Early 1990s crash of collector Porsche and Ferrari values...how did it happen?

more sellers than buyers, price goes down
more buyers than sellers, price goes up

 

^^^^ LOL welcome back !!!

 

whats up henry!?!? I see not much has changed

 

Thanks itsablur for posting the graphs. While the drop was traumatic it wasn't a full fledged crash it was a huge correction. It is surprising how little solid data exists on price trends. I have done some back envelope calculations based on data from this thread http://www.ferrarichat.com/forum/vintage-ferrari-market/382162-few-more-asking-prices-golden-years-14.html
As has been mentioned in this thread, the correction was highly correlated with other assets. Over extended time frames, quality collector cars have done just fine.

For masochists who can't get enough of the topic, every possible opinion and nuance has surfaced in the vintage forum, bubble-burst thread.

 

There are some old articles I recall reading that would suggest the Daytona was a $500000 at the peak in 1989. THe daytona dropped to a floor of $125000 by around 1994 then rose back up to around low 200s then fell some around 2007 then by 2012 it was running around $350K and of course now in late 2015 it is a 800k or more car...
I believe these are reasonably accurate numbers....but the articles are out there to find I recall this as i really wanted to buy a Daytona but just kept chasing the price now I am not really comfortable with the number....should have bought in 2012 at around 350
oh well

 

Since its been over 20 years since the last bubble in the collector market, will this now become a cyclical trend especially since Ferrari is roughly 70years old and has no intention of becoming extinct?

 

You better have a lot of air in the tires of your exotic... A block of gold measuring 12" X 12" X 12" weighs over 1,200 lbs!

 

Yup


I agree buying now isn't a plan. Of course I bought 2 cars this year-but I don't care about the $.

Having said that I wouldn't take a big position in a car for 1.5M and hope it's going to 2M. I think the prices are within 10% of the top. And there's a correction within a year, not a crash.

I'm not selling my big cars now, I'm confident enough in the market that I'll hold them. But as I said I wouldn't buy anything big(for me that's a mil or more).

Cheers

 

I'm pretty sure all car prices will correct w/ notable exceptions being the berlinetta boxer and 930 turbo...they will appreciate w/ alacrity.

jus saying

 

Agreed with this above hence why I own 4 early (1975-1977) Porsche 930 Turbo's.

If one could chart sales of specific cars over the life of the car my guess is that they get both overbought and oversold and inevitable return to an average. Like real estate, the stock market, etc. I don't have the data but we could be at average considering we were oversold. Then again, we could be overbought. Sometimes when overbought, time decays that overbought position. If we go sideways for 5 years, then we would no longer be overbought but back to average. The trouble with selling now and waiting to buy when oversold is you could end up waiting a large portion of your adult lifetime and lose out on all the smiles and happiness that come with ownership. If someone is 50 years old, I wouldn't want to be on the sidelines for 10 years (which is certainly possible).

To dive further, there are two important factors here at play with regards to buying and ownership:

1) Waiting until a happy entry point financially when or if these cars drop in price considerable and then feeling the reward of enjoying something so beautiful and actually making money on it.

2) Buying the car when the moment in our lifetime is right and not looking at it financially but in terms of happiness of which money has no meaning.

If you are waiting for point 2 above but at point 1 in your life, one could wait their lifetime or a substantial portion of it and have lost hundreds of feelings of joy and happiness and smiles. For me that is a lost lifetime. We all know life is short.

Some things money doesn't pertain to for me. If my cars go to zero, I won't be happy yet I won't be devastated either. I am not leveraged and the money in my cars isn't money I need in 2 years nor 10 for a house, college tuition, etc. I don't want to be without my cars so its all relevant.

Final note: when everyone in the US is awaiting a stock market correction and the large majority here are waiting for a car correction, that is precisely the reason there might be no correction. I don't know a single hedge fund manager in the world who called this oil move correctly.

This all coming from a guy who is 100% cash and waiting for the stock market to crash so as to get back invested. I'm just not sure it will or is going to happen. It's too crowded.

