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Offline 360c

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The Generational Shift

Today's middle-age buyer's dream cars start where the previous generation's left off.

The Baby-Boomers, now in their 60s, are moving on

The Collectable Ferrari market, like any commodities market, shifts with global socio-economics, demographics and time. Our long term clients are baby-boomers, born in the late 1940s, 50s and early 60s. Once in high school and then college in the late 60s, 70s and early 80s, their bedrooms and dorm rooms were adorned with road tests from Road & Track and Car and Driver featuring the then-new and state-of-the-art 275 GTB and GTS, followed by the 330 GTCs and 330 GTS, the Dinos and Daytonas and on to the Berlinetta Boxers.

In October 1974 the world suffered through the first Arab oil embargo as gas prices rocketed from an affordable 30 cents a gallon to a then-shocking $1 a gallon in only months. The market for exotic cars imploded with near-new Dinos available for $5k - $7.5k and Daytonas at $15k. By 1977 the economy recovered, a few hardworking baby boomers did well and thanks to low prices and a booming global economy the collectable Ferrari market was born. We have been selling to that same world-wide demographic group of buyers since the early 1970s and still sell the same cars to many of the same demographic group today.

Getting resigned to senior discounts

We are now going through a major generational shift. Many of the people my age, the baby-boomers, are now in their 60s and most have "been there, done that" and are now leaving the collectable market. Most of those who wanted to own an Enzo-era Ferrari have owned one, or many, or conversely financially never-could own one. Additionally when one gets senior discounts one's priorities turns to business succession, retirement, insurance and health issues, 401ks, social security, kids, grandkids and Mediterranean cruises. Ferraris fall far down the list of priorities. The Baby-boomers are moving on.

The main demographic buying group has always been men in their forties and fifties. Today those in that age group were born in the late 1960s and the 1970s, went to high school and college in the 1980s to early 2000s and so their poster cars were Testarossas, 288 GTOs, F40s, F50s, Enzos, and the 550s and 575s. At the top of that food chain, the 288s, the F40s, the F50s and the Enzos have doubled and doubled again since 2011. Low mileage 288s are now trading in the $2.5m range, high serial number F40s in the $1.4m range, F50s in the $2.m plus range and Enzos now in the $2.5m plus range, each an integral part of what is now needed for the new wave of collector to complete "The Supercar Set".

The last to the price-party

The tide does not raise all ships equally or at the same time. The much-higher-production volume 308s, 328s, Testarossas and 550s were the last Ferraris to the current price party and doubled from 2014 to 2015. As the last of the all-6-speed V-12 Ferraris, the 550s doubled to the $150k range. While the 575 F1s are not considered collectable and have flat lined at the $100k mark, the few 575 6-speeds have doubled and doubled again from $100k to as much as $400k, demonstration that collectability is usually inversely proportional to quantity.

Another clear sign of the demographic shift is that "collector car" is no longer synonymous with "old car". A select few near new supercars, the 599 SA Apertas, the 599 GTB 6-speeds and LaFerraris have doubled in the last few years. 599 Apertas have jumped from a list price in the $600k range to $1.2m and more today. The 599 GTB 6-speeds have jumped from a list price of $350k "ish" to $500k and the LaFerraris have jumped from a list price of $1.8m to $2.5m and more.

Collectability versus quantity

Meanwhile, back in the world of Enzo-era cars, the best of the best, the most desirable, the Coach built cars, the 250 TDFs; 250 SWBs, the California Spyders and 250 GTOs will always occupy the top of the Ferrari food chain. Sold new to movie stars, heads of state and captains of industry, the sleek and uncompromised lines of the 250s and the Coach built cars were penciled long before smog and crash safety standards, ABS brakes, traction control or engine management systems were on the horizon. Additionally the 250s offer a unique auditory and visceral driving experience un-paralleled by today's modern Ferraris.

The Enzo-era Ferraris have always enjoyed a global market, are relatively liquid, can be on an airplane for any part of the globe on short notice, have long been a pride-of-ownership asset, were built in very low numbers by today's standards and Ferrari isn't making any more. Witness the sale of 400 SA s/n 3949 SA for $4.4M or the sale of 250 SWB California Spyder s/n 2871 GT for $17m at Amelia Island last month, both sold to an English Diamond billionaire, again demonstrating that collectability is inversely proportional to quantity.

The market shifts

Further down the Enzo-era food chain, the higher-production-number 275 GTBs and GTS; the 330 GTC and GTS, Dinos and Daytonas, the Gold Standard of user-friendly and collectable Ferraris for the last four decades, find fewer clients and so prices are "off" substantially. Baby boomers have stopped buying old cars or restoration projects that might take a sizeable amount of their time left on this planet. Further driving down the old-Ferrari market, many of today's younger 40 and 50 year old buyers don't want and don't care about cars built before they were on the planet.

