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How will the art market meltdown affect collector Ferrari cars?

Discussion in 'Vintage Ferrari Market' started by Platini 289, Feb 7, 2016.

  1. technom3

    technom3 F1 Rookie
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    That data exists but not for public consumption. It is alot of work to compile it and there are probably people in the business that have that info... but again... not free use.

    Plus the people who contribute articles won't put in that kind of time.

    What sells and what pays are clicks. Substance rarely does
     
  2. richardson michael

    Aug 17, 2013
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    Justin. I admire your input,but speaking from Europe/UK any research article on auctions would be meaningless,as any top end Ferrari,from Dinos through to Daytonas,and others have changed hands privately,or through consultants for prices that are not recorded,and considerably exceed any published auction result.
     
  3. technom3

    technom3 F1 Rookie
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    I agree 100%

    Unfortunately the media/social media/general buying public is typically only looking for the lowest hanging fruit. The shortest sentence with the most amount of information. They eat up statistics and not substance. Many draw conclusions from it and profess expertise. Its all pretty annoying.
     
  4. Super_Dave

    Super_Dave Formula Junior

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    Note, however, that this same truth applies to many consumers of products, even at the high and ultra high end.

    There is plenty of misunderstanding in the ranks of real estate buyers, art buyers, and (dare I say) high-end automobile buyers too, where people simply pile onto the latest trend or market move.

    The media magnifies this and fuels the hype but the fact that the media's take does indeed matter, is the scary part. Most important thing is always to dig below the headlines and look at the details.
     
  5. paulchua

    paulchua Cat Herder
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    #155 paulchua, Apr 13, 2016
    Last edited: Apr 13, 2016
    this

    yet here you are.

    Yes, it's only been 10 months since your challenge (not 12-18)...and yes of course correction can happen in the next 8 months - for sure....that's the point many made that you had a hard time fathoming. So yes in the next 8 months your prognostication may come true....yes.

    A correction can come anytime. Tomorrow, next year, 2 years from now. Agreed.

    My friend bought a 430 the same time you were denigrating Ferrari buyers, ironically one of the cars on your 'short' list. If he had followed your 'wise' counsel - he would have missed out on a bunch of great experiences we've had since then. Maybe posting negative comments about Ferrari owners on Ferrari Forums would have made up for it.

    So I agree with you 100%, indeed there is "plenty of misunderstanding" here. Other's have said it better than me:

    Oh wise oracle of finance, what does the market bode for tomorrow? ...and as much as you may try to hide your history of insulting Ferrari owners - I promise you, we all have long memories.
     
  6. Platini 289

    Platini 289 Karting

    Sep 21, 2015
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  7. energy88

    energy88 F1 World Champ
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    I certainly don't begrudge dealers making a fair profit as they do perform a valuable service in uniting special cars with buyers seeking special cars. They do a better job than myself in turning up gems. Most of the dealers here on FChat are ethical and of high integrity.

    What is a fair profit? The article cited a whopping 60% buy/sell spread. At a minimum, if one were to flip a car at an auction they would need to overcome a hurdle on the order of 20% (~10% on the buy side and ~10% on the sell side). So, a reasonable spread is likely somewhere between the two. And of course if you do it yourself, you can get things down to "noise" between asking and market price.

    As for the character in the article, he seems like the British version of a Craigslist scammer. Clever but somewhat unethical. I can see why the dealers were upset.
     
  8. RallyeChris

    RallyeChris Formula Junior

    Nov 30, 2012
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    Well stated. However, I think the 458 appreciation will begin sooner than that, especially with Speciale variants.
     
  9. F1tommy

    F1tommy F1 Veteran
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    #159 F1tommy, Apr 15, 2016
    Last edited: Apr 15, 2016
    Not to sure about 458 prices as they made a lot of them and that will kill "collector prices". The 288(272 made) was very limited and looks the way a 308 on steroids should look. Even the F40 wich still shows some 308 was produced in much higher numbers(1311 produced) than the 288. Production numbers mean more than looks.


    Look for car bargains now just to drive and enjoy as the high end stuff is selling at prices that are silly. I think the higher production cars such as air cooled Porsche's will take a hit as soon as collectors realize there are a crap load of them sitting in garages around the world, in numbers they never expected and some in great shape :)
     
  10. roma1280

    roma1280 F1 Rookie
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    I don't know John, but I believe he is a guy that writes big checks (or cheques in his case) to buy cars. He takes risk and can onviously make money, so good for him.
     
  11. BIRA

    BIRA Formula Junior

    Jun 15, 2007
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    Nevertheless for those in the business of investing in companies, interesting to think about the methodology to value his company ( which company I would assume has no or little net assets).
    And of course a big key man risk...
     