 

I think we can all agree that whatever cars we own personally are rare and will continue to rise in price indefinitely, while the cars we don't own are due for a correction.

 

Duh.

 

Your medium probability is the most accurate.

Plenty of real financial data supporting why a crash won't happen - unless a major world event happens, then All bets are off

 

I just saw the "Smokey & the Bandit" car signed by Burt Renolds is going up for auction. IMO those type of cars-Janet Joplin Porsche are the cars that will take the biggest hits when the market softens up. They are more "collectables" than cars, for lack of a better description(kinda tired right now).


I firmly believe that there will be some cars hit harder than others. I remember when F40's brand new were $550K then went to a mil then 250K there were lots of reasons & 1200 cars. Low production cars should fare better

My too tired to be posting thoughts


Happy Christmas

Eric

 

An interesting phenomenon I have noticed is that a maker can significantly affect present demand for their classic cars with their current actions. Porsche is a prime example. Their older cars have been skyrocketing for several years now. In my opinion, at a greater pace than the general market (although Ferraris have had quite a run as well). And there were very many of these older Porsches made. I have a '56. So why the increase? Because I believe their demand is growing. How? I think (and please, it's just my personal observation, not an invitation to be trolled), in part, because Porsche CULTIVATES demand in its cars. It sponsors and donates items to vintage websites and events. It is building experience centers across the country (one to open in LA very soon and one opened in Atlanta a few months ago) that will hold events for its vintage cars and clubs. It treats its customers very well and makes them part of a community. And I think this matters because it is selling lots of new cars and in the process growing demand for its classics as well. Ferrari has caught on, and has driving programs, opened a temporary vintage gas station in Monterey for Pebble Beach, etc., but it in my opinion it has a long way to go (don't get me started on the IPO...bad idea in my opinion...they should focus on core business, not building more cars and licensing out more Ferrari mugs and handbags). My point is, the value of a marque is not static (look at Alfa Romeo or Maserati throughout the years...of course with them, we have many more years to track). What the marque does in the coming years will indeed matter.

I guess my point is that it's much more complicated an issue than just tracking supply and demand, and the economy, because each of those inputs change over time. I could go on...

Oh, last point...if the "doomsday" ever does come, where some on this thread posit that in 30 years no one will care about these cars because of gas prices, smog rules, ECU's, apathy, etc...I dream about how cool my collection will be because I will own so many of these wonderful cars! . Demand will always be there.

 

LOL, what exactly is your "real financial data" that supports the outcome you're biased to confirm ?

 

I disagree that auto makers are actively trying to drum up interest in their vintage cars.
They may be investing in their modern brand, to make money, and a by-product may be interest in vintage.

What might be more realistic is cross shopping and modern price increases.
If a 2015 version of a car costs $150,000, then a vintage version for $30,000 starts to seem like quite a bargain.

 

Porsche and Mercedes are certainly doing this. Porsche has just opened a classic sales centre in Holland and two classic servicing centres in the UK. Mercedes has just invested tens of millions into its MB Classic program in Stuttgart, hiring classic sales staff partly on the basis of their knowledge of collectors with cars they might sell - this is happening now and soft launching in 2015/2016. (You can read about that in the latest issue of one of my magazines, out in January). The showroom at the classic centre in Fellbach is being expanded and there are classics for sale now on the ground floor of the MB Museum in Stuttgart (mainly modern classics).

Their back catalogue of parts and support via the existing MB Classic centre, run until recently by Michael Bock, is, as someone else noted, superb.

Ferrari, as has been noted, does not do this to anything like the same extent.

 

This should change your opinion on this statement.

Porsche: Cut out the middleman, buy a vintage 911 directly from your local Porsche Classic Center | Autoweek

Lamborgini: Lamborghini's PoloStorico Will Make Old Lambos Even More Valuable ? News ? Car and Driver | Car and Driver Blog

Porsche release their story on Nov 30th. Lamborgini release their news 16 days later on Dec 15th. No surprise but not a peep from Ferrari. They must be busy watching their stock price.

