Ferrari SA Aperta - already sold out

Isn't that how you want it to have as a car manufacturer? You create a new car, and even before it's officially presented, it's already sold out. Exactly this is what happened with the Ferrari SA Apperta, the open version of the 599. It's a good looking car and with the limitation to 80 examples to be built it's clear that there's at least initial collector's value. Whether the money will keep the value, that's another question, but we will see. By the way the "SA" goes back to Sergio and Andrea Pininfarina, and the "80" comes from Pininfarina's 80st anniversary.

It's not easy to make money by investing in cars, but it's possible

One of the most often read blog posts on "driving philosopher" is talking about today's investment opportunities in the automobile space. 10 cars are presented that have good chances of gaining in value. There's something to say however. Gaining in value isn't enough to be a worthwhile investment if the only objective is to make money. The chart here shows a very simple model. Assume you buy a car at € 20'000, 30'000.- or 500'000. Assume it will gain 10% in value every year over twenty years. Assume you spend some money to keep the car road worthy and properly stored and insured. At the end of the period your total gain was € 14'318 if you bought a € 20'000 car. This means you average interest rate per year was 3.6% if you kept the car for so long. But only after 17 years you actually are in the positive zone. Before that you lost money. What this chart also says is that it's easier to make money with more expensive cars. The reason is that maintenance and storage don't influence the figures as much as with less expensive cars. But, very few cars really gain 10% in value very year. It probably has been true for a Lamborghini Miura, few Ferraris and some rare racing and sports cars. But the well loved Mercedes 280 SL Pagoda (R113) for example gained only 30-40% in the last ten years, so less than 4% per annum. So this is a tricky business. Anyway, I stick with my argument mentioned earlier, buy your car because you like it and love to drive it, take any money you win with it as an expected up-sight.

The new Audi RS5 - more than what we need?

It took Audi quite a bit of time, but now it's here, or will be here. At the coming Geneva Autoshow Audi is supposed to present the new Audi RS5. It features a high revving V8 engine with 450 HP and 430 NM, accelerating the car in less than 5 seconds from 0 to 100 km/h. It comes with all the usual Audi features such as four wheel drive, double clutch seven speed gearbox and launch control. It's almost Ferrari F40 performance for you everyday trip to the office. Now, my readers know from earlier postings, that I am not really a fan of the current "bigger - heavier - faster" trend. It's actually impressive that Audi seems to be able to stay below 1.8 tons. But still, given the average speed on today's street is barely more than 130 km/h (even in Germany) you may wonder whether you need such a machine. Why not go for a nice A4 Avant 2.0 TFSI and a Morgan Plus 8, coming at the same price as a well spec'ed RS5 together, but delivering undoubtedly more fun and causing less depreciation also? Don't get me wrong, the RS5 is gorgeous and certainly fun to drive, but for a Sunday afternoon blast a Morgan is so much more fun and for the commute to the office the A4 does the job.

Why buying expensive cars doesn't make economical sense

When you were making a decision in the 60ies or 70ies whether to buy a Mercedes versus a Skoda, or a Seat versus a Volkswagen, you were facing very different cars with a huge gap between them in terms of engineering, features and quality. Today this is quite different! If you want for example to buy a station wagon and have to decide between a Volkswagen Golf Variant, an Audi A3/A4 Avant/Sportsback, a Skoda Octavia or a Seat Exoto ST then you will see that actually a lot of the components (engine, transmission, suspensions, navigation system, etc.) are shared between some of these cars, thanks to the Volkswagen platform strategy. Not even the quality is too different, actually all these cars are on a high standard. But still, there's a huge price difference between the cheapest and the most expensive car of these four. When you do the same thing between a Mercedes E series T model and a Skoda Superb Combi then it gets even worse. Price differences today are not justified by technology differences anymore, but rather by marketing and branding, a bit of design and maybe the availability of (expensive) innovative features. But from an economical point of view, even the cheapest car in the comparison can fulfill all the needs. And it gets worse! Maintenance, spare parts and insurance get more expensive the more expensive the car is. If you have ever compared spare parts prices then you have seen that adding a prancing horse (Ferrari brand) on a spare part box can increase the price by factors. Same with repair and services shops' hourly rates. The more expensive the car the more expensive the mechanic. And the insurance premiums are of course driven by car value too. So, if you are adding the numbers, you will buy the cheapest car doing what you want to have, assuming quality and durability is comparable. But that doesn't mean you are happy, as you always wanted to have the Audi, not the Skoda. Yes, dear marketing guys, you have been doing a good job in making us believe that "expensive" means better and more exclusive ....

