SSO Blog: Supercar Market Update

[SSO]

Just posted a new article on the current status of the Supercar Market:

https://karenable.com/supercar-market-update-q1-2020/

Comments?

[Broccers]

Interesting as the super rich as I presume you are protect themselves against such market fluctuations probably killing it as normal investors shit themselves.

The youtuber influencer who produces content to finance their car will not be making any content soon and their vehicles repossessed sinking the market further.

I basically think the values will tank, there is no quick recovery from this.

[Foz]

Completely agree with that and the trickle down for everything else on 4 wheels bar the most mundane shitbox.

[RobYob]

Interesting read as ever.

I don't know the numbers backing McLaren but I'd be concerned about their very limited niche at the moment. AML have dire numbers at the moment but DBX and super SUVs "might" but the sort of slightly more paletable indulgence the buyers return to first.

Fingers crossed for Glickenhaus but they've always seemed to be one of the smartest operations around.

Pagani was a one point my hero but they just haven't done anything geinuinly inovative/interesting in so very long, bespoke one-offs are interesting in the same way Jay Leno's tank car is. Koeneggsegg likewise*.
edit:*Apart from all the really cool stuff they've been doing like Regera and Genera, and I'd probably have been better off waking up before posting, thanks Rich B

Is there a degree in wishful thing that Carrera GT prices will come back, of the three supercar buyer sets (investor/driver/new and shiney thing buyer) I'd say it appeals to 2/3 which is better than a lot of other models out there.

What I want is Mk1 NSX prices to return to sane levels.

[Rich B]

....but they just haven't done anything geinuinly inovative/interesting in so very long... Koenigsegg likewise

You might want to look up the Genera, a 4 door super car with 1700bhp from a small camless ICE plus EV motors.

[Broccers]

Completely agree with that and the trickle down for everything else on 4 wheels bar the most mundane shitbox.

The frozen market the OP speaks of might be in usa now. In Q2/3 and beyond it will be an absolute cliff edge. Who can run a car when all of a sudden their business is shuttered - the new era successful stay at home money won't be wanting to flaunt it or go out.

Personally I am glad Im not tied to a lease now and the ones I do own are mentally written off as costs over the years we have them. High end stuff they must be absolutely fucking crying - their prop portfolios going down and their tenants not paying, pensions fucked. Where is the money generation?

[Foz]

I tend to agree, unless this turns around very quickly, which it won’t, the global economy is utterly fucked.

I was going to sit tight post the house sale which was “Corona’d” however I fully expect to be unable to sell it unless I take a complete financial hiding, but then everyone will be in the same boat so its all relative!

The world will be a different place after this!

[RobYob]

....but they just haven't done anything geinuinly inovative/interesting in so very long... Koenigsegg likewise

You might want to look up the Genera, a 4 door super car with 1700bhp from a small camless ICE plus EV motors.

Whoops, point conceeded my brain clearly wasn't firing on all cylinders earlier! The Gamera is pretty bloody cool and innovative
There was also there Regera Hybrid Supercar.

[SSO]

Interesting as the super rich as I presume you are protect themselves against such market fluctuations probably killing it as normal investors shit themselves.

The youtuber influencer who produces content to finance their car will not be making any content soon and their vehicles repossessed sinking the market further.

I basically think the values will tank, there is no quick recovery from this.

I certainly don't fall into the super rich category and in general the market fluctuations impact everyone proportionally equally. In fact the super rich are probably more exposed as they will much more likely to be invested in hedge funds and other highly leveraged investment vehicles which are taking an absolute beating right now. The difference is when you are starting with a huge pile, you still have plenty of cushion left.

Agree .... the YouTube model is about to end in tears

[SSO]

Interesting read as ever.

I don't know the numbers backing McLaren but I'd be concerned about their very limited niche at the moment. AML have dire numbers at the moment but DBX and super SUVs "might" but the sort of slightly more paletable indulgence the buyers return to first.

