Supercar Market Update – Q1 2020

Supercar Market Update – Q1 2020

Supercar Market Update – Q1 2020

As a follow up to the Q4 2019 car market article (Market Update Q4 2019) I’ve continued to track the Ferrari F355, Porsche Carrera GT, and the Ferrari 365 GTB/4 Daytona, as I believe these are good bellwethers for the market in general.  On occasion, I also take a glance at Koenigseggs, the McLaren P1, Porsche 918, and the Special Series Ferraris out of personal interest.  It’s wasn’t too long ago the F355 Spiders were regularly selling in the $90-100k range and market experts were predicting Daytona would be $1 mil cars, which is certainly not the case today.  On a more positive note, the one car that has held steady in value is the Carrera GT.  CGTs have been rock solid in the $700k range for the past year.  

A few Q1 2020 results of interest are:

49k Mile 1973 Ferrari 365 GTB/4 Daytona, Sold $500k

53k Mile 1971 Ferrari 365 GTB/4 Daytona, Sold $420k

62k Mile 1970 Ferrari 365 GTB/4 Daytona, Sold $506k

NA Mile 1972 Ferrari 365 GTB/4 Daytona, Sold $495k

5k Mile 1995 Ferrari F355 Spider 6-Speed, Sold $69k 

14k Mile 1996 Ferrari F355 Spider 6-Speed, Sold $49k

28k Mile 1997 Ferrari F355 Spider 6-Speed, Sold $48k

2k Mile 2014 McLaren P1, Sold $1.05 mil

1k Mile 2015 McLaren P1, Sold $990k 

2k  Mile  2005 Porsche Carrera GT, Sold $710k

5k  Mile  2005 Porsche Carrera GT, Not Sold at High Bid of $570k

1,600 Mile 2015 Porsche 918, Not Sold at a High Bid $1.2 mil

3,800 Mile 2015 Porsche 918, Not Sold at a High Bid $900k 

12k Mile 2008 Koenigsegg CCX, Not Sold at a High Bid of $850k

These are very consistent with the trajectories seen in Q4.  This may be all quite interesting but since someone in Wuhan ate an undercooked bat, it’s all become completely irrelevant. 

So, where does this leave us?  Right now we have a market that is basically frozen.  Asking prices haven’t changed but no one is buying.  In most places around the world, even if you wanted to buy or sell a car, it just not practical or feasible.  This situation isn’t likely to change for at least another month or two, and perhaps much longer.  During this deep freeze, economies are tanking, unemployment is skyrocketing, and the world is awash in a pandemic driven tragedy unlike any we have experience in our lifetimes. 

Once things start to normalize, I believe that the lasting impact of the Coronavirus on the Supercar market will be immense and play out over a number of years.  In many markets a high percentage of new supercars are leased or financed.  With economies plunging towards recession, a large number of these cars which are 1-3 years old are going to find their way back onto the market quickly.  Supply will quickly swamp demand and prices will drop. This will put enormous pressure both on new supercar prices and accelerate depreciation on older used supercars in the 3-10 year age bracket.  The large increase in supercar production in the last decade via the entry of new manufacturers (McLaren) and significant increases in volume from the establish brands (Ferrari & Lamborghini) has created what will now be a very toxic situation when it comes to residual values until the oversupply is removed from the market which will likely take several years.  While Ferrari, Lamborghini, and McLaren all have deep pocketed parents or shareholders, Aston Martin looks to be in a very precarious position.  2019 was, in the words of Aston Martin CEO, Andy Palmer “a very disappointing year,” and now Aston has bet the house on exactly the last sort of car that will be in high demand in the next couple of years, a $200k luxury SUV, the DBX.  Older supercars, like the Ferrari F355 or 550, will likely hold their current value a bit better as they have already dropped in price significantly over the past several years.

In addition there will be significant carnage among the large number of Micro Manufacturers that have emerged in the last several years (Micro Manufacturers).  Those without deep pockets or an established client base are unlikely to survive.  The few Micro Manufacturers which are built around resurrections of long dormant brands are the ones I would guess will be most likely to be returning to the morgue shortly.  If I had to bet on one that will survive, it would be SCG as they have both the funding and business plan in place to make it long term.  

