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SSO: THOUGHTS ON THE MARKET - IS THE BOOM OVER?
SSO: Thoughts on the Market - Is the Boom Over?
October 5, 2015 12:31 AM  |  Posted By: Secret Supercar Owner
Rated 4.0 out of 5.0 by 1 member  |  2 Comments  |  3947 Views
Related Categories: Supercars

I received a phone call from one of my closest friends recently which prompted me to go take a more in-depth look at what has been happening in the Ferrari market first over the last 12 months and then back over the last several years.  Amongst others, my friend has a beautiful Ferrari F50 which he has owned for several years now.  He drives the F50 on a very regular basis and it is a car he truly enjoys owning.  What prompted the call was a hefty unsolicited offer he had just received for the F50 from a distant acquaintance.  While my friend lives a very comfortable life, the size of the offer put him in a position where he needed to give it serious consideration.  The discussion then turned to “if you do sell the F50 what would you replace it with?” and this is where it got interesting.  Just about every model we discussed had jumped hugely in value over the last several years.  When we finished the call, I went back and took a look at the price movements on a number of models I had used as benchmarks for different parts of the Ferrari market.

 When leafing through the data, almost all of which is US market based, what didn’t surprise me was the continued steady price increases over the last several years on most of the vintage (Enzo era) Ferraris.  In just about all cases, these are rare cars with low production numbers.  In any type of bull market it is fairly easy to see how demand would outstrip supply and drive prices.  Generally, the prices on the more desirable of the 250 and 275 model ranges moved steadily upwards from 2009 to 2013 and then accelerated from 2013 to 2015 but in a fairly linear manner in both cases.  Prices on the classic & modern (post Enzo) era cars stayed flat or slightly negative all the way from 2009 thru mid 2013, and then went up slightly from 2013-2014. The only exception was the Dino 246, which has been on a steady climb since 2010. I am ignoring the Ferrari hyper cars (288 GTO, F40, F50, Enzo) as they operate under their own unique logic.

In 2014 the situation took a rather dramatic change and the prices of a large range of models stretching from mid 70’s 308s to 80s Testarossas thru mid 90’s F355s & 550s all jumped significantly.  In many cases, prices more than doubled in just 12 months.  While I am far from an expert on Porsche values, I do believe many 70s-mid 90s 911s followed a similar trajectory.  The rational that this is being driven by historically low interest rates does hold some weight for the Enzo era cars.  Prices for these certainly did start to march upwards when the post 2008 rate cuts where implemented.  However, this does not explain the huge recent jump in the mid 70s- mid 90s Ferraris.  These models stayed basically flat from 2008-2013 and then values headed north rapidly starting in 2014.  Big jumps in values always concern me and how sustainable this will be longer term is anyone’s guess. 

When looking forward, the Wall Street S&P 500 will likely finish down this year for the first time since 2008.  Both the US Fed and Bank of England would like to begin to raise interest rates again and are likely to do so at some point in 2016.  In addition, the Russian Ruble has devalued over 50% vs. the US $ in the last 12 months and the Chinese government devalued the Yuan recently.  The school of thought that the market was being fueled by new money coming in from the east, even if originally true, would now seem to have run its course.  It will be very interesting to see if the 2016 market ends up looking like 2015 or 2008.

My Twitter account is @SupercarOwner . I will send out a message when the latest Fast Fleet article or blog is posted.

 
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DdWorks at 8:35 AM October 8, 2015

*It should be read - > which then other competing bidders Snowball... > The winning bid goes to the highest bidder.

DdWorks at 8:31 AM October 8, 2015

I'm not a stock market analyst, so take it easy (and no hard feelings). I believe we are seeing the rich artificially inflating everything, as long as money can buy - at a price. It has been all this while. For rising classic car price values, it is the same. For example, you go to a car auction - Bidder A bid a sum of $1,000.00. In quick succession Bidder B bid $2,000.00 which then Snowball into an extravagant millions of dollars. The highest bidding goes to the winning bidder. The deeper your pocket allows, the stronger your buying power. Of course you will need to be shrewd in managing your wealth. No matter the market conditions, I think the rich will take advantage to buy or sell their assets as they see fit and perhaps, influence the international stock market.

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