial results are broken out, Lamborghini’s are just lumped in with Bentley’s. In 2016, the last year prior to the Lamborghini Urus SUV launch, VW Group sold 3,579 Lamborghinis.  In 2022, 9,233 Lamborghinis were sold.  Of the 9,233 Lambos, 5,367 were Urus’ which would indicate that the Urus has brough new buyers into the Lamborghini brand and the volume was clearly fully incremental. The added volume would certainly have been a welcomed by the dealer network and taken Lamborghini from a borderline brand to relevant and more supportable.  When looking at shorter term sales trends though, it seems that Urus sales have now flattened and will likely remain in the 5,000-5,500 units per annum range going forward.  Lamborghini now has a situation where 60% of their sales are SUVs and how this will change brand perception in the medium to long term is major question mark.  For VW, turning Lamborghini into a SUV brand is probably not a major concern as long as that moves more units.  Should VW decide to spin Lamborghini back off, it is a total different issue unless the new owner can execute a similar platform sharing arrangement similar to the Audi Q7, Bentayga, and Urus.

 

A Chicken

Bentley is an interesting case to look at as the Bentayga is considered a success.  In 2014, the last year pre the Bentley Bentayga SUV launch, VW sold 11,033 Bentleys. In 2022 VW sold 15,174 Bentleys of which 6,373 were Bentaygas.  That’s a 4.4% CAGR in terms of total units.  It is not exactly impressive and hardly a major success.  Net net, while total Bentley sales have grown, the vast majority of the Bentayga sales came from cannibalizing other Bentley models and this trend seems to have stabilized as the Bentayga’s CAGR from 2019-2022 is 6.8% which is nearly exactly in line with the 6.9% CAGR on total Bentley sales over the same period.  I did do a review on the Bentayga a few years back: 36 Hours with the Bentayga of which the most memorable comment on it came from Mrs. SSO who described it as driving around in a Channel handbag.

The Platypus

The Maserati Levante was launched in 2016.  That year Maserati sold 42k cars.  In 2021 (2022 results are not yet available) Maserati sold 24k cars.  Having driven an early Levante, the results are not surprising.  It felt like the Cayenne’s poor cousin and the interior came across as if it was assembled out of a Fiat parts bin.  The Levante certainly has not done much for Maserati.

 

The Messiah…..not really

The Aston Martin DBX SUV was supposed to be the car that saved Aston Martin.  Call it the second coming of the Cayenne, just this time with a British accent and a whiff of James Bond.  In its second year post launch, the DBX SUV, which was supposed to be AML’s savior, sales are down 16% through Q3 2022.  Its crystal clear at this point that the big bet on the DBX hasn’t worked.  Looking at the DBX sales in a bit more depth, in 2021 Aston Martin wholesaled 3,001 DBXs.  This is half of the original target of 6,000 units.  On February 1, 2022, Aston Martin announced a new more powerful version of the DBX, the DBX707 in an attempt to create renewed excitement around its floundering SUV.  The jury is still out on whether the DBX707 will turn around AML’s SUV fortunes.

 

Everything We Touch Turns to Gold

The Ferrari Purosangue SUV was officially launched in 2022 with shipments starting in 2023.  It is already sold out for the next several years.  The funny thing is Ferrari spent years denying they would ever launch an SUV.  The former CEO, Louis Camilleri, stated that he hated the word SUV and that it did not belong in the same sentence with Ferrari. Other Ferrari executives have stated that a SUV is not part of Ferrari’s DNA and that Enzo would roll over in his grave if it were to happen.  Yet here we are and the Purosangue is a huge success, even before the first car is delivered.

 

Ferrari has been quite clever in the design of the Purosangue.  It appears to be a two door while actually having four (the two rear doors are “suicide” doors that are rear hinged).  This also gives it a sleeker sportier appearance and it looks basically like a Ferrari GTC4 that’s been dabbling with steroids.  Also quite clever, Ferrari is capping production of the Purosangue at no more than 20% of total Ferrari production which puts it in the 2,000-3,000 range over the next half decade.  This effectively kills the risk of the Purosangue becoming the car that defines Ferrari the way the Urus has for Lamborghini.

 

McLaren & the SUV

Given McLaren’s new CEO’s history with both the Porsche Cayenne and Ferrari Purosangue, it is inevitable that the SUV discussion would be rumored to making the rounds of Woking’s hallways again.  McLaren Racing getting into Extreme E, which is an all-electric off-road series, was a not exactly subtle hint at ideas being played around with.  Assuming that a McLaren SUV is inevitable, question is what it should be and what can be learned from other manufacturers’ success and failures.  