Furthermore, the demand for new Hypercars, which was already hitting a saturation point (Too Much of a Good Thing) is going to head south quickly.  I would expect a wave of cancelled deposits on all but the most sought-after models.  Those models with low build numbers, produced by well-established manufacturers (Ferrari, McLaren, Pagani), which have defendable pricing will do the best.  The last generation of limited edition hypercars (No Longer the New New Thing) were already yesterday’s news and yesterday just got a lot less interesting.  In fact, both the McLaren P1 and Porsche 918 were already changing hands below their original list prices and this will only drop further.  My guess is they, along with the LaFerrari, have another 20-30% to fall.  Maintenance and running costs do still matter and will now likely play an even larger role in driving valuations.  A $120k+ battery replacement or $5k+ service on a McLaren P1, 918 or a LaFerrari just isn’t a cost most people will be looking to take on these days.  Ferrari Enzos, F50s, F40s, 288 GTOs, and Porsche Carrera GTs will all likely experience similar drops in values as many financially stretched owners have to unfortunately unload assets.  Of these four, perhaps the largest risk is the Carrera GT.   In my last market update, I mentioned that there seemed to be a large number of ultra low mileage Carrera GTs on the market.  My guess is these ultra-low mileage CGTs were purchased as investments (they certainly aren’t being driven and enjoyed).  In this current climate those owners will very likely want out, and quickly.  Question is, will this drive Carrera GT pricing back to 2014 levels?

Perhaps the biggest question right now is regarding Koenigsegg.  Koenigsegg has operated in a very different value universe for multiple years now.    Prices on their new cars have risen astronomically and in the recent past, Koenigesgg has gone to considerable lengths to make sure it’s cars sold at or above estimates (Car Market Q3 2019) when one has shown up at auction.  That changed as of Nov 2019, an Agera R sold for 60% of the low estimate and in Jan 2020 a CCX was a no sale.  The question is does the pricing bubble on Koenigseggs now finally pop, and if so, how far do they fall?

Of all the cars listed in the original auction results update list, what will now happen to the values of the Ferrari 365 GTB/4 Daytona and similar cars from that era is the great unknown.  In general, 50’s and 60’s Ferraris appeal to older collectors that grew up lusting after these works of automotive art.  The Coronavirus has taken its deadliest toll from exactly this group of enthusiasts and collectors.  It’s a sad and tragic situation that will likely have a major negative impact on demand.

In summary, right now we have a market that is basically frozen.  The situation isn’t likely to change for at least another month or two, and perhaps much longer.  The Coronavirus is causing a global tragedy and economic meltdown unlike any we have experience in our lifetimes. Once things start to normalize, and full normalization is unlikely until a vaccine is available, the impact of the Coronavirus on the Supercar market will be immense and play out over a number of years.  Not all manufacturers will survive, and many of those that do will have much more modest ambitions.  There will be a few manufacturers which had the foresight to reduce production and build a financial cushion that come out ahead.  All of the above is just my opinion and in this case I really hope I’m wrong.

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Road Trips & Driving Talent

Road Trips & Driving Talent

Road Trips & Driving Talent

About six weeks ago Mrs. SSO and I started planning a road trip to Scotland.  The route was planned, and hotels were booked in both London and Scotland.  Two weeks ago, we cancelled our plans with the hope that we might be able to reschedule in the fall.  McLaren had extremely generously offered to lend us a car for the trip to Scotland and I was very much looking forward to spending a week driving the McLaren GT on some of the greatest roads in the world.  However, in light of what’s going on in the world right now, a cancelled road trip is completely inconsequential, and I consider ourselves extremely fortunate that we are able to even consider going on these sort of road trips.  

Going back six weeks to when Mrs. SSO & I started discussing the trip, one of the first questions that came up was who to invite to come along with us.  While a solo road trip is fun, sharing the driving experience and meals with great company who equal appreciate great roads, luxury hotels, and gourmet food, takes the experience to a whole different level.  Looking back to our last two Scottish road trips, my memories of several great dinners is a vivid as some of the great northwestern roads.  For us a great road trip is a holistic undertaking where you need to get five critical elements right: hotels, restaurants, cars, drivers, and the routes.  The first two on this list are generally Mrs. SSO’s responsibility and the last three are mine.

Of the three critical elements I’m normally responsible for, the easiest is the cars.  We have a simple rule for these trips, all the cars on the trips have to be supercars.  There is actually a practical reason for this, we want to make sure all the cars can comfortably keep up with each other as the driving can get a bit “spirited” at times, when the conditions allow. Picking the roads is easier that it might first appear.  At this point I’ve built up a decent database of great roads in different countries across Contintenal Europe and the UK.  The challenge is normally linking the routes up with the hotels Mrs. SSO has chosen.  Net net, the roads and hotels are puzzle that just needs a bit of time and patience to put together.

