Aston Martin, Ferrari, & McLaren Update Q 2 2020

Aston Martin, Ferrari, & McLaren Business Update Q 2 2020

In early April I posted an article on the challenges Aston Martin, Ferrari, and McLaren were facing in light of the Coronavirus (Aston Ferrari McLaren Challenges).  At that time most of the world was just several weeks into a lock down that would ultimately bring large parts of the global economy to a halt.  Eight weeks later, those lock downs are starting to lift in many countries and a “new normal” is taking root.  This new normal looks nothing like the world circa 2019 and that world is unlikely to return until a vaccine is widely available.  With all three manufacturers now having posted their Q1 results, in this rapidly changing environment, I thought it would be worth taking another look at the health of Aston Martin, Ferrari, and McLaren, the challenges they are facing, and what needs to be done to survive.

 

I am a firm believer that you need to not only understand the situation today but also have a firm grasp on history to be able to even remotely predict the future.  A strong, healthy, well-run company isn’t something that happens overnight, it takes years to build.  On the other hand, baring a crisis, a poorly run, sick company can crawl along on life support for years.  The difference is right now we have a crisis, and the risk to a poorly performing business in this environment is significant. 

 

Below are the financial indicators that I normally start with on any company I am taking a look at.  These are the full year 2019:

 

Manufacturer

(US $)

Market Cap (as of May 29, 2020)

2019 Group Sales

D% vs. 2018

2019 Cars Sold

2019 EBITDA

D% vs. 2018

Aston Martin

$838 mil.

$1,241 mil.

-10%

5,862

$167 mil.

-46%

Ferrari

$42 bil.

$4,118 mil.

+10%

10,131

$1,002 mil.

+11%

McLaren ‘

$2.5 bil.*

$1,960 mil.

+18%

4,662

$230 mil.

+30%

*Based on last round of investment in 2018. 

 

And this is Q 1 2020:

 

Manufacturer

(US $)

Market Cap (as of May 29, 2020)

Q1 2020 Group Sales

D% vs. Q 1 2019

Q 1 2020 Cars Sold

Q 1 2020 EBITDA

D% vs. Q 1 2019

Aston Martin

$838 mil.

$99 mil.

-61%

578

-$58 mil.

-266%

Ferrari

$42 bil.

$1,015 mil.

-0.8%

2,738

$345 mil.

+1.9%

McLaren

$2.5 bil.*

$137 mil.

-62%

307

-$101 mil.

-460%

*Based on last round of investment in 2018. 

 

Clearly things got very ugly for McLaren fast, Ferrari hit a small speed bump, and Aston Martin continued to unravel.  In the two months since the end of Q1 2020, these trajectories, if anything have only accelerated. 

Starting with the strongest of the three, from a financial perspective, Ferrari is clearly performing well and is well positioned to both weather the crisis and emerge in a position of increased strength.  To give an idea of just how solid Ferrari’s current position is, they have enough cash on hand to just about cover all their debt that matures in the next two years.  In the past two months Ferrari’s market cap has actually increased by $4 billion, more than the combined value of Aston and McLaren.  In fact today Ferrari, which produces just over 10k cars a year, is worth more than either General Motors (7.5 mil. cars/year) or Ford (6 mil. cars/year). The stock market values Ferrari as a luxury good manufacturer with a P/E ratio of 37, much more in line with Hermes or LVHM than GM or Ford.  When announcing the Q 1 2020 results, Ferrari did issue guidance for the balance of 2020.  At the high end of the guidance EBITDA is expected to be -5% vs. 2019.  In normal times this would be a poor year, in today’s circumstances, if they can deliver it’s a very strong result.  Ferrari will also benefit significantly from the Formula 1 spending caps coming into place and has reduced its driver cost by an estimated $40 million in 2021 with the switch from Sebastian Vettel to Carlos Sainz.  The biggest risk Ferrari faces right now is to its huge market cap should it miss 2020’s reduced targets. 