 

Putting the Ferrari Purosangue aside because to be honest, given how strong the Ferrari brand is, you could put a Prancing Horse badge on the nose of a Dacia Sandero and it would sell out for the next three years. Also for Ferrari, this isnt about driving volumes, it just trading up the former GT 2+2 customers into a higher margin, more profitable new car.  If you look at the Bentayga and DBX, two SUVs that have had some moderate success but basically just cannibalized other models within the same brand, the outcome is not surprising.  In both cases the SUVs were designed to mimic the brands Grand Tourer experience just in a bigger, taller, platform.  Effectively they didn’t bring anything new to the table which would have attracted considerable numbers of new customers to the brand.  The Bentayga and DBX just give you the same Bentley or Aston Martin experience, just from an extra several inches off the ground.  The key to the Cayennes’ success, first of all Porsche effectively invented the Sport SUV, second, the Cayenne isn’t a 911 in SUV clothing, it’s a completely different car and doesn’t try to be a 911.  Hence it expanded the Porsche market considerable.  The same principles hold for the Lamborghini Urus.  Not much to learn from the Maserati Levante other than uninspired engineering and part bin raiding don’t normally lead to an inspired outcome.

 

Based on the above, if a McLaren SUV is going to be a success, it has to bring something new and different to the market.  The challenge in this is in doing so, it also has to stay honest to McLaren’s racing ethos.  If the McLaren MX Extreme E off road race car is the direction they are thinking of heading, then there is a good change they get it right.  If the approach taken is turning a McLaren GT into a SUV, it will not go about as well as the DBX has for Aston Martin.  In the same way you can take a McLaren 765LT to the track and run circles just about everything else out there, a McLaren SUV should be able to run the Dakar Rally or the Baja 500 with just minor modifications.  Probably the company I’ve seen that has done this best is Scuderia Cameron Glickenhaus with the Boot (SCG Boot).  The Boot is also the only SUV I have ever had Mrs. SSO tell me that we should get one. 

 

In summary, while I am personally not a big fan of SuperSUVs, I have accepted that they are definitely here to stay.  Most sports and supercar companies have entered the market but only a few have gotten it right.  One of the few who hasn’t yet is McLaren but they probably will shortly.  I hope they learn from other’s mistakes and if they can stay turn to their racing heritage, they might just get it right.

 

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February 2023

 

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The Cost of Mileage & Supercar Good Buys 2023

The Cost of Mileage & Supercar Good Buys 2023

The following are two short pieces.  The first one on the “Cost of Mileage” actually came out of research I was doing for the second on “Supercar Good Buys”.  

Cost of Mileage

I’ve been following the Ferrari F12 market quite closely for about a year now, just patiently waiting for the right car to fall into my budget.  When checking the Ferrari US site today, two similar spec F12s popped up right next to each other.  Both were 2015 models, Rosso, well spec’ed, with clean Carfax reports.  The first had an asking price of $315k and the second $209K.  Why the $106k spread?  The 41,902 difference in the mileage on the odometer.  Each of those extra 41,902 miles devalued that F12 by $2.53.  Do Ferraris essentially become worthless once they hit 125k on the odometer?  At that devaluation rate, if you drove it another 83k miles would Ferrari give you a refund?  It’s not just the F12 that this applies to, I have found examples of the 488, 812, and Portofino that have very similar price mileage relationships.

Is this rational? Not if you look at other similar sports and supercar brands.  Take the Porsche 911 GT3 RS as an example, I found two 2016 GT3 RS’s on the Porsche US site with similar mileage to the pair of F12s.  First had 49,850 miles on the odometer with an asking price of $196k.  The second 2,245 miles with an asking of $220k.  Some quick math gives you a Porsche devaluation rate of $0.50 a mile.  Using the 2015 McLaren 650S Spider as a second benchmark, looking again at two similar car s, car #1 has an ask of $150k and 38,272 miles on the odometer and car #2 is an ask of $180k at 1,621 miles.  While not quite as good a bargain as the Porsche 991 GT3 RS, the McLaren 650S Spider still has an easily Ferrari beating devalue rate of $0.83 per mile between the two examples.  As a final point of reference, I pulled up a couple of examples of the 2015 Aston Martin Vanquish, as it was a direct competitor to the Ferrari F12.  The first 2015 Vanquish coupe has an ask of $120k and 31,489 miles on the odometer, the second has an ask of $170k with 1,856 miles on it.  While not quite as eye watering as the F12, the devalue rate between these two Aston Martin Vanquish’s is still a wallet draining $1.69 per mile. 