Where things get quite a bit more complicated is when it comes to the drivers.  The majority of supercar owners I have met over the last couple of decades fall into three general categories: “drivers”, “lifestyle”, and “polishers”.  For our road trips, it’s the first of these three groups that is relevant.  To qualify as a “driver” in this case, it’s not just the mindset of an enthusiast who gets great enjoyment of taking a supercar out for an early morning drive, but also a driver with extensive track day and/or racing experience or who has taken advance driving skill courses.  In my case, I learned how to drive a racecar with Fiorano Ferrari, have done more track days than I can remember, and did advance driver training with Ride Drive in the UK.  The Ride Drive instructors are off duty policeman who are trained in high speed pursuit.  In terms of how to drive enthusiastically and safely on a country road, I probably learned more in a few hours with Ride Drive than in any of the other advanced driving courses I have taken.  While setting this sort of criteria might sound a bit elitist, its actually for everyone’s safety.  

When you are driving as a group across great empty back country roads or in the mountains, having a group of cars with similar capabilities, piloted by drivers with similar skill sets, is critical.  While we have never had an “incident” on a road trip, there have been two near misses that I have witnessed.  In both cases the driver didn’t understand the gap between his Ferrari’s capabilities and his limited talent.  Had it not been for the Ferrari’s excellent traction control and great brakes, there would have been plenty of bent aluminum.  Getting in over your head in these situations makes you a danger not only to yourself and your passenger but also to everyone else on the road.  Hence selecting who to invite is critical as the last thing I want to do is put anyone in a situation they might not be comfortable in.  

There is one more added complication on the driver invites.  Not only do they need to be an experienced and skilled supercar owning driver but also have to appreciate and enjoy great hotels and excellent food.  While this sounds pretty straight forward, some people will surprise you.  On one trip we had a friend of a friend come along who turned out to be quite an eccentric individual.  This gentleman turned up with a cooler of tuna sandwiches and booked himself in alternative budget hotels nearby where we were staying.  I know it wasn’t an issue of money as this gentleman had more than plenty of it.  There is something uniquely wonderful about enjoying a great meal with friends in a wonderful location after an exhilarating day driving that is very hard to top.

When everything eventually returns to normal, we will celebrate with friends on another great road trip.  It’s always good to have things to look forward, especially in very uncertain and trying times.  Stay safe and healthy.

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Collecting Supercars

Collecting What I’ve Learned

Collecting Supercars

Recently I exchanged a few messages with a gentleman who was looking for a bit of advice on plans for his car collection.  I quite enjoyed the exchange and hope I was able to provide at least a modicum of useful insights.  I found the experience fascinating as it forced me to reflect back on our car collecting experiences over the last 18 years and look into what I have learned (Supercar Ghosts).  To start, I went back and took a look at each of the cars we have owned during that time period and captured my key impressions.  From there I took a look back at the different garage combinations we have had over the years and tried to discern which were our favorites and why. 

When compiling the list of the supercars and limited edition/hypercars that we have owned over nearly two decades, a pattern clearly emerged.  If I look at longevity of ownership, there are three main buckets:  the 6 month cars, the 2 year cars, and the long termers.  Every single front engine V12 we have owned has fallen into one of the first two buckets. The occupants of the long termer bucket have all been mid-engine.  No matter how hard I have tried to love a big front engine 12-cylinder GT, I just prefer the way a mid-engine car drives.  “Like” was the best I got to with each of the 6 different front engine Ferrari V12s (Ferrari 599 GTB HGTE) that passed through our hands.  I guess this also explains why I have never owned an Aston Martin.  Another learning has been 4 seat supercars don’t work for us.  While it might be a noble idea to get a four-seater so we can use the supercar on road trips with the kids in the back, it never worked out that way.  First of all, teenagers have zero interest in being stuffed in the back of a Ferrari.  Second there really isn’t enough luggage space in the boot for four people’s bags.  Inevitably we always defaulted to using one of the SUVs in those situations.  

Over time I have found that how one intends to use the car has a huge impact on what I am looking for in a car’s dynamics.  I have used both a Ferrari 360 Modena and a McLaren 650S Spider as daily drivers.  While the 650S Spider has been by far the best daily driver I have ever had (650S Spider Daily Driver), the 360 Modena just wasn’t geared for heavy traffic.  At the same time, the polish of the 650S Spider, doesn’t make it my weekend or road trip car of choice.  The rawer McLaren 675LT Spider or the Porsche 911 GT3 RS (675LT Spider & 911 GT3 RS) fit this brief much better.  Alternatively, the 675LT Spider is too hard to use as a daily driver and I would never consider it for that role.  When it comes to the limited edition/hypercars, I am definitely looking for more personality and a bit of an edge.  Too much of an edge however gets old after a while.  I have multiple memories of getting out of the Koenigsegg CCR (Driving a CCR) after a spirited drive and just being thankful to be alive.  The cockpit of the Jaguar XJR-15 (Jaguar XJR-15) was a sauna and the suspension rock hard.  After an hour behind the wheel of the XJR-15 I normally needed both a shower and a massage. On the other hand, I have driven the Ferrari F40 (Driving the F40)  multiple times for many hours and never had anything but a big smile on my face.