Financially, Aston Martin’s situation is just plain ugly, again.  It’s gone bankrupt 7 times in its history and an 8thdoesn’t seem out of the realm of possibility depending on how the next year plays out.  From its IPO in Oct 2018, which valued Aston Martin Lagonda at a little over $5 bil, 18 months later AML’s value sits at 16% of that after the share price recovered a bit in the last week.  It’s a spectacular destruction of shareholder value in a relatively short period of time.  Q 1 2020 for Aston Martin continued the downward spiral Aston perfected in 2019.  All of Aston Martin’s hopes and dreams right now are wrapped around the DBX SUV.  Whether the post Covid-19 economy will be a welcoming one for yet another $200k+ SUV is highly debatable.  Even if it is a success, it may be too little too late.  Lawrence Stroll, brought in to provide badly needed liquidity, is now officially the Executive Chairman and owns Aston’s future.  He recently hired Tobias Moers away from Mercedes-AMG to be Aston’s new CEO and to execute the turnaround.  What is quite shocking is this is really the only major move, other than a bit of belt tightening, Aston has made in the last couple of months. 

 

In the first article I wrote that “Aston Martin feels like it was built on the side of an active volcano that sits on top of an earthquake fault line” and nothing that has happened recently would change my point of view.  Andy Palmer, the former CEO who just recently found out (via a reporter at the Financial Times in a stunning display of poor transition management) that his presence was no longer required looks to be carrying the bag for the current mess.  Whether Dr. Palmer is to blame for the current situation is an interesting discussion.  He was brought in back in 2014 by the controlling private shareholders to polish Aston Martin up for an IPO.  Palmer was brilliant at delivering against that mandate.  He doubled Aston Martin’s revenue between 2015 and the IPO in 2018, more than tripled EBIDTA, almost doubled car sales, while holding debt levels steady.  For his troubles, Dr. Palmer walked away with roughly $40 mil. when Aston went public.  The key words in the last sentence are walked away, because if Andy had taken his cash and ridden off into the sunset, his reputation would certainly be very different than what it is today.  If pre-IPO Aston was a discipled financial enterprise under Palmer, post IPO Aston exhibited all of the financial disciple of an alcoholic locked in a brewery.  Net leverage soared in 2019 to 7.3x adjusted EBITDA, up from 2.3X in 2018 and as of Q 1 2020 sits at an even more frightening 10.4x.  The warning signs that this was going to go off the rails certainly date back to 2018 and the way the IPO was structured.   All money raised from the IPO went to the existing shareholders and did not generate any cash for Aston Martin which could be reinvested in the business.  It’s a clear message that the group that got Aston to this point had little interest in its future.  Throw in a couple of head scratching completely off strategy vanity projects like Project Nepture – the Aston Martin Submarine, and the Aston Martin Apartments in Miami, and its clear management had begun to lose the plot. 

 

So, if Lawrence Stroll and Tobias Moers are going to save the day and turn Aston Martin into the “British Ferrari” with a P/E ratio north of 30x, they first need to stabilize the business and stop the bleeding.  It’s surprising that a restructuring program has yet to be announced as reducing costs is a critical step in these sorts of situations.  The one line of the P&L that has been increasing well ahead of revenue for a few years is “operating expense”.  This points to an organization becoming increasing bloated and less efficient.  Ditch the submarine and the Miami apartments, they are nothing more than an unnecessary distraction.  Finally get the long-delayed Valkyrie finally out the door and take a hard look at if Aston really has the resources (and the demand) for the Valhalla.  Same goes for the V12 Speedster.  If not, you still have time to pin it all on the Palmer regime and to walk away.  Finally, pray hard that the post Covid-19 world really does have a need for the DBX SUV.

Which finally brings us to McLaren.  In the first article I wrote that McLaren needed to do three things to get the business back on track:

 

  • McLaren’s Formula 1 Team needs to again become a net profit contributor to the group.
  • The next generation Sport and Super series McLaren’s need to be launched flawlessly and deliver segment leading performance.
  • Need to fill the profit gap left by the longer timing now necessary between Ultimate series models given the recent market saturation in this segment.

 