Remember these cars? They may be rare but still not collector's items

There are cars that almost nobody remembers and others that are on many people's wish list. Here's a selection of cars most people probably have forgotten. For various reasons. Some probably have been just not good looking enough to make them attractive for collectors. Others were produced in so small numbers that barely any of them are left. They have disappeared from the streets and don't make it to oldtimer and classic car meetings. For some there may be clubs and communities to gather owners, for others not even this exists. The list of these cars is probably much longer than you would think, but it's quite hard to come up with such a list because it's so easy to not remember these cars. Quod erat demonstrandum!

What's wrong with the Alfa Romeo 8C?

The Alfa-Romeo 8C is certainly one of the design master pieces of the last decade. It's gorgeous, no doubt. It was the star at many car shows and it's probably on the wish list of many many Alfisti waiting to win in the lottery. Despite the fact that only 500 cars (Coupés) were produced and got distributed "by hand", it is not difficult to buy one today. I would estimate that roughly one fifth of all the cars are on the market currently. Only looking at three online classifieds platforms I already found more than 50 and quite a big share actually being offered from the UK. So what's wrong with this car? Maybe it's not the car, but the financial crisis. But even if that's the case, listening to people who know or should know, the car is not really a "low maintenance" toy. And in my eyes it got way too expensive. It was initially "announced" for less than 100k € and finally was sold for at least 50% more than this. The convertible version is with more than 200k € even more expensive. Maybe, together with the rather average handling (see for example the TopGear test, see 4:00 and later), it was just too much? I am sure there would be a market for such a car in the 70-90 k€ segment, maybe with a smaller and lighter six cylinder engine (not the Holden/GM version, please) and with less carbon fiber and electronic gimmicks. I would probably put my name on the list. But not for 200k € plus and knowing it's some sort of a prototype where you are the test driver. For this it's way to complicated.

Yellow Ferrari 355 Spider - a future classic?

The Ferrari 355 Spider was introduced 1995 and was after the Ferrari 348 Spider the second fully open 8 cylinder Ferrari. Of course it inherited all the good ingredients of the 355 Coupé, specifically the 3'495 ccm engine with 381 HP. It was delivered with manual 6 gear transmission or the F1 sequential gear change unit. With 1'350 kg weight and 4.25 meter length it was a fairly compact and lightweight car. Acceleration was below 5 seconds for the sprint from 0 to 100 km/h. The 355 was a good looking car, certainly more pretty than it's successor, the 360. The styling and design have survived the last 10 years quite well, the car still looks slick and modern. Technically it's a good car and maintenance usually should't make the wealthy owner wrong. Not too many things usually go wrong with a 355 if it's well maintained and cared for. Prices today are around 40 to 60 percentages of when it was new, cars rarely have covered more than 50'000 km, most come with 20'000 to 30'000 km. A majority of cars traded these days have been equipped with the F1 gear change. But I would prefer the 6 speed manual transmission. There's nothing better than the open polished gear change gate.
So, is this a car worth collecting? Well, this goes back to what I wrote about the 575M a couple of days before. Ferrari produced approx. 3'714 355 Spiders, most of them (85%) LHD. So, it's not rare. It's clearly gorgeous and a blast to drive. In yellow it looks great and is a good alternative to the usual ferrari red. If you buy one now it will probably hold the value quite well for the next years. But most probably you won't make real money on this car. But it will give you a lot of pleasure and that's probably much more than what shares of a financial institutions will deliver to you.

Porsche 924 Carrera GT - exciting but still undervalued?

There are great cars, everybody knows and others that are almost forgotten. One of the second kind is the Porsche 924 Carrera GT, built around 1980 on the basis of the "people Porsche" 924 that was quite far from being really exciting. But by adding 85 hp, widening the body and optimizing suspensions, brakes and interior the 924 became a seriour sports car, and in GTS and GTR disguise a proper race car even. Only 406 GTs, plus 78 GTS/GTRs were built, that's a very small number. So you would think these cars fetch high prices. Well at least the GTs don't . So if you are looking for a cool car to drive and hope to get a decent return on your investment this is certainly not the worst car to buy. And according to period tests it was really great to drive and with less than 7 seconds from 0 to 100 km/h quite quick. Go for a white one, if you find one, as this was the racing color of that time. At least myself, I have it on my list of cars to potentially buy in the near future.