Adding to the global demographic downturn, in the last two years the Euro has dropped from 1.35 "ish" €uro to 1.12 "ish" €uro to the dollar. The Cdn dollar which was 94 cents "ish" to the USD has dropped to .76 "ish" cents to the US dollar. The Aussi dollar has dropped from 93 "ish" cents to the USD to .76 "ish" cents. The British £££ has gone from 1.53 £ to 1.41 £, a more modest drop, but… as Ferraris are almost always priced in USD, the Brits, the Aussis, Europeans and Canadians, who collectively made up over 50% of the buying market, have left the ever-higher Enzo-Era Ferrari price party.

Further adding to the softening market, global worries about a downturn in the Chinese real estate market, stock market and industry sector; combined with a frothy US Stock market; fear of an Italian banking system collapse; the threat of a Brexit and well-founded worries about the ability of global Central bankers to sustain the tepid economic expansion have all contributed to a softer market for the globally traded Enzo-era Ferraris.

Newer, faster, safer

Each new generation of cars is much faster, safer, and far more user-friendly. Today's sports car will blow the doors off the last generation's similar model, let alone a car decades older. What is nostalgic and desireable to one generation is merely old fashioned or obsolete to the next. A 246 GT may be a beautiful and thrilling car to own and drive, a 250 Lusso may be a timeless design, but neither are much fun to drive for any extended period and are dead slow by any modern standard.


Daytona

Daytonas have long been used as the leading market price indicator of the higher-volume Enzo-era Ferraris. While it would be difficult to perform an analytical study, I would guess that the average cost basis among Daytona coupe owners is probably in the $250-350K range. So what if they are not worth last year's $850K, but rather today's $650K? The average owner still has a substantial profit with a free 599 thrown in on the deal.

The next generation of collectables

The younger generation doesn't want to live their father's dreams, instead they want the newest and the best. Only a decade ago I would never have guessed the 550s and 599s would become the next affordable collectables, but with only 3,600 550s and another 3,600 599s made, and only 974 US (and Canadian) 550s and 1,082 US (and Canadian) 599s built, they are the future. Today's middle-age buyer's dream cars start where the previous generation's left off. No one wants to date their dad's prom queen! While we will always sell Dinos, Daytonas and all the other Enzo-era Ferraris, today we sell far more 550s and 599s than Dinos. The market is a changing.

I'd also like to thank the following: Anthony Moody, Bruce & Spencer Trenery; Steve Ahlgrim; Thor Thorsen; Michael Lynch for their help with this column

If you have a Ferrari or other exotic you are looking to sell please email us at Sales@ferraris-online.com or call us at 949-646-6086.

To visit Ferraris-online.com now:
www.ferraris-online.com

Look forward to your feedback.

My regards,

M. Sheehan.



Offline robertb

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Ray sent this to me today ,makes a lot of points ,one would have to agree with much of his comment.


What i read out of it was

Baby boomers have moved on the next gen have settled on post Enzo cars which are limited production as collectable

Great Ferrari cars will always attract a premium .

Many models have come back in value .

And too many of the high production numbers are over valued and are coming back in value as per recent auction results.



Offline allanuber


  • Joined: Aug 2007

  • Location: Sydney
  • Name: Al
Not a fezza, but what does that article above suggest for considering moving this thing if the urge hit? Boat sailed???
C'mon, do it!



Offline robertb

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Not a fezza, but what does that article above suggest for considering moving this thing if the urge hit? Boat sailed???
i don't think the boat ever arrived.



Offline allanuber


  • Joined: Aug 2007

  • Location: Sydney
  • Name: Al
i don't think the boat ever arrived.

hahaha. Ouch, fair call. Though, recent euro sale at over 100K euros shows a bit of love in the market - as all the truly collectible massers are now locked away (3500's etc)...
C'mon, do it!



Offline robertb

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hahaha. Ouch, fair call. Though, recent euro sale at over 100K euros shows a bit of love in the market - as all the truly collectible massers are now locked away (3500's etc)...
wow 100 euro ,there you go ,10 years ago it would have been a 15k car .

3500 always been a car to own with that classic six.But were unloved for years.



Offline sinkman


  • Joined: Feb 2011

  • Location: Melbourne
Not a fezza, but what does that article above suggest for considering moving this thing if the urge hit? Boat sailed???

Depends a lot on condition...
Original RHD?

The market is tight for the 4 door Maser, particularly as a falling market will retract from the outliers first, e.g. Quattroporte, Dino GT4, Indy, Urraco etc



Offline allanuber


  • Joined: Aug 2007

  • Location: Sydney
  • Name: Al
Depends a lot on condition...
Original RHD?