 

The irony here is Ferraris are better built today then they ever have been. Reliability and build quality are light years ahead of where they were 20 years ago.  That big V12 in the nose of a F12 should be good for at least 200k miles before needing to be rebuilt.  If you are gentle with the brakes, the ceramic rotors should last at least 100k miles.  The dual clutch transmission should last the life of the vehicle.  Given these facts does a $100k hit on a F12s valuation for driving 40k miles make any since?  It does if you think of the F12 as a piece of art needing to be preserved in its original form with every mile driven degrading that piece of art just a little bit more.  The interesting thing though is that doesn’t actually hold for vintage Ferraris.  If you look at values of the F12’s great great grandfather, the Ferrari 365 GTB/4 Daytona, mileage is completely irrelevant to values.  Its condition that matters.  So, buy it, drive it, and if you keep it long enough, all those miles you have enjoyed will not have devalued the Ferrari a single $.  And that is a much better bet than expecting a refund from Ferrari.

Supercar Good Buys 2023

Coming out of last week’s article on the current state of the Supercar Market, I have received a few questions about what might be good buys in 2023 (Supercar Market Update Jan 2023).  “Good buys” I define as supercars that offer enormous value at today’s prices.  Its slightly different from what I would call a bargain which is more dependent on the current values vs. where values are likely to be longer term.  A “Good Buy” might be a bargain or just really good value for what it is.  While it is always difficult to predict what’s going to happen in the coming months, the following are a few that I believe could be good buys including a several on my potential acquisition list. 

 

Ferrari F12 Berlinetta

The Ferrari F12 has been high up on the “want” list for quite some time now.  So long in fact that I even have the “Use Case” all figured out (see: Use Case Rule ) and Mrs. SSO approved.  I have been following the Ferrari F12 market fairly closely for about a year now and it finally seems to be headed in my direction (i.e down).   While filling the V12 GT hole in the garage with a Prancing Horse has been high on my list, I am not in a rush and refuse to pay a premium for a model that has traditionally been the depreciation champion of the Ferrari line up.  I would not be surprised to see another $30k drop in F12 prices in the next 12 months which would then make the last Pininfarina designed Ferrari V12 GT a great buy and the whole “Cost of Mileage” thing irrelevant as I would just hold it for the next 30 years.

 

Aston Martin DBS (2008-2012)

With the 2008 DBS, all production moved to Gaydon and the same VH platform that the DB9 utilized was adopted.  Unlike the Vanquish, a six-speed manual was standard with the automatic six-speed ‘Touchtronic 2’ gearbox as an option. Both coupe and convertible (Volante) versions were sold during the production run. Today automatic Volante’s and automatic Coupes sit at the bottom of the DBS food chain with both starting at around $80k.  Manuals tend to bring a $40-60k premium over the automatic versions.  What is interesting is Volante’s don’t seem to command any premium over the Coupes.  DBS’s have enjoyed a bit of a run up in values over the last several years and I would expect they will retreat to pre-Covid valuations in the coming years with the floor being around $70k.  For less than half the price today vs. its contemporary, the  Ferrari 599 GTB, the DBS a huge amount of car for the money.

 

Ferrari F430

The Ferrari F430 was the last of the line of mid-engine V8 Ferraris that ran for over 10 years starting with the 360 Modena in 1999.  The 360 Modena was the first Ferrari to use an all-aluminum space-frame chassis and was powered by a new 3.6 liter flat-plane crankshaft V8 engine producing 395 bhp.  With the 360 Modena, build quality was dramatically improved and cambelt changes were no longer a costly engine out exercise.  However, the 360 Modena did have its share of issues and the F430, which replaced it, was a significantly improved car.

 

Today you can pick up a F430 Coupe with a F1 transmission for just under $100k with Spiders commanding an additional 15-20% premium.  The rarer manual F430s (about 10% of F430s were produced with 6 speed manual transmissions) command a fairly absurd 2x premium.  Having driven both manual and F1 F430’s,  it’s the F1 transmission that suits the car best, unlike the 360 where the manual is the better of the two options.  Unlike both of its predecessor, the Ferrari F355 and 360 Modena, values on F430s basically haven’t moved in the last couple of years which makes them the bargain of the Ferrari world right now.  Ferrari produced around 15,000 F430s so there are always plenty on the market.  The high production numbers have also served to hold down values.