Coming out of 2019, McLaren’s financials looked quite respectable.  It had a growing business, the ten-year-old supercar business made money, and as a privately held company, has been able to attract outside investment whenever necessary.  On the surface, it was the F1 team that presented the biggest financial challenge and the supercar business looked solid.  Then Q1 2020 happened and McLaren’s results imploded.  The F1 team is certainly no longer McLaren’s biggest issue. McLaren sold fewer cars and lost more money in Q 1 than Aston Martin.  Some of this was by design and some of it not.  What caused this, well the “hamster” died in late 2019.  The “hamster” in this case, which had spun the wheel that powered the McLaren financial model since 2015, was the Ultimate Series and LT series cars.  The model simplistically was that the high profitability from the limited-edition cars would help fund incentives when needed to keep the regular production supercars moving out of dealer’s showrooms.  What killed the “hamster”, overwork and exhaustion.  Instead of keeping the Ultimate Series cars as a once in every 5+ years event, McLaren had started churning them out on an almost annual basis as McLaren had become reliant on the profits.  In addition, the last LT car produced, the 600LT was no longer a capped production run and McLaren flooded the market with them.  What happened in 2nd half of 2019 broke the model.  The last Ultimate Series car launched, the Elva didn’t sell out and McLaren was forced to cut the planned production run from 399 units to 249.  The writing was on the wall for the Elva by the way the secondary market was allowed to develop for the Senna.  With no restrictions on how long you needed to hold the car for, a significant number of Senna owners flipped the cars shortly after taking delivery.  This gut of Sennas on the market depressed values and for the 1st time in memory, a limited edition hypercar was available on the secondary market at or below list.  While I do believe the way Ford managed the application process for the GT was atrocious, the one thing they did do right was lock owners into holding their cars for at least two years.  At the same time this was happening, in order to move a glut of 600LTs out of showrooms, McLaren was having to provide incentives.  So instead of the 600LT being a high profit contributor, it became a drag on the P&L. 

 

The roots of McLaren’s problem date back to 2016 when McLaren launched the Track22 plan which called for 15 new models in 6 years.  McLaren then doubled down 2 years later with an updated Track25 plan which called for 18 new models by 2025.  The plan laid out was audacious to say the least.  McLaren then borrowed heavily to fund the development of all these new models, leading to the significant debt problem they are currently facing.  Net leverage is currently at an Aston like 7.8x adjusted EBITDA.  In reality it was too many new models, too fast, that the market could not absorb.  Eight to ten years between new production models with a revite/update/facelift at the mid-point and a minimum of five years between Ultimate Series cars feels like a much more reasonable plan.  In addition, the production ramp up on all these new models did cause a few reliability issues that got very over hyped in a few social media platforms.  (Personally, we have never had any issues McLarens & Reliability). The net impact on McLaren’s reputation though has not been positive.

 

To McLaren’s credit, they did realize they had a major problem well prior to the Coronavirus taking its toll.  Planned production for 2020 was already reduced heading into this year and McLaren just announced a major restructuring.  In addition, capital spending and marketing costs have been cut substantially. The launch of the new Sport Series models has been pushed back to 2021 and the main focus for 2020 is delivering the “hamsters” dying gifts, the Ultimate Series Speedtail & Elva, along with highly profitable 765LTs. 

In summary, all three supercar manufacturers have their challenges.  For Ferrari these are not outside what one would expect for a highly successful company in a challenging environment.  What happens to Aston Martin is anyone’s guess.  It’s in dire straits but like a phoenix, Aston Martin is exceedingly good at rising from the ashes to live yet another day.  If the DBX lives up to expectations, Aston might just make it.  Or at least for long enough for Stroll & Company to cash out handsomely.  McLaren went off the rails quickly, even if the warning signs have been evident for a while.  When things are going well, and by most measurements 2019 was a very good year for McLaren, it’s easy to ignore the warning signs.  McLaren does seem to understand their issues and is taking action to address them.  The good news for McLaren though is their cars are still best in class.

 

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Ferrari 365 GT/4 BB & 512BB

Memories of the Ferrari 365BB & 512BB

Ferrari 365 GT/4 BB & 512BB

Several years ago, I owned a pair of Ferrari Berlinetta Boxers. These were the 2ndand 4thof the sixteen Ferraris we have owned to date. If the F355 GTS was the car that introduced me to the world of Ferrari, it was the Berlinetta Boxers that cemented a long relationship with the cars from Maranello.  It’s hard to beat a carbureted V12 sitting behind your head for sensory stimulation.  While not the easiest cars to master, they reward tremendously when you take the time to learn how to drive one properly.  They are a true Grand Tourer and can devour huge highway mileage effortlessly.  The race track however is not a friend and driving one on in that environment is only for the brave.  The following are two of my more memorable stories from my Boxer days.

365BB

I picked up my 365 GT4 BB from the workshop where it had been for the better part of the last two months having a few age-related issues attended to. At 30 years old, all the rubber bits and a lot of the wiring were in need of attention.  The workshop did a great job and came in at the agreed budget.  