Fingers crossed for Glickenhaus but they've always seemed to be one of the smartest operations around.

Pagani was a one point my hero but they just haven't done anything geinuinly inovative/interesting in so very long, bespoke one-offs are interesting in the same way Jay Leno's tank car is. Koeneggsegg likewise*.
edit:*Apart from all the really cool stuff they've been doing like Regera and Genera, and I'd probably have been better off waking up before posting, thanks Rich B

Is there a degree in wishful thing that Carrera GT prices will come back, of the three supercar buyer sets (investor/driver/new and shiney thing buyer) I'd say it appeals to 2/3 which is better than a lot of other models out there.

What I want is Mk1 NSX prices to return to sane levels.

I think the limited niche will actually help McLaren weather this. From a portfolio complexity standpoint, they pretty focussed which has a big impact on cost/working capital. Personally think the luxury/super SUV will be the last segment to recover given the negative stigma attached to it.

On Pagani, its really hard to predict. Who would have thought that you could continue to sell final/limited/last/exclusive editions of a car you technically discontinued almost a decade ago. The Zonda seems to be unkillable and Horacio has built up a nice highly loyal group of very deep pockets customers. Koenigsegg while techinically much more interesting lack the style and desirability of the Paganis. The "luct" factor just isn't there.

On the CGT, perhaps but there are far too many that seem to change hands without ever being driven which indicates a bubble likely to pop at some point.

I hope your right on the NSX

[Broccers]

Interesting as the super rich as I presume you are protect themselves against such market fluctuations probably killing it as normal investors shit themselves.

The youtuber influencer who produces content to finance their car will not be making any content soon and their vehicles repossessed sinking the market further.

I basically think the values will tank, there is no quick recovery from this.

I certainly don't fall into the super rich category and in general the market fluctuations impact everyone proportionally equally. In fact the super rich are probably more exposed as they will much more likely to be invested in hedge funds and other highly leveraged investment vehicles which are taking an absolute beating right now. The difference is when you are starting with a huge pile, you still have plenty of cushion left.

Agree .... the YouTube model is about to end in tears

I hope you're suitably protected, I wouldn't wish hardship on anyone, even YouTubers.

2008 the market slumped on everything. I bought my motorbike then nearly new 800 miles and before the last couple of months it hadn't lost much money at all.

Rare cars will always command a premium eventually but when you are seeing millions of folks jobless is it the time to be spunkin huge sums on flashy cars when you can have driving thrills in things noone notices?

[SSO]

Interesting as the super rich as I presume you are protect themselves against such market fluctuations probably killing it as normal investors shit themselves.

The youtuber influencer who produces content to finance their car will not be making any content soon and their vehicles repossessed sinking the market further.

I basically think the values will tank, there is no quick recovery from this.

I certainly don't fall into the super rich category and in general the market fluctuations impact everyone proportionally equally. In fact the super rich are probably more exposed as they will much more likely to be invested in hedge funds and other highly leveraged investment vehicles which are taking an absolute beating right now. The difference is when you are starting with a huge pile, you still have plenty of cushion left.

Agree .... the YouTube model is about to end in tears

I hope you're suitably protected, I wouldn't wish hardship on anyone, even YouTubers.

2008 the market slumped on everything. I bought my motorbike then nearly new 800 miles and before the last couple of months it hadn't lost much money at all.

Rare cars will always command a premium eventually but when you are seeing millions of folks jobless is it the time to be spunkin huge sums on flashy cars when you can have driving thrills in things noone notices?

Thanks, we are pretty conservative financially so we should be fine.

Agree, I do think there will be a very negative stigma to flashy displays of wealth until the economy recovers.

Stay safe and healthy

[Broccers]

I certainly don't fall into the super rich category and in general the market fluctuations impact everyone proportionally equally. In fact the super rich are probably more exposed as they will much more likely to be invested in hedge funds and other highly leveraged investment vehicles which are taking an absolute beating right now. The difference is when you are starting with a huge pile, you still have plenty of cushion left.