Classic cars and their value over time

In my experience there are three basic scenarios for cars on how they will depreciate, respectively gain in value. By the way, of course cars of this category can increase in value beyond the initial sales price. We have recently seen low mileage Mercedes 300 SL (R107) offered for more than 50'000 Euros, which is clearly more than the 60-70'000 DMs (30-35'000 Euros) that were asked for a new car in the 80ies.

Scenario C (red)
The car is an instant classic and collector's item. There's much more demand than market from begin on. The car never really drops in value and typically gains a bit in a continuous way. Few cars really fall in this category. Some seem to belong in there in the beginning when people are paying premium prices to get an early one, but most of them then still depreciate. Exceptions probably are the Ferrari Enzo (?), Ferrari F40, McLaren F1. But as said very few cars make it into this category.

Scenario B (green)
Cars that fall into this category are usually neither volume cars nor everyday cars. They typically are pretty rare from the beginning and bring some sensation with them. Many if not most of them are either convertibles or sportscars. While they do depreciate over the first 10-20 years they still lose less value than the mass production cars. They are always sought after during their whole career. After some years they start to continuously gain in value and can actually even outperform their initial sales price. Cars that fall into this category are the Mercedes SLs (R113, R107), the Porsche 911 and derivates, TVR 3000 S, Morgan +8, BMW M3 (E30), BMW Z1, BMW M1, most Ferraris, some Lamborghinis, some Maseratis, etc.). You get the picture.

Scenario A (blue)
This is the most common scenario. Most cars actually fall into this category. From begin on they depreciate (rather fast) and reach over the years (let's say 7 to 15) the bottom, a fraction of their initial sales price. Some then become collector's items and raise in value quickly, some others slower. If you take a Volkswagen Golf Mk1 for example, this car has been produced in millions, but after 20 or 30 years only a handful remain in a market and they become somewhat exclusive. So their value increases and can actually become higher than the initial sales price. In the exhibit this is illustrated with graph A1.
A very special category are race cars. Quite expensive when new they have almost no value after few years and can be purchased for very little money sometimes. This was especially true in the late sixties and the seventies, when Ferrari GTOs or Porsche 904/906 were on the market for a few thousand USD or DMs. Thanks to the developments are historic racing some of these became later very expensive. The Porsche 906 was sold for roughly 30'000 DMs when new, changed hands for maybe 6'000 DMs in the late sixties and is today valued at around 600'000 Euros (multiply with 2 for DMs). This is indicated by graph A2.
Cars in this category are everything from the Volkswagen Beetle, to Fiat 850 Sport Spider or Ford Mustangs. But it includes also cars like the mentioned Porsche 904/906, the Lotus Eleven or the prewar race cars. Actually cars that can't make it into B or C end up in A. Or they disappear totally.

Now there is one comment to be made: To really gain substantial value over time the car must remain in driving condition and often needs to be restored multiple times. The cost for maintaining or restoring the car can be easily higher than the value gain driven by it. And even if the car is barely used it will still ask for quite a bit of maintenance and a dry garage and insurance and .... So, if you are only interested in cars for making money, you may be better in buying something else. But if you like cars and love to drive them, making money with them is just a bonus on top and of course makes the hobby even more attractive. See also my previous post on a comparison of cars and their value when new and now.

Really rare cars

When thinking about collector's cars then usually premium brands pop up, such as Ferrari, Porsche, Bentley, Jaguar, Maserati and the likes. Thinking a bit longer the list may be extended by companies such as Lotus, Alfa-Romeo, Bugatti and more. But few people actually are able to name small production car manufacturers such as TVR, Marcos, Ginetta, Bizzarini or Monteverdi. And these produced significant numbers of cars. Beyond these there have been a quite a few very small companies that produced cars in the two digit number range: Diva, J.W.F., Devin, Apollo, Scarab, Bollwell, Connaught to list just a few. Isn't it so much more attractive to drive one of these cars? An Apollo 5000 is substantially more exclusive than a Ferrari Daytona, a Diva GT beats any GTO in terms of rarity, you probably will never meet another Connaught on the street if you drive one. But still these cars fetch much less value than some of the better known classic cars from the better known brands. Value isn't though the only measure. Isn't it more about pleasure and fun to drive something that only exists in extremely small numbers and is somewhat unique? People following this blog have seen the post on the JWF Milano GT earlier this year. From the approximately built 30 cars only about 10 still do exist and each and every one is quite different in terms of components used and history. And that's why I love these cars so much.