What happened next was not at all fun. Upon leaving for the roughly 40-mile drive back, I hit a major traffic jam. Later I found out that a truck had crashed and caught fire, shutting down the major highway back towards London. It was now Friday late afternoon, rush hour starting, dusk descending rapidly, and I am sitting in a 30-year-old Ferrari barely moving. Over the next two hours of crawling along detours in bumper to bumper traffic I came the following conclusions:

– the 365BB is not designed for inching forward. Try this for over an hour and your left leg will just about fall off. The large single plate clutch is a beast to manage at low speed

– the side mirrors on a 512BB are just about useless, but useless is still much better than no side mirrors at all

– having to do a 3 point turn, in the dark, with not exactly outstanding rear three quarters visibility, is both an outstanding upper body workout, and involves a lot of praying that you are not about to back over something short or hidden

– 30 year old headlights, even if in perfect working order, are pretty pathetic

– the normal 12-14 miles to a gallon drops to 12-14 gallons to the mile when you are not moving  

despite all this the car behaved impeccably. Oil temp & pressure, and water temp all stayed right at normal throughout the whole ordeal.  The driver’s blood pressure was another story. 

The 365BB is clearly a car for sunny days and open roads. However, the 365BB can handle trying of situations if it has to.

512BB

It started on a beautiful fall day, bright blue sky, crisp air, and as it was early, not a lot of people on the road. Perfect driving conditions. It had been about a month since I had driven the 512BB. It was an angry beast when I first starting pumping fuel through the Webers and demanded that it wake up. After a bit of a fight the engine finally came to life and settled into a low annoyed rumble. There we sat for about five minutes until the water temp gauge started the long slow journey to 90 degrees C. As soon as we started moving, oil pressure read a perfect 6.  

It is interesting how soon you forget things. The 512BB’s steering is very heavy at low speeds and turning around in the driveway today was a full cardio vascular work out. It might have been easier to try to pick up the front end and walk it around. That completed we were off first to the highway for some high-speed cruising to warm up and then into the mountains for a proper work out. After about 10 minutes on the highway the engine temperature gauge actually started to move. Sometimes this takes half an hour and if you cruise at under 3000 RPMS it may never move. With basically no traffic on the highway though, we were in triple digit territory once everything had fully warmed up. At speed, the 512BB forgave me for ignoring it for the past couple of weeks and became a completely different car. The steering transforms itself to become perfectly weighted and highly responsive. It is a much better car at 100 than at 50 mph. At low speed it was rough, barking, with a lot of different noises filling the back of your head. Over 4000 rpm, it is all in harmony. I rarely use the stereo, in fact, not sure it even works. We cruised for about 20 minutes before exiting onto the more mountainous portion of the drive.  

After navigating quickly through 2 little towns we were in the foothills on a great windy road. Lots of fast long sweepers that the 512BB is well set up for. The car was really running well at this point and everything flowed smoothly. Getting the corners right I find highly rewarding as you can feel the rear snap into line through the back of the seat. On these roads the 512BB seems to shrink and become more agile than it should be. We did this for about another 30 minutes before heading back. It was a great run and I love the feeling when everything is in sync between man and machine. 

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Ferrari F40 20th Anniversary Return to Maranello

Ferrari F40 20th Anniversary Event

Ferrari F40 20th Anniversary Event

The story that follows is a diary of the 4 days spent at Ferrari’s 20th Anniversary celebrations for the F40.

Day 1
I arrived at Maranello on Friday afternoon, having taken the train down from Milan to Modena. It is actually quite an easy trip and the train was even on time. From Modena, Maranello is a 15-20 minute cab ride. My F40 had been shipped directly to the Fiorano track, which is where I was told to go for the initial check-in. After circling the factory once, the cabby got directions and we were able to find the track entrance fairly easily. Once inside the gate, and now on the holy ground of the Ferrarista, I decided to go take a quick look at my car to make sure it had arrived in one piece. The grass lot that had been set aside for the F40s was to the left behind the main guard house. When I arrived, there were about 15 F40’s parked side by side, with more on the way. In the shade of the Ferrari factory, seeing so many F40s in one place seemed very natural. After a quick once over, it was back to the main complex for final check in and tour through the Ferrari complex.

