It's what I have been saying all along the new money could care less
Lash What's the word on the dinner in Montreal ? Date time place etc ? In victory you deserve Champagne In defeat you need it!
Scars are Tattoos with better stories !
If you follow all the rules You miss all the fun!
If you have no enemies, you have no character !
Clyde Romero
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Begin forwarded message:
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The Market Correction
In every boom everyone wants to think this time it’s different, the good times will go on forever
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Collectable Ferraris, like all commodities, trade on a world-wide market. That market has doubled and doubled again in only five
years, a classical bubble run-up. Although some will disagree, we believe that the market for the Enzo-era Ferraris peaked at
Monterey in 2014 and is now off by 25%-30%. After a weak five-year recovery, the global economy is slowing down. Economic headwinds
include China’s massive bank debt (at 260% of GDP!!) coupled with a stock market, real estate and construction slowdown. In the US
debt is now $19 trillion, debt per person is $58,000 and no-one in either party has a viable plan to cut that debt! Looking to
Europe, the looming costs of integrating a million plus refugees who do not speak English, or German, or French, or Danish, or
Swedish will be massive. Let’s not forget the threat of a possible “Brexit” or the possibility of an Italian banking implosion
(thanks to a 21% non-performing loan rate). And the list goes on.
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The numbers tell the story
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Still not convinced that these global Dominos have and will affect the Enzo-Era prices? Let’s look at auction house prices, which
so many take as gospel. We will use the Series II 250 PF Cabriolets as examples, since they are usually represented at all the
major auctions, and exclude cars with mismatched engines or restoration projects from this short summary. At Monterey in 2014 three
no-story 250 PF Cabs crossed the block: 250 PF Cab s/n 1817 sold for $2.1m at Gooding’s, s/n 3807 sold for $2.2 at Rick Cole and
s/n 2441 sold for $2.25 at Mecum, establishing a base-line in the $2.18m range.
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Fast forward five months to Scottsdale 2015 and only one 250 PF Cab II crossed the
block with s/n 3633 selling for $1.7m at RM. Only two months later at Amelia in 2015 a very special multi-platinum 250 PF Cab sold
for $2.1m at Gooding’s, outside the sliding price curve. Five months later, at Monterey 2015, s/n 2533 sold for $1.8, a modest
pause in the price decline. Moving to 2016, s/n 2153 sold for $1.65m at RM, and two months later s/n 1695 sold for $1.5m at
Gooding’s at Amelia. Based on this dataset 250 PF Cab prices are indeed off app. 25%-30%.
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Gooding Amelia 2016, PF Cab s/n 1695
Different Ferrari, different dataset, same trend
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Not
convinced? Let’s chart Daytona prices. At Monterey 2014, seven Daytonas crossed the block with s/n 14821 at RM for $945k; s/n 16571
at RM for $963k; s/n 12691 at RM for $775k and s/n 16931 at RM for $880k. S/n 14229 sold at Gooding for $627k; s/n 16943 at Rick
Cole for $1,155k and s/n 16565 at Russo sold for $732k. The average price was $868k.
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Fast forward five months to Scottsdale 2015. Only two Daytonas crossed the block: s/n 16447 at Gooding’s for $699k and s/n 12923 at
Bonham’s for $748k, for an average of $723k. Two months later at Amelia, s/n 16393 was a no-sale at Bonham’s. Five months later, at
Monterey 2015, six Daytonas crossed the block with s/n 13361 at RM for $1,045k; s/n 16927 at RM for $792k; s/n 14191 at Gooding’s
for $770k; s/n 17607 also at Gooding’s for $715k; 14335 at Bonham’s at $748k and s/n 15757 a no-sale at Mecum for an average of
$814k, a modest drop.
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Moving to Scottsdale 2016, s/n 15437 at RM sold for $710k, s/n 14819 also at RM for $688k and s/n 14219 at Bonham’s for $1,155k,
for a very modest drop to $851k. At Amelia 2016 s/n 15271 at RM sold for $605 and s/n 14345 at Gooding’s was a no sale. While this
dataset is less linear than the 250 PF Cabs, based on the most recent sales Daytona prices are off the same 25%-30%.