 

I have spent a good deal of time with Michael Bock and his team in Stuttgart and Fellbach, in a professional manner (my company works with several large auto manufacturers), and their operation is nothing short of awesome. The last time I was there, Klaus set me up with an office in the Classic Center while we did some work in the workshop where some very special things were taking place. It really makes for something extraordinary when you see the finished products.

However, the reason that M-B spends what they do on the Classic Center is to build the brand so that they sell more NEW cars. It's all about creating customer loyalty and building the brand, not cashing in on the classic market as most people mistakenly think. If you look at their mandate where they are placed in the budgeting hierarchy, this is clear.

 

TooTimid, I believe they are increasing interest in their classic cars, because as a company, they are trying to drum up interest in their entire brand, which necessarily creates interest in the past models. The classics are the DNA for their present models, and what better way to sell a new car than to market an old, wildly collectible classic (for example, the vintage 300SL Gullwing to market the new Mercedes models). I agree, they are not necessarily aiming to increase the price of the classics. However, that is a byproduct. One that benefits them. The point is, these actions by a marque can increase demand for classics, causing prices to increase.

 

I agree, Porsche actively cultivates demand in its older cars (and yes, I also own a '56) and goes out of its way to make owners of all of its cars feel like part of the figurative family. Earlier this year, the parts department at Porsche of San Diego worked through their Classic service to locate the correct replacement Knecht air cleaners for my 1600 Normal. I had been pretty desperate, running the car with furnace tape over a cracked air cleaner for months because the supply of used ones was exhausted, and there were several different heights/shapes used in the 356 era, so it was a bit of shot in the dark trying to get the right one. But they got measurements for the specific piece on my car and got the right part (actually a new pair) the first time.

The guys at the local dealership tend to be younger, but their passion for the classic Porsches is terrific.

I'll add, also -- and having just taken my 356 for a drive this morning -- that classic Porsches are reliable cars. Knowing that anything that breaks can be replaced/fixed is a huge comfort. The fact that you can use them without fear helps values as well. I don't know that I'd recommend cars as an investment, especially right now, but I do get the sense with vintage/classic Porsches (pre-1974) that they are the kind of item you could hold on to long term, enjoy, and cash out comfortably when the time comes to hang up the keys.

I doubt it. Most of us who like the older cars also have a newer car in the garage. (Porsche or Ferrari.) It's a whole different value proposition with classics, and for me a whole different budget/bank account. A 991 can't replace a 356, or vice versa. And a 488 can't replace a 308. Too different. Do I want all four? Yeah. But the price of a 991 has no bearing on the 356 market.

This.

I've lost count of how many Mercedes and Porsche ads feature their vintage cars.

 

Though the investment in classics by manufacturers may be for brand building reasons ultimately, it has more than one motivation. There's a revenue stream for Porsche in reselling their classic cars and bringing maintenance and servicing back under the marque. They see all the $$ going to specialists and they want some of the action. It's not purely about building desire for their modern cars.
Someone Who Knows at Porsche told me this on their stand at the Frankfurt motor show this year.

 

I cannot speak for all of the manufacturers but I know first hand that most of them lose money with the Classic Department. They know they lose money, they accept they lose money, and they plan to lose money (although less loss is better). There is no economic reason to do it (is losing money better than not losing money and letting specialists make money?). As someone who founded and built some decent sized companies, I don't see how additional "revenue streams" make much point if they come with pretty decent sized losses. They see the benefit in building the brand and the cash repayment for them ultimately lies in their selling new cars.

I am in these departments often. I am part of their budget conversations. I don't know everything but I do know some things.

All of the financials aside, there are some amazing craftsman in these departments. Some of them have even been there since these cars were built new in the factories. The level of work that a few of these folks display is unreal. Sadly, not all classic departments are created equal; the great ones are truly exceptional.