The official event kick-off started that night in an auditorium next to the new Classiche workshop. After a welcome speech by Jean Todt, in which he mentioned that he has an F40 and has no time to drive it (he did sound quite disappointed), we were given a more detailed brief by the Classiche staff on Saturday’s regulatory rally and Sunday’s events at Mugello. At the conclusion of the briefing we were ushered next door for a reception in the new Classiche workshop. After another short speech, in which everyone was encouraged to have their F40’s officially certified, the covers were removed from all the cars undergoing restoration and certification. It was really both an amazing and quite interesting sight. The workshop was so immaculate, I would have been happy to dine using any of the tools. Many of the models were exactly the ones you would expect to see, including several early 50’s models, three 275 GTBs, several 365 GTB/4 Daytonas, a 512 BBs, an F40, an F50, a few 250 Lussos, a 250 SWB, a 250 TdF, a 250 GTE, a 330 GTC, a set of Dino 246 GTs, and then amazingly a pair of 400i’s. It just goes to show the passion any Ferrari can generate for its owner. Not drooling on any of the perfect paintwork required intense concentration.

In an amazing display of cruelty by the Classiche Division, after only half an hour, they announced we had to leave for dinner. I think most of the group would have been quite happy to starve if it meant we could spend a few more hours enjoying all these amazing Ferraris. Dinner was held across the street from the main factory gates at the Ristorant Cavallino. Given how famous this place is, expectations were quite high. While the walls are covered in Ferrari memorabilia, the stuff that comes on the plates is much closer to Fiat quality. I would not go back next time I find myself in Maranello. The best part of the meal was that the service was efficient, so we were out of the restaurant in time to get a good night’s sleep in preparation for Saturday’s early start.

Day 2
The alarm clock went off early Saturday morning. The Regulation Rally start time was 9:00 AM, which meant we all had to be in our F40’s by 8:30 AM. It had rained overnight and when we arrived at the Fiorano track all the cars were covered in a fine mist. Talking to a few of the other guys (yes, all the “Pilotas” were male) on the way to the track, it became clear that most were not particularly interested in winning the rally (i.e. achieving/keeping to the posted times for the different stages) but were quite keen on a spirited drive up through the mountainous Tuscan countryside before heading down into Florence. The average speed for the 170 KM rally was listed as 48 kph, which we all figured we would exceed by just a wee bit.

With all the F40’s wiped down and warmed up, we pulled out of the parking lot and headed up onto the Fiorano circuit. We were then lined up in our assigned starting order with a minute gap between each F40. After idling for 15 minutes waiting to go, I was finally off for a lap around the track before heading back out through the gates onto the streets of Maranello for a brief jaunt before cutting directly through the factory and onto the road leading out of town. At each one of the intersections, police had traffic stopped so we were able to roll right on through (a fantastic experience). Despite the minute gap between cars, after about 5 kilometers four of us were running in a tight convoy. The first stage basically ran from Maranello through four or five towns before heading out on the highway for 30 kilometers. When we entered the toll station before the highway we were instructed to run straight through the express lane. We all ran up the entrance ramp in convoy and hit the highway moving smartly. We must have been quite a sight as one young boy looked like he was going to break his nose by mashing it against the rear window of his parent’s Range Rover. The 48 kph average speed went right out the window as traffic was light on the highway and, well, the turbos needed proper exercise. The F40 is truly an amazing piece of engineering and the contrast between us and everyone else on the highway made this blazingly clear. When we would start to take off, all the other cars just became little dots in the rearview mirror.

The highway stage ended far too quickly, and we were waved off and up into the mountains. The next 100 plus kilometers would be run exclusively in 2nd and 3rd gear. The road from the highway exit to Florence was cut straight though some of the most scenic areas of Tuscany. As there was barely a single piece of straight asphalt in this stage, a great deal of concentration was needed to navigate the terrain. Running an F40 skillfully through the hills is an exercise in controlling the boost, being gentle on the brakes, and balancing the car between hands and right foot. The key is to get into a good rhythm and let the car run. As the police closed most intersections as we ran through, this was made much easier as you did not have to worry about constantly stopping and starting for lights and incoming traffic.

As different cars stopped for gas and coffee at different times, the make-up of the convoy was constantly shifting. By the time I started the decent into Florence, there were five of us in procession. We had lost our Police protection in the mountains and hitting the mad traffic of Florence, a city populated with random one-way street teeming with American tourists obliviously wandering down the middle of them, was quite an experience. Fortunately, as we hit the 1st square we were waved into a parking area. As soon as eight of us had arrived, Police on motorcycles pulled up and indicated that we were to follow them. Back we plunged into the traffic which now parted (barely, as every kid on a scooter wanted to come up for a closer look) and we headed into the center of the city aiming for Piazza Ognissanti. Upon arriving at the Piazza, we were given instructions in formation parking, which given how well a F40 maneuvers at low speed with the not so great rear and 3 quarters visibility, was quite a sight. Despite the challenges, everyone pulled it off and Ferrari got its PR shots. We now had a couple of hours off before having to report back for the sprint up to Mugello.

