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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