  12. Bobj

    Bobj Formula Junior

    Aug 12, 2013
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    Agreed. If I had lied about a £3m inhertance due I wouldn't be boasting about it - hardly makes me want to rush to him for my next purchase
     
  13. BIRA

    BIRA Formula Junior

    Jun 15, 2007
    889

    I don't think he makes a 60% margin, numbers are self explanatory. With 13m profit out of 110 m sales this is a 12.5% net margin. And I guess he does not pay himself, ( to make sure the numbers look better) and dividend himself. I would assume he has costs, SG&A plus rent and high marketing costs. We can assume and I am sure I am not too much off the mark that those costs represent 10 to 15% of sales as they are preparing cars etc. so this would mean a gross margin in the 25% range, so not so shocking as compared to the auction houses who also have marketing costs but do not usually buy cars.

    But while Talacrest buys on its own account, I am also sure they also broker cars. And when they buy this is leveraged, so we have some kind of agency issue here, as the real risks are with the banks who are financing the stock. And his friends who are financing his stock.

    Which brings me to the final comment on valuation of the business which is used to calculate his net wealth. Simplistic approach is to use a P/E multiple which they are clearly using, like 7 times earnings. Except that if JC leaves , there is no more earnings..RM is a real organization not just dependent on Rob M! So you can use earnings multiple, but not for an almost one man shop.

    Finally if he is selling cars to some of his friends and backers, those are also related parties transactions and it is tempting to increase the nominal price to create more net earnings that increase the value of the business. To make it simple, if I sell one of my cars with a 1 m profit margin each year, this does not make me 7 m richer, just 1 m . Because it is not a recurring business. Talacrest is a recurring business, but as we have seen in late eighties, it is a fragile business very cyclical.

    In other words I believe J.Collins is a good professional, colorful and brash but some are low keys and some are not. He has a good network of clients that want to buy his stuff, and he knows how to buy cars, and even when he buys at auctions, others can do it too. If he makes an extra margin on this, this shows he knows the market better than most. If he fails, he will pay the price,,,recently the inventory moved rather slowly, I think the 250 PF red series one cabriolet was bought at Pebble Beach sale in summer 2015..so we will see,

    but what we see and what we know, when digging into the numbers, is that no one would pay 100M to buy a business which is massively leveraged, has few assets and depends on one, albeit talented, person. Which means that the estimate of his wealth made by this newspaper is much more questionable than the talent of JC, even if some of us may not like his style or ability to arbitrage between bid and ask prices.
     
  14. Bobj

    Bobj Formula Junior

    Aug 12, 2013
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    As I understand it he sold the business once before and it folded few years later, he then bought it back for close to nothing

    In terms of company value. I think it's worth what someone would pay for it but I say a sensible person who want it would pay Assets-Liabilities plus maybe 1-2 years earnings. Ball park £40-50m imho (assuming info at companies house is in the zone)


    "Cash
    £4.7m
    21.59%
    Net Worth
    £24.2m
    69.07%
    Assets
    £25.2m
    0.3%
    Liabilities
    £1.2m
    89.62%"
     
  15. Patek

    Patek Formula 3
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    In that Case the 308 GT4 would go up nicely. In 1978 they only made 260 world wide. First Mid engine V8 road going car. Bertone design , man that designed the Lancia Stratos. I guess we will see. Interesting stuff. Not sure the 458 will stablize, I think they will do just like the 430's and 360's just being a used car that drops. But they will reach a bottom at some point as the 550 did . 3 years ago they were $60,000 all day long. Now the numbers are a bit high. Someone said about 2500 all total were left hand drive the rest were RHD.
     
  16. Bobj

    Bobj Formula Junior

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    I think you need to look at all the years of production of a model - I'm not aware of anything special about 1978 that would distinguish those 260 cars from the other 2600 produced?

    Dino 308 GT4 2+2
    Production started: 1973.
    Production ended: 1980.
    Total production: 2,826, 547 RHD.
    First serial number: 07202.
    Last serial number: 15604.
     
  17. PBE624

    PBE624 Formula Junior

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  18. 330 4HL

    330 4HL Formula Junior
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    No assets??
    With the Bertone 250 on stock, his inventory must be close to 50 million quid...
     
  19. BIRA

    BIRA Formula Junior

    Jun 15, 2007
    889
    For a company, you are always talking of net assets, i.e. Assets minus liabilities. The stock is financed, even if Talacrest owns it, asset base is whatever real own money put in. If banks are financing 90pc of stock, net assets are 10pc of the stock.
    Incidentally we all know form Marcel M that Bertone 250 does not belong to Talacrest. So inventory has nothing to do with net assets as used to value a company.
     
  20. energy88

    energy88 F1 World Champ
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  21. Bradwilliams

    Bradwilliams F1 Rookie
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    "it will sit in a warehouse and — the buyer hopes — appreciate in value."

    Sounds like another one of those "end users" we keep hearing so much about! LOL
     
  22. Platini 289

    Platini 289 Karting

    Sep 21, 2015
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  23. Platini 289

    Platini 289 Karting

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