The mix of cars in a collection is critical.  What has worked best for us is when we have had a balance of more usable supercars along with a few edgy limited edition/hypercars.  At one point we owned a F40, F50, Koenigsegg CCR, Jaguar XJR-15, and a Mosler MT900S.  While that might sound great paper, when a Mosler MT900S (Mosler MT900S) is your most practical/useable supercar it’s a bit of a problem.  That combination might make for great driveway pictures you aren’t really going to want to drive any of them into London on a Saturday morning.  None on this list were really “office/commuting” friendly and we basically had 5 “Sunday Morning” cars of which only the F40 could be used for longer road trips.  A much better mix was a F40, F50, XJR-15, 430 Scuderia, and 612 as the last two were highly usable and both saw plenty of mid-week & road trip usage.  Net net, making sure each car in the garage has a clear role and that there isn’t too much overlap is key.  When we have gotten this right, all of the cars in the garage have had regular use without it being forced.  Other garage combinations that have worked well for us are:

  • The current: Ferrari F40, McLaren Senna, 650S Spider, 675LT Spider, 720S Spider, Maserati Granturiso Cabrio, & Porsche 997.2 GT3 RS,
  • Circa 2017: Ferrari F40, 599 GTB, McLaren P1, 650S Spider, 675LT Spider, & Maserati Granturismo Cabrio
  • Circa 2013: Ferrari F40, F50, McLaren 12C Coupe, 12 C Spider
  • Circa 2010: Ferrari F40, F50, 365GTB/4 Daytona, & 575 Maranello
  • Circa 2007: Ferrari F40, F50, 308 GTB, & 360 Modena

Another learning is if you are buying cars all from a similar era, make sure they are very different in terms of the driving experience and only buy the best in class. A Ferrari 488 GTB and a McLaren 720S are a bad combo as they are conceptually very similar. In terms of performance, the McLaren will run circles around the Ferrari and after a couple of months the 488 GTB will just sit in the garage until it finally gets sold. Also, in regard to buying, one or two acquisitions a year works best. This gives you time to bond and really get to know a car before the next new thing comes along. The best way I know to bond quickly with a new car is to take it on a multiday road trip (F40 Road Trip) as soon as you collect it.

Summary

While most of the above may sound simple or just plain common sense, it’s really only through trial and error that I have figured it out.  We all have perceptions on what different cars are shaped by friends, the media, and car manufacturers marketing.  Its’ really only by living with a car for multiple months that those perceptions convert to your reality. Personally, it is mid-engined cars that I really bond with and four seat supercars just don’t work for us.  

I have learned over the years that my daily driver needs to be polished, and the weekend cars need more of an edge.  A bit raw is great but certainly as I have gotten older, I am less interested in incurring physical or mental damage from a drive.  Having the right mix of cars in the garage, each with a clear role, is critical to making sure all get used.  Last but not least, just because a car might be a great buy, unless you have a clear idea how it’s going to fit into your collection, don’t buy it.

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Great Supercar Buys 2020

Great Buys 2020

Great Supercar Buys 2020

2019 has not been a particularly kind year to the car market. If 2014 was the year that the bubble really inflated, 2019 represented a return to earth. I would not call it a market crash but more a returning to a more sensible reality. Some very deserving cars, like the Ferrari F50, have held value well, while others that got over hyped have not. In addition, as time has moved on, what was the new “must have” thing, is yesterday’s news and that “must have now” premium has evaporated. All of this makes for a very interesting situation going into 2020. A bit of chaos, tossed in with political uncertainty, always leads to a few opportunities. These are a few of what I think could be great buys in 2020:

McLaren P1

Of the 2014 Hypercar Trinity (Porsche 918, Ferrari LaFerrari, McLaren P1), long term I believe the McLaren P1 will be the one to have.  With auction prices down over 50% in the last two years to the $1 mil. range, the near future looks like a good time to buy. In this league rarity counts and with over 710 LaFerraris (coupe & spider) and 918 Porsche 918s produced, the 375(ish) McLaren P1s make it a significantly rarer car.  If the LaFerrari is polished and the 918 is a complete technology showcase, then the P1 has a raw edge the other’s lack.  While all three are crammed with technology that may not age well, if I had to place a bet on which will age the best and continue to be supported, it would be the P1 given McLaren’s expertise in advanced technologies (McLaren Applied).  There is one major caveat on the P1 making this list though, and it’s the battery pack.  For the McLaren P1 to be a great 2020 buy, McLaren needs to come up with a cost effective the solution to the issues with the battery pack.  The issues with the 1st generation battery packs were a key reason we sold ours (P1 Farewell) and a long term solution would be a key reason we would buy another one.  