Ferrari 612 Scaglietti

If the 360 Modena was the first of a new generation of Ferrari V8s, the 612 Scaglietti played the same role on the V12 GT side of the Ferrari business.  Back in 2004, the Ferrari 612 Scaglietti was the first Ferrari GT to be built on an aluminum chassis and was powered by a 5.7 liter V12 engine producing 533 bhp, 30 bhp more than the Ferrari F50.

 

In today’s market $100k will land you a nice 612 Scaglietti although most dealers have asking prices a bit higher.  The rare manual 612’s do command huge premiums but the F1 gearbox suits the GT nature of the 612 better.  The original list price on a Ferrari 612 Scaglietti was just north of $310k, before any of the multiple option boxes were ticked. Most 612s are highly spec’ed cars so you can add at least another $30-40k on top of the base price.  Despite being a Grand Tourer and designed to eat up huge number of miles effortlessly, most 612’s have seen fairly moderate amounts of use and there are plenty around with under 25k miles on the odometer.  If you are looking for a supercar that can haul 4 people in relative comfort over vast distances, the 612 Scaglietti has to be the best value on today’s market.

 

We did own a beautiful Nart Blue 612 Scaglietti a few years ago.  It was a terrific car that did what it was designed for brilliantly. 

 

McLaren 12C

The McLaren 12C was McLaren Automotive’s first production car when it was launched in 2011.  The 12C was built on a carbon fiber tub and is powered by a 3.8 L twin-turbo 616 bph V8 engine.  Performance at launch was best in class.  The 12C can do 0-60 mph in 2.8 seconds and top speed is well over 200 mph. 

 

Early 12C’s have now dropped to under the magic $100k line. In addition, as they are now over 10 years old, they will have fully bottomed out on the depreciation curve.  If you have a bit of patience, $110k-120k should be all it takes to land a good spec well maintained late production McLaren 12C Spider in today’s market.  Having owned three 12Cs, each from a different production year, I can attest that they got better with each model year.  For the money, you will be getting a car that not only outperformed everything in its class when launched, but could still keep pace with a Ferrari F8 up to 60 mph.  Spiders command a slight premium over the coupes but lose next to nothing in terms of performance due to the carbon fiber tub.

 

SCG 004S

I know it’s a bit unusual to put a new car on the good buy list but on occasion something does come along that is just so unique and a great deal that it qualifies.  Given that the SCG 004S is both the first and likely the last US built fully homologated, 3 seater, central driving position supercar certainly makes it quite interesting.  When you consider that the list price on the SCG 004S is 1/6th that of two other recent 3 seaters, the McLaren Speedtail or GMA T.50 (see: 21st Century 3 Seaters ) it looks like a huge bargain.  Throw in the fact that it is about the same price as the latest tarted up “limited edition” from Aston Martin, the DBS 770 Ultimate Edition (which despite a hefty 44 bhp increase in power over the base DBS delivers the same 3.4 sec. 0-62 mph sprint time and 211 mph top speed), I do think the SCG 004S qualifies as a great buy.

 

To be transparent, we do have an SCG 004S on order via the official dealer HK Motorcars.

 

 

A few Sports Cars that I would rate as Good Buys in 2023:

 

Alfa Romeo 4C

Alfa’s beautiful but flawed carbon fiber tub go kart.  These had a run up in value in 2021 but started to return to earth in 2022.  It is certainly the most interesting car to come out of Alfa Romeo this century (I am not including the 8C as it was basically a re-engineered/rebodied Maserati Granturismo).  $45k-55k seems like where the current market is right now, down from $55k-65k in 2021.  I would not be surprised if it dropped another 10-15% this year.

 

Porsche 911 Turbo (930)

When it comes to raw and wild, the 1st generation of the Porsche 911 Turbo is hard to beat.  The 911 (930) Turbo was nicknamed the “Widow Maker” for good reason.  Make the mistake of lifting off mid corner, and a quick trip to meet your maker is likely in order.  Prices on the first generation Porsche 911 Turbo have basically doubled in the last several years but started to soften a bit in the 2nd half of last year.  I would expect that to continue and once they drop into the $80k range, they should be a great buy again.

 

Maserati Granturismo

Early Maserati Granturismos have to be one of the best bargains in the current market.  Granturismo production ran from 2007-2019, and with over 40,000 produced it is likely the best selling Maserati of all time.  If you are brave, early high mileage Granturismos are $20k today which does put you in the driver’s seat of a Ferrari powered great sounding proper GT.  Double your investment to $40k and you get a mid production Granturismo with reasonable mileage.   There are quite a few Granturismos with 80+k miles on them which is a good indication of their build quality.