Leaving Florence, we were split into groups of six with a Police escort in the front and rear. The pace set was moderate, so everyone could enjoy seeing the convoy of F40’s running through the city and then through all the small towns along the route. In several places clearly, the message had gotten around that the F40s were coming as it seemed the entire town was out on the sidewalks waving as we went by. It was a wonderful experience for all-a Tour de F40. The trip up to the circuit took about 45 minutes.

Upon entering the Mugello Circuit, we were waved into a parking area for a short break to allow everyone to get ready for the open track session. Up went the front hoods, and out of the limited storage space came the racing boots, helmets, and in a few cases in-car communication systems. Engines fired back up, and we snaked our way into the pit lane. The first lap was behind a pace car to allow everyone to get a feel for the layout of the track. Coming off the last curve, I could see the pace car pulling into the pit lane and with no further ado everyone started taking off down the straight. The noise of 30 plus F40’s thundering down the Mugello straight on full boost is ungodly. The straight is not long and the first couple of cars looked to be going into the right hander a bit hot. Brake lights lit up and a shower of rubber descended on those of us in the next group back. At this point, I decided to drop back to put some space between myself and the testosterone-soaked front group. After a couple of laps, the F40s had spread out on the track, clustered into groups of 2-3. I was then able to focus on driving quick, clean laps and hitting the apexes. Life does not get much better than this. The open track session ran until dusk and was followed by a joint dinner with the Ferrari Historic Challenge drivers.

A truly great day.

Day 3
Sunday started off on a more relaxing note. With several shuttles up to the Mugello Circuit to choose from, the day did not start off in a mad rush. The morning program consisted of a series of Historic races. The cars of several of the grids were stunning, living pieces of history. Seeing Ferrari’s finest from the 50’s, 60’s, and 70’s being driven full out is simply fantastic. In one case, realizing that the car taking the inside track on the first corner was worth somewhere north of $10 million just made it even that more phenomenal. Walking the pit lane was better than being in any toyshop that I remember as a kid.

The major activity for the F40 group was the official parade lap after the morning racing program. We were all instructed to be in our cars 15 minutes ahead of time. As the cars were now parked in a giant U in front of the hospitality center, mayhem ensued as everyone decided to start up and head on their own directly for the gate to the track. What ensued was a giant F40 traffic jam. The net result was that we all sat for ten minutes while it got sorted out. Once on the track, we were organized in three rows behind a pair of 599 GTBs with a camera van in front. Strict instructions were delivered not to overtake the 599 GTBs, and off we went for a couple of PR laps for Ferrari. It was interesting to see which drivers where camera hungry and who could have cared less as different F40s jockeyed for front position as we moved around the circuit. At the conclusion of the second lap, the camera van pulled into the pit lane and the two 599 GTB’s took off at full throttle. The net effect was that of a red cape in front of a bull. Off everyone went to give chase. Looking back now, it is amazing that there was not a major shunt as half the field seemed to arrive at the first corner at the same time. I ran two laps at a good clip before exiting the track. Several others stayed on for longer sessions but as my helmet and head were not in the same location, I decided to get off while still in one piece.

Officially the parade lap ended the F40 event. At this point it was time to pack up, bid farewell to a few new friends and head out for the long drive back. It was a great weekend and the Ferrari Classiche Team was wonderful. To a person they could not have been nicer, more helpful, and great to deal with. Hopefully they will organize more events like this in the near future.

Now began the long journey back. While I had shipped the F40 to Italy, I decided to take the opportunity to give it a good long run and drive it back over the following day and a half. The objective for Sunday was to make it just north of Nice and then into Madrid by Monday evening. About half the F40’s seemed to leave at about the time I did. For the first hour of the drive, I was on my own, heading north at a solid pace on one of Italy’s rougher highways. After a quick stop for gas, I pulled back onto the highway and immediately picked up one of the other F40’s. We then ran in tandem for the next couple of brisk hours before splitting as I was headed west towards France and they were continuing directly north. During this run, we basically just sat in the left lane and had traffic very politely move out of our way. Driving a Ferrari in Italy is a wonderful experience as almost all other motorists seem to both respect and enjoy seeing these wonderful cars running on the open road.