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RM Amelia 2016, Daytona s/n 15271
The Baby-Boomers are moving on
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I
could have used 246 GTs or GTSs or 330 GTCs or almost every other Enzo-era Ferrari. They all show the same trend. As outlined in
last month’s article, we’re going through a major generational shift as the baby-boomers leave the collectable market. Those who
wanted to own an Enzo-era Ferrari already have. When one gets senior discounts, their priorities turn to business succession,
retirement, health issues, kids, grandkids and Mediterranean cruises. Ferraris fall far down the list of priorities. Adding to the
global downturn, in the last two years the Euro, the Cdn dollar, the Aussie dollar and the Pound have all dropped against the
strong USD. Ferraris are almost always priced in USD so the Europeans, the Brits, the Aussis and Canadians have left the
ever-higher Enzo-Era Ferrari price party.
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Just as noticeable is the relative lack of buyers. Cars that would have gotten five or more offers two years ago now receive only
one or two, and often need price reductions before they sell. The ride had to come to an end at some point, the long-awaited market
correction is here.
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Moving to the Fiat-era Ferraris, the Boxers followed the same price curve as the
Enzo-era cars and peaked in 2014 while the Testarossas, the 308s and 328s flat-lined until they doubled in 2015 in only a year.
Alas, they too are now on their way down the price ladder. As for the Montezemolo-era Ferraris, the 550s and 575s, like the 308s
and Testarossas, doubled in 2015 and are now on the same price ladder down. The irony is that these newer Ferraris are far better
cars than the Enzo-era Ferraris: better built, more reliable, faster, safer, better-handling. If you’re looking to buy a Ferrari to
drive, rather than invest in, thanks to the recent price corrections the Fiat-era Ferraris are again becoming buyer-friendly.
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512 BB s/n 31453, Bonham’s Goodwood 2015, No Sale
And then there’s the exceptions
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All markets have exceptions and the ultra-low-production, best-of-the-best Enzo-era
Ferraris are still strong, as witnessed by the sale of 335 S s/n 0674 which sold for $35.7M at Artcurial in Paris in Feb. to real
estate mogul Brian Ross or the sale of 250 SWB California Spyder s/n 2871 at $17.16m at Gooding’s and 400 SA s/n 3949 SA at RM for
$4.4m, both purchased at Amelia Island by Laurence Graff, a London-based diamond billionaire.
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250 SWB California Spyder s/n 2871 GT, Gooding Amelia Island 2016
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Thanks to a new generation of buyers, “collector car” is no longer synonymous with “old car.” The 288s, F40s and F50s are stable in
price while the Supercar cars such as the Enzos, 599 SA Apertas, FXXs and LaFerraris just keep climbing. Only last year the
LaFerrari listed for $1.4m-$1.5m, but today trade at a staggering $4m.
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Where do we go from here?
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What comes next? Given the rise of the Gen Xers, who’ve made their millions, or billions, in a business model that didn’t exist
twenty years ago, the supercars and modern limited-production models are becoming the new class of blue-chip collectable Ferraris.
There were simply too many 308s, 328s, Testarossas, 550s and 575Ms built to support their sudden price spike for long. Since
collectability is inversely proportional to numbers built, I’ll speculate that the 550 Barchetta and 575M Superamerica and other
such modern marvels as the F512M, Scuderia Spider 16M, 458 Speciale A, and 599 GTO could become the new collectables.
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The next “collectable”?
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There will always be significant demand for rare and legendary cars like the Cal
Spyder, SWB, and GTO, so I will guess that these prices will just keep climbing, but as the baby boomers leave the market it’s hard
to see where the past doubling and re-doubling of prices for more common vintage models like the Daytona and Dino 246 will come
from. While these cars will always be an important segment of any collection, any future appreciation will probably be far more
modest. They were the supercars of their day, but their appeal today is aesthetic, historic and/or nostalgic. A Gen Xer who grew up
with the poster of a F40 or an Enzo on his wall isn’t going to be nearly as interested in a 45-year-old car that’s far slower than
the BMW SUV he just bought his wife.
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To
quote the legendary economist J.K. Galbraith, “The only function of economic forecasting is to make astrology look respectable”.
Having said that, my crystal ball tends to short circuit from time to time. I’ve been wrong before, I’ll be wrong in the future.
However, centuries of economic history always prove that booms always end and busts eventually turn around. In every boom everyone
wants to think this time it’s different, the good times will go on forever. Alas, the party always ends.
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I’d like to thank the following: Thor Thorsen, Michael Lynch, Howard Cohen, Stephan Markowski,
Bruce and Spencer Trenery and Anthony Moody for their help with this article
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If
you have a Ferrari or other exotic you are looking to sell please email us at Sales [at] ferraris-online.com or call us at 949-646-6086.
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Look forward to your feedback.
My
regards,
M.
Sheehan.
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gmail.com)