 

Summary

While this is a relatively short list, it’s not through lack of trying.  I looked at a wide range of different models but in the madness that’s today’s rapidly changing Supercar market, figuring out what really are good buys is harder than getting a getting a Ferrari Daytona SP3 build slot.  Almost all the cars on the list are between 10-20 years old which is just over the point where normal depreciation curves flatten out.  With one exception, they all fall into the group of yesterday’s models but not old enough to be classic yet.  Currently 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 tanking in many areas. All of this should lead to plenty of good buys and bargains emerging in 2023.

 

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Supercar Market Insights & Analysis – Aston Martin

Supercar Market Insights & Analysis – Aston Martin

Last week I posted up an article on the Supercar Market, the macro situation and covered a number of different models (Supercar Market Update Jan 2023).  One request coming out of that article was for a point of view on the Aston Martin, Lamborghini, and Porsche RS market.  As I know absolutely nothing about the Lamborghini market, and only slightly more on the Porsche RS market, I thought it best to try and concentrate on the Aston Martins.  To be very transparent, it is not a market that I have been tracking long term, but I have at least written the occasional article on Aston Martin so have a little bit of insight on the brand.

The Twenty First Century V12 Flagships

V12 Vanquish & Vanquish S

The 2001-2007 V12 Vanquish & Vanquish S were the last of the handmade Aston Martin’s to come out of the Newport Pagnell manufacturing site.  Personally, I think it’s the most elegant car Aston Martin has ever produced.  A year ago, you could pick up an early Vanquish for $60-80k depending on spec and mileage.  Today the same car would run about $10k less.  The later Vanquish S are $70-90k cars today with low mileage “S” (under 10k) running about $20k more.  I would expect another across the board drop of around $10k in the coming 12-18 months.  Autotrader currently has 9 listed for sale and about 3 a month show up on Bring A Trailer so are always a few to choose from.

 

There is no other 21st century bespoke V12 close to this in price.  I wouldn’t pay a huge premium for a low mileage example.  Better to put the savings into a few sessions with a therapist so you can work through the trauma of just how bad the first generation automated manual transmission is.  Aston Martin did convert a few of the V12 Vanquish’s to a 6 speed manual for a very modest $25k.  A good friend did own one of these conversions.  He wasn’t a fan and it ended up being replaced by a Ferrari 599 GTB.

 

DBS 2008-2012

With the 2008 DBS, production moved to Gaydon and the same VH platform that the DB9 utilized was adopted.  Unlike the Vanquish, a six-speed manual was standard with the automatic six-speed ‘Touchtronic 2’ gearbox as an option. Both coupe and convertible (Volante) versions were sold during the production run. Today automatic Volante’s and automatic Coupes sit at the bottom of the DBS food chain with both starting at around $80k.  Manuals tend to bring a $40-60k premium over the automatic versions.  What is interesting is Volante’s don’t seem to command any premium over the Coupes. DBS’s have enjoyed a bit of a run up in values over the last several years and I would expect they will retreat to pre-Covid valuations in the coming years with the floor being around $70k.  The market for the DBS is a bit tighter, Autotrader has 15 listed for sale plus an additional 10 on Aston Martin Preowned USA.  You get about one a month showing up on Bring A Trailer. 

2nd generation Vanquish 2012-2018

The 2nd generation 2012-2018 Vanquish was basically an evolution of the DBS with both built of the same basic platform with a few styling cues swiped off the One-77.  The Gen 2 Vanquish was only sold with an automatic gearbox.  Early models came with a 6 speed autobox with later (2014-2018) switching to an 8 speed ZF automatic.  Today you can find higher mileage coupes for around $100k with Volante’s starting at $125k with late models of both hitting $200k.  Mileage and spec seem to have a major impact on valuations.  The late model Vanquish’s are still depreciating and I would expect that they will eventually settle down at a similar price range as the DBS.  With 46 listed for sale on Autotrader plus an additional 10 on Aston Martin Preowned USA right now, it is a buyer’s market.

Of the 21st Century V12 Flagships, my choice would be the manual DBS Volante.  I prefer the lines of the DBS vs. the later Vanquish and it is just a much better car to drive vs. the earlier V12 Vanquish.  Should manual DBS Volante’s get back down in the $100-120k range, it would be very tempting.