The market is tight for the 4 door Maser, particularly as a falling market will retract from the outliers first, e.g. Quattroporte, Dino GT4, Indy, Urraco etc

I'm going to take it back to it's original green, the rest is surprisingly complete - with the only modification being electronic ignition. All gauges work etc and the bank of aircraft type switches all still click away and make things move. It is an original RHD, with power steer - I'm under no illusions about it being a rocketship for investment... it's a nice thing and a pleasure on the odd weekend for  a long drive. Even the aircon still blows cold and old electric windows still work!

The catch 22 of having classic cars, is that if this was fitted with EFI, gauges swapped out at the same time for modern equivalents, new aluminium radiator, cats fitted, steering rack swapped out for electric assisted and suspension updated... then you'd have an epic, roomy, reliable daily that makes you feel like a classy fella    :)

C'mon, do it!



Offline 360c

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A recent article on the state of the Ferrari market from Mike Sheehan which I thought was relevant to what is happening here:


Most Ferrari market followers would agree that values for Enzo- and Fiat-era Prancing Horses peaked close to the 2014 Monterey auctions and are now off by around 30 percent. Similarly, many Montezemolo-era cars peaked in late 2015 and are now off by the same percentage. In either case, you might never know values were falling if you looked only at asking prices—and the reason is something psychologists call the “entitlement effect.”

From an objective point of view, the value someone attributes to something should not depend on whether they own it or not; in reality, we all know that’s not the case. Hundreds of university experiments have proven that college students, at least, are surprisingly reluctant to trade a coffee mug they had been given for a bar of chocolate they were offered, even though they did not prefer coffee mugs to chocolate when given a straight choice between the two.

Simply put, once someone owns something, they irrationally place a higher value on it compared to an equivalent item—be it a coffee mug, a chocolate bar, or a Ferrari—that is owned by someone else. Comedian George Carlin might have said it best: “Have you ever noticed that their stuff is sh.t and your sh.t is stuff?”

A couple of examples spring to mind. In 2014, a client saw that a 246 GT had sold at Gooding’s Scottsdale for a new high water mark of $473,000. I knew that car well, having sold it in 2006 and having followed its later high-quality restoration at Dugan Enterprises in Oceanside, California.

My client figured his own Dino coupe, which had been in dead storage for decades, was “better” than Gooding’s practically perfect example and therefore worth even more. I pointed out that his car hadn’t been treated to a recent restoration, and instead, due to sitting for many years, almost certainly had frozen brakes, frozen shocks, and perished rubber, needed a massive service and a long list of deferred maintenance issues resolved, and was still wearing its original 40+year-old paint, carpets, and leather, none of which are known for aging well.

I’ll leave out the back and forth that ensued and just say we eventually agreed to disagree. More germain here is the fact that, if that same owner had been presented with the two Dinos side-by-side, there’s no possible way he would have chosen his own as being more valuable—unless, of course, he owned it.

Going a step beyond the endowment effect, behavioral economists describe something called “loss aversion,” which is people’s tendency to value avoiding loss more than acquiring an equivalent gain. In other words, it’s better to not lose $5 than to gain $5. Nowhere is that more evident than in the land of asking prices.

When the market’s rising, everyone piles on to reap the rewards. When the market falls, everyone, including people who should know better, hangs onto their toys to the bitter end and beyond, somehow convinced the falling market doesn’t affect their car. Remember the entitlement effect?

In late 2015, I purchased a nice 550 Maranello for $90,000. After spending around $12,000 on services, I sold it instantly to a dealer for $130,000. That dealer turned around and quickly sold the car to another dealer for $150,000. That dealer then listed the 550 at $175,000 and…nothing. The market peak had passed, and prices were on the way down. When I last looked up that car, its asking price had come down to around $160,000, but by then the market had fallen even further.

Around that same time, in May 2016, I received a 550 Maranello on consignment. It was the same year as the earlier 550 and fully serviced, with better options but more miles. There was no instant sale this time. After several weeks, it finally sold to the only interested buyer for $105,000.

If you as a seller want to know what your Ferrari is really worth, don’t go looking for the highest auction prices or the highest asking price online. Instead, pretend that you’re buying a car that’s just like yours, research the market to figure out how much you would offer for such a car, subtract the usual 5 or 10 percent for haggling, and then factor in a realistic opinion of where the market’s heading. If you’re lucky, your car’s worth that much.

The moral to the story? No matter how much they might wish, sellers do not control the market; buyers control the market. There will always be sellers, and if there are excited buyers they will bid the price up. If the buyers lose interest or see an unfavorable market trend, they tend to sit on their wallets and wait. Unless a seller can convince a buyer that this car is the one he really wants at his price, any rational buyer will defer a decision to see if something better comes along.



Offline M500


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"The Entitlement Effect", perfectly put. We see so much of this with owners of classic cars in our business too. Theirs is always so much better that the last record breaking sale.



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