Agree .... the YouTube model is about to end in tears

I hope you're suitably protected, I wouldn't wish hardship on anyone, even YouTubers.

2008 the market slumped on everything. I bought my motorbike then nearly new 800 miles and before the last couple of months it hadn't lost much money at all.

Rare cars will always command a premium eventually but when you are seeing millions of folks jobless is it the time to be spunkin huge sums on flashy cars when you can have driving thrills in things noone notices?

Thanks, we are pretty conservative financially so we should be fine.

Agree, I do think there will be a very negative stigma to flashy displays of wealth until the economy recovers.

Stay safe and healthy

Walmart repeat delivery will see you through. Seriously tho I really hope this is just a massive ruse.

[mik]

Finally read this, and think your predictions are likely to be true. I'm unlikely to shead a tear for the speculators who have created "can never be driven" ultra-low-mileage motoring ornaments, but as Foz states - this will likely affect the entire performance car spectrum.

Since we've done the "what is a supercar?" before though, I was interested in the question posed in this thread (by Broccers). So what is the definition of "Super Rich"?

By most yardsticks, I'd guess any family with the number of Super and Hypercars owned by your good self (unless you got them all with the assistance of Ocean Finance) would be perceived as super-rich? Maybe not hyper-rich.....

[GG.]

£100m net worth would be the point I'd consider someone to be 'super-rich' as in the noun referring to the global wealthy elite, rather than 'super' rich as merely an adjective.

https://www.bbc.co.uk/news/business-30689144

This article by someone that runs a wealth management firm suggests a similar kind of figure though it is 5 years out of date so its definitely to the top of her range of $50-100m.

[SSO]

Finally read this, and think your predictions are likely to be true. I'm unlikely to shead a tear for the speculators who have created "can never be driven" ultra-low-mileage motoring ornaments, but as Foz states - this will likely affect the entire performance car spectrum.

Since we've done the "what is a supercar?" before though, I was interested in the question posed in this thread (by Broccers). So what is the definition of "Super Rich"?

By most yardsticks, I'd guess any family with the number of Super and Hypercars owned by your good self (unless you got them all with the assistance of Ocean Finance) would be perceived as super-rich? Maybe not hyper-rich.....

Personally I define the "super rich" as those with a net wealth of over $100 million.

[Orange Cola]

How much money do you really need to run these sort of cars? I know it's a very personal question and can vary based on a lot of factors so please feel free to tell me to FRO.

However, if you're interested in putting some numbers around it, I would be keen to know. I have always thought one car is easy enough to work out as there are often magazine reviews which run through buying prices and running costs as a "debunking the myth" sort of thing. I guess too there's lots of different ways of doing it, e.g. storing cars in a collection will be much less expensive than using the cars daily especially if you don't pay to maintain the cars and just store them in a unit somewhere. But do people who buy cars try and run them and cut corners, such as only servicing as when absolutely necessary as opposed to the servicing guidelines? Do people manage to get bulk buy discounts on rare parts and save a small fortune (I'm thinking rare sized tyres here), or is all of the maintenance costs lost in value when selling them on?

Are there other 'hidden' costs to factor in such as finders/agent/'Ferrari tax' fees when buying or selling, additional insurance premiums depending on where you decide to register the car?

I know depreciation and appreciation make a massive difference when factored into all of this, as is the newer way of leasing cars rather than buying them outright and there are some quirks such as the McLaren replacement batteries which are over £100k so I'd be happy to leave those out to get to the other figures

[SSO]

How much money do you really need to run these sort of cars? I know it's a very personal question and can vary based on a lot of factors so please feel free to tell me to FRO.