Back on my own again, I almost immediately ran into a rain storm. Despite popular myth, the F40 is not unmanageable in the rain. You just have to be careful and stay off the boost. Drive carefully and you should be ok. That having been said, while switching highways, I did hit a massive puddle on one off ramp that was hidden in the shadows. Aquaplaning in an F40 is not for the weak of heart. Luckily the road was straight, I was going straight, and the tires found tarmac again quickly. As a result, the underwear stayed clean. The moving showers lasted for about an hour before blue skies and the Alps beckoned ahead.

Within minutes of the sun reappearing and a final change of highways, I ran into another convoy of F40s. I pulled alongside the lead car and we exchanged hand signals, agreeing to stop soon for gas and to make further plans. This agreed, I dropped into the middle of the convoy and off we went. After roughly 45 minutes, the lead F40 put on his turn signal, indicating that we were to pull into the next service station. This we did, making quite an entrance into the parking area, with the three of us lining up parallel to each other. Within seconds a large camera phone-carrying crowd had gathered with different people taking turns having their pictures taken posing in front of the F40s. My favorites were the two guys who lay down in front. It was quite a scene. After a bit of discussion, we decided the best bet was to drive into France, get off in Monaco, and head into the center for dinner. Shortly before leaving, we were joined in the parking lot by several representatives of Italian law enforcement. It turned out that they were as excited as the rest of the crowd to see the three F40s. We were given strict instructions to floor it leaving the station, and hit the highway moving quite smartly. What a great country for driving. We followed the officers’ instructions to the letter and with the help of some of their friends clearing cars out of our way on the highway, we made great progress for the rest of the trip in Italy. The highway for the last 50 kilometers before the French border is basically a series of tunnels joined by bridges. The wail of three F40s in a tunnel running at high speed was spine-tingling.

Passing into France, our speed immediately dropped by a third. The French police are not known to be car enthusiasts and according to many of the stories circulating lately, seem to have a particular affection for pulling over Ferraris. With stories of car seizures and heavy fines bouncing around our brains, none of us had any interest in enhancing the French Treasury. The highway between the border and Monaco cuts directly through the mountains along the coast, affording spectacular views in some areas, especially at sunset.

With the sun finally disappearing over the horizon, we pulled off the highway and began the decent into Monaco. This is basically a long series of fairly tight S turns that take you from the mountains down through the heart of the Principality to the water. We passed the border control officer without incident (border control is a policeman standing in the middle of the road who waves as you drive by) and headed toward the Casino. The Casino was the target destination as it has guarded valet parking in front and the restaurant was very nearby. Even in Monaco, street or garage parking is not really a smart option for a convoy of F40s.

Upon arrival, the head parking attendant immediately came bounding out into the road to greet the lead car. Instructions that the three of us wanted to park were quickly delivered, and his assistants immediately started moving other cars out of the way and to more distant spaces to make room. Net conclusion: it appears that Monaco’s parking Darwinism rules state that the F40 sits atop car food chain. We then all pulled ourselves as elegantly as possible out of the cars and headed off to the bistro. Exiting an F40 is always a challenge given the very wide sill, lack of door handles, and low ride height. It is more an exercise in pouring yourself onto the asphalt than climbing elegantly up onto the sidewalk. As we left, roving packs of tourists descended on the cars to have their pictures taken with the cars. Over dinner we could see the camera flashes going off on a regular basis. After dinner, it was time to part and head to the hotel which was located just north of Nice. A quick stop for gas and then a short run to the hotel ended another fantastic day.

Day 4
The final day began early as I was determined to clear the Nice and Cannes area before rush hour. The day started off cool and crisp with just a smattering of clouds in the sky, perfect conditions for driving. I hit the road early and made good time despite being very conscious of keeping it near the speed limit. This turned out to be a wise decision. As I cleared the second set of toll booths, there were a small army of police officers pulling cars over. In France, they will hide a radar gun several miles back up the highway and then pull you over at the next set of toll booths. The next several hours were uneventful, and as I crossed into Spain a light rain started. With short stops for gas, nature, and food, the miles fell away quickly. The afternoon drive was as unremarkable as the morning other than it being done more quickly. The highway that runs from Barcelona to Madrid was deserted. In areas it has been recently repaved and is a joy to drive. In others it is flat-out horrible, and you really need to be careful not to bottom out in the potholes and depressions. Without pushing it, I arrived at the final destination well before both dinner and sunset. The total distance covered since leaving Mugello was just over 1,100 miles. Not bad for a day and a half drive.