Ferrari 275 GTB & 275 GTB/4

While it may be a stretch to call a car that regularly sells for between $1.5 mil. – $3.0 mil., depending on the specific variant, a great buy but prices across the board on 275 GTBs have been drifting back down for a couple of years now. The top of the food chain 275 GTB/6c Long Nose Alloy body cars have dropped by close to $1 mil. after a run up in values that lasted from the turn of the century through 2016. With only around 774 road versions produced across both the 275 GTB & 275 GTB/4, rarity is assured. I personally believe this is one of the most beautiful, timeless, and classic designs ever to emerge from Pininfarina’s studios. As the first Ferrari road car to be produced with a 5-speed manual syncromesh transaxle, a limited-slip differential, four-wheel independent suspension, and disc brakes, make it still a very useable car today.

Ferrari 308 GTB/308 GTS

The Ferrari 308 is another car that had a major run up in value in the past decade which has recently dropped back down.  It wasn’t too long ago that 308s were approaching $100k (with early fiberglass models going for twice that) and today you can find a nice one for about half of that.  The 308 is instantly recognizable as a Ferrari, was the first of the V8 line of Ferraris that continues to this day, and a well sorted one is a delight to drive (Driving a 308 GTB).

Ferrari 430 Scuderia/16M

I do have a bit of bias here, the 430 Scuderia is probably my favorite mid-engine V8 Ferrari (Driving a 430 Scuderia).  As the last of the F1 semi-automatic single clutch Ferraris, it’s the best of the breed.  The gearbox is lightyears ahead of the F1 system in the Enzo.  Prices on 430 Scuderia’s seem to have dropped by about $20k in the last 2 years to around $170k while the 16M, after topping out near $400k in 2016, are now back down in the $250k range (430 Scuderia vs. 16M).  At half the price of a 458 Speciale, but more fun to drive, the 430 Scuderia is great value right now.

McLaren 675LT/LT Spider

In many ways, I believe the 675 LT/LT Spider is the best, most complete, car McLaren Automotive has produced (The Brilliant 675LT Spider).  It simply does everything brilliantly. We have had ours from new and it still puts a huge smile on my face every time I drive it.  Build quality is outstanding and we have never had a single issue with ours.  McLaren built five hundred 675LT coupes plus an additional five hundred 675 LT Spiders which makes the 675LT rarer than the 365 GTB/4 Daytona, F40, and Carrera GT.  With values today starting around $200k for coupes and $240k for Spiders, this has to be the most car for the money in the supercar world today. 

SCG 004S

Last but certainly not least is Scuderia Cameron Glickenhaus 004S (The SCG 004S).  While it might seem a bit strange to be recommending a car that hasn’t yet been built, try to find another car that is a 3-seater with a central driving position for less than the GDP of a small Caribbean Island.  Your other options are a Ferrari 365 P Berlinetta Speciale, a McLaren F1, and a McLaren Speedtail.  All basically fall into the unobtainium category. The 3-seat layout in a mid-engine supercar is one that I have been deeply intrigued with since I read an article on the Ferrari 365 P back in the late 1990s and saw my first McLaren F1 seventeen years ago.  The SCG 004S will be a 6 speed manual, with a 650 bhp supercharged V8, dropped into a carbon fiber tub and with carbon fiber body panels so there isn’t much not to like.  In terms of cost, a SCG 004S is not too far off what a well spec’d Ferrari F8 Tributo will remove from your bank account at around $450k.

On all of the above, I’ve tried to pick cars that not only do I believe will represent good value going forward but also (or will be in the case of the SCG 004S) great to drive. We have a firm family rule that cars which sit get sold. When putting together this list, I tried to balance both the current and forward values with the ownership enjoyment side of the equation. A few others that got serious consideration are the 997 series Porsche 911 GT3 and GT3 RS, 993 series Porsche 911 C2s, Porsche Carrera GT, Ferrari 458 Speciale, Aston Martin DBS (6 speed manual), Ford GT (2005/2006), and the Alfa Romeo 8C. All missed the final cut as I believe they still have a way to go before prices bottom out.

A very Happy New Year and all the best for a happy, safe, and prosperous 2020.

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