One-77

The One-77 was Aston Martin’s first Hypercar.  A total of 77 were built between 2009-2012 and sold for $1.9 million each.  Aston Martin had a very difficult time selling out the production run and there were 11 build slots still available in late 2011.  I do remember being approached on at least 3 different occasions. In the last 3 years, 4 have come up for sale at auction with 3 of the 4 being hammer down at prices ranging from $1.3 mil. to $1.64 mil.  If the One-77 wasn’t able to leap over its original list price during the great price run up in the last 8 years, it is very unlikely it will do so anytime soon.

DB9

Aston Martin produced over 16,000 DB9’s during its 2004-2016 production run so there is no shortage of DB9s on the market.  The DB9 was the first Aston Martin built off of the aluminum VH platform which served as the base for all Aston Martins for over a decade.  The VH platformed doubled the rigidity and cut weight by 25% vs. the prior model.  The V12 in the front nose was lifted out of the Vanquish and produced 450 bhp when the car was launched.

The last dozen DB9s to sell on Bring A Trailer have ranged from a low of $38k to a high of $82k.  Autotrader has 64 DB9s listed ranging from $36k to a very optimistic $130k.  Most DB9s were fitted with a 6 speed Touchtronic automatic gearbox but a 6-speed manual was also an option and does command a 15-20% premium today.  If you can find a manual, I do believe the premium is worth it.  DB9s were offered as both Coupes and Volante (convertible) versions.  Neither seems to command much of a premium vs. the other.  Early DB9s are famous for having electrical issues but these should have been sorted long ago.  As V12 GTs go, the DB9 is probably the best value on the market today, especially when you consider that you can pick up a nicely spec’ed V12 powered DB9 for about the same price as a 4 cylinder Lotus Elise.

Classic Aston Martins

DB4, DB5 & DB6

If you look at the longer-term trends on the main 60’s Aston Martin models, the direction does seem clear.  Looking at the last 3-4 examples of each of the 3 models that has gone across the auction block, in almost no cases has the lower reserve been reached.  Even for those that are noted as sold.  DB6 coupes, which soared up into the $500k range have crashed back down to earth with the last two sales being in the $140k-150k range.  The higher powered DB6 Vantage still seem to command a 50%-100% premium over the base DB6 depending on condition.  It is the DB6 Volante’s that now sit in the $500-$600k range, down from close to $1 mil. back in 2019.  DB5s look to be $400k-$550k depending on condition and spec.  This is down from $700-$850k for a similar car a few years back.  Its DB4s have seemed to be a bit more stable over the long run.   A rare DB4 with James Bond ties or one of the 70 Volantes (out of 1,100 DB4s built) would bring a $1 mil. price tag today but the average DB4 is a $200k-350k car now, down only around $50k-100k in the last 12 months.  The 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 taking the biggest percentage hits.  Vintage Aston Martins are cars that take real skill to drive well and are a bit of an acquired taste as light and nimble are not words normally used to describe a DB6.  Condition on all is a huge driver of value as restoration costs on all are eyewatering.  In addition, 20 years ago, they were not considered high value cars and a lot of them were put away wet and were not well maintained. 

DBX

The only current model included here is the DBX.  DBX sales started in 2021 with a base list price of $177k.  Today those early DBX’s are $130k cars.  Autotrader currently has 134 used DBX listed for sale and there are 65 on Aston Martin Preowned USA.  The Aston Martin USA website doesn’t list new cars for sale as in theory there aren’t any as per Lawrence Stroll’s multiple statements that Aston Martin now only manufacturers vehicles to order. However, doing a quick check of a few of the larger Aston Martin dealerships in the US.  The Washington DC dealership has 5 new DBX’s for sale, Greenwich, CT also has 5, Chicago has 6 and Beverly Hills has 16.  That would seem to be a lot of new cars that in theory are only being built to order.  I expect we will get a bit more insight on this when AML releases their 2022 results in a bit over a month.  With a market that’s headed south fast and a very saturated market, I would not be surprised if early DBXs dipped below the $100k mark in the next 1-2 years. 

Summary

As of January 2023, 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 tanking in many areas. The bill from the excess of the last decade has come due.  Recent Aston Martin’s are not immune to any of these factors and if anything, are more vulnerable that their Italian competitors.  The older vintage DB4-6s are clearly in decline and will likely remain so for the foreseeable future.  To end on a positive note though, if you have the cash and the patience the next couple of years could be a great time to buy.

 

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