However, if you're interested in putting some numbers around it, I would be keen to know. I have always thought one car is easy enough to work out as there are often magazine reviews which run through buying prices and running costs as a "debunking the myth" sort of thing. I guess too there's lots of different ways of doing it, e.g. storing cars in a collection will be much less expensive than using the cars daily especially if you don't pay to maintain the cars and just store them in a unit somewhere. But do people who buy cars try and run them and cut corners, such as only servicing as when absolutely necessary as opposed to the servicing guidelines? Do people manage to get bulk buy discounts on rare parts and save a small fortune (I'm thinking rare sized tyres here), or is all of the maintenance costs lost in value when selling them on?

Are there other 'hidden' costs to factor in such as finders/agent/'Ferrari tax' fees when buying or selling, additional insurance premiums depending on where you decide to register the car?

I know depreciation and appreciation make a massive difference when factored into all of this, as is the newer way of leasing cars rather than buying them outright and there are some quirks such as the McLaren replacement batteries which are over £100k so I'd be happy to leave those out to get to the other figures

In terms of just basic annual running costs for all our cars, we spend about $35k on insurance and annual maintenance costs run $10-20k depending on the year. All of our cars get serviced annually, regardless of mileage. Registration fees run another $5-6k depending on which cars are registered in which state.

[Orange Cola]

How much money do you really need to run these sort of cars? I know it's a very personal question and can vary based on a lot of factors so please feel free to tell me to FRO.

However, if you're interested in putting some numbers around it, I would be keen to know. I have always thought one car is easy enough to work out as there are often magazine reviews which run through buying prices and running costs as a "debunking the myth" sort of thing. I guess too there's lots of different ways of doing it, e.g. storing cars in a collection will be much less expensive than using the cars daily especially if you don't pay to maintain the cars and just store them in a unit somewhere. But do people who buy cars try and run them and cut corners, such as only servicing as when absolutely necessary as opposed to the servicing guidelines? Do people manage to get bulk buy discounts on rare parts and save a small fortune (I'm thinking rare sized tyres here), or is all of the maintenance costs lost in value when selling them on?

Are there other 'hidden' costs to factor in such as finders/agent/'Ferrari tax' fees when buying or selling, additional insurance premiums depending on where you decide to register the car?

I know depreciation and appreciation make a massive difference when factored into all of this, as is the newer way of leasing cars rather than buying them outright and there are some quirks such as the McLaren replacement batteries which are over £100k so I'd be happy to leave those out to get to the other figures

In terms of just basic annual running costs for all our cars, we spend about $35k on insurance and annual maintenance costs run $10-20k depending on the year. All of our cars get serviced annually, regardless of mileage. Registration fees run another $5-6k depending on which cars are registered in which state.

I'm amazed at those figures in a number of ways. Insurance is at least what I'd expect, but the servicing costs are way lower than I thought. Do the big bills average out the more frequent smaller ones, e.g. the partial engine rebuilds at various service intervals or do you research the costs and choose your cars to buy in a way to minimise the time to the next big bill? I could easily spend at least half that much money on an annual 'service' of just one rally car and a lot of amateur club racers will spend 30%+ on a 3 series with a 2.0 N/A petrol engine which are ten to the penny in a scrap yard

Are registration fees similar in the US to the UK road tax system?

Thanks for sharing, really interesting

[SSO]

I'm amazed at those figures in a number of ways. Insurance is at least what I'd expect, but the servicing costs are way lower than I thought. Do the big bills average out the more frequent smaller ones, e.g. the partial engine rebuilds at various service intervals or do you research the costs and choose your cars to buy in a way to minimise the time to the next big bill? I could easily spend at least half that much money on an annual 'service' of just one rally car and a lot of amateur club racers will spend 30%+ on a 3 series with a 2.0 N/A petrol engine which are ten to the penny in a scrap yard

Are registration fees similar in the US to the UK road tax system?

Thanks for sharing, really interesting

Servicing costs are low mostly because the majority of the car we own are 5 years old or newer. The big bills normally are on older classics of which only the F40 falls into that category. On the F40, we have been doing a "rolling restoration" for the last 7-8 years getting one major area addressed each year. It keeps the annual out of pocket down and doesn't take the car off the road for an extended period.