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Ferrari F40 Buyer’s Guide

Ferrari F40 Buying Advice

Ferrari F40 Buyer's Guide

The F40 was the first Supercar I owned and has provided the perfect introduction to Supercar ownership, raw, focussed, unforgiving, and incredibly exciting.   It forced me to really learn how to drive properly and provided a great experience base for all the other Supercars that have shared space in the garage in the years since.  The track days and trips together have been some of my most memorable and enjoyable.  There are few things in life that can top driving an F40 in Italy or threading one down brilliant twisty narrow Welsh roads.

Having owned the F40 for a number of years now, I do have a bit of experience in terms of what issues might arise.  Most potential F40 buyers that I talk to though seem much more concerned with mileage & history, and the impact of both on values, that anything else.  It is a major focus in both the UK and US but much less so in other markets.   Personally I think the only thing that should count on this great Ferraris is condition.  As early F40s are now 25 years old, condition and how well a specific car has been maintained, is critical.   In fact most of the ones that I have seen that run beautifully are used and serviced regularly.  Several F40s that I have seen die during F40 events were all garage queens.  These are machines that were designed to be driven and run best when used regularly.

History is another area that buyers tend to put a lot of focus on.  As F40s are LHD, with the fluctuations in exchange rate over the last 20-25 years, many of these cars have moved through multiple countries.  While in the US & UK, most supercar owners tend to keep detailed service records, in other markets it is much less common.  As cars move across borders and through multiple owners, records can and do get misplaced.  In Germany, Italy, Spain, and France, a stamped service book is more the norm than a box of detailed receipts.   I do like to see the detailed history on a car but from a personal standpoint, it is really only the last 4-5 years that matterr.  What happened 20 years ago is interesting but not really relevant to the current condition.

On any Ferrari, a detailed pre purchase inspection by a qualified mechanic is highly recommended.  I would also insist on a compression and leak down test to insure that the engine is health.

In terms of items to check on an F40, it includes:

– health of the Turbos, by now they will most likely have needed to be rebuilt or replaced

– clutch, check condition and when it was last replaced

– fuel bag tanks, they need to be replaced every ten years, find out when they were last done

– tires, check the condition and date codes, ideally they should not be more than a few years old

– if it has the adjustable suspension, make sure it is working properly, if left up when parked it will develop problems

– by now the shocks, bushes, etc will need to have been rebuilt or replaced, find out when it was done.

– it is easy to “clock” F40s and disconnect the odometers, make sure the cars condition matches the mileage

– the fabric on the seats fades over time, tear easily, and is difficult to clean. Check condition and see if they have been recovered. If so make sure the proper material has been used.

– if the air-conditioner is not regularly used and serviced, it will likely need replacement

– the water temp sensors will eventually fail and need replacement, check if this has been done.

– cam belts need changing every two years, check when they were last done and the history

– the drilled bremo discs have a tendency to suffer from surface cracks. Check to make sure the cracks are surface only and do not cross from one hole to the next.

– all F40s were built by hand and the tolerances were more art than science. After 20 plus years of running over potholes, badly paved road etc, things can get knocked slowly out of alignment. It is well worth the effort to put the car up on a rig and make sure everything is still straight.

– the glue and foam on the headlining will eventually disintegrate, check for sagging.

– a very significant number of F40s will have had a “misadventure” at some point in their lifetime. As long as the repairs were done properly, it should not be a major concern. Easy ways to tell are by checking for paint under the rubber door trim, and differences in paint on the chassis tubes. Also check that the green glue along the edges of the interior panels on the drivers and passenger’s side floor are consistent.

– a few of the wheels developed air leakage issues early on, make sure the tires are holding pressure properly (almost all would have been fixed long ago) and see if all four wheels are original.

– all the rubber hoses will have needed to be replaced by now, check when it was last done. Also see when the valve clearances were last checked and the spark plugs changed.

– check to see if the F40 was originally delivered with the three piece fitted luggage set, if so, make sure it is included in the sale

– as per above, on the tool kit and tyre repair canister

– make sure the service book & owner’s manual in the leather folder are still with the car

The above list is what I have learned from living with the F40 for multiple years now.  Overall, buying the F40 was one of the better and enjoyable decisions I made this past decade.

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