Chris Harris's Column -- Burst Bubble;Massive Dump;Bargains
Discussion
Ferruccio said:
Sorry, no. I go to meetings with these people.
Consumer debt since the crash has been growing at 10% compound.
Leveraged finance at 23%. It is now x2 the size it was in $ terms going into the crash.
A bit less of it in the U.K. than some other jurisdictions.
Yes the gross number is bigger but I think the leverage now is less systemic though....in 2008 it was an outsize risk on most bank’s balance sheets. Barclays, RBS et al aren’t sitting on anything like the amount of risk they were in 2008. RBS’s balance sheet is less than £700 bil now....5 years ago it was £1tril and a decent amount more than that in 2008....and the capital position is much stronger. That’s the same at Lloyds, Barclays etc Consumer debt since the crash has been growing at 10% compound.
Leveraged finance at 23%. It is now x2 the size it was in $ terms going into the crash.
A bit less of it in the U.K. than some other jurisdictions.
Anyway that’s not got much to do with the price of Ferrari Daytona’s
Re-read with interest this thread from the beginning when people were questioning Chris' assessment of the situation.. and the desperate attempts to deny the obvious
Market is taking quite a correction, prices are there for all to see.. I really don't understand people trying to deny it. Probably the reason is not so much in terms of interest rate but rather in terms of dim economic outlook, a lot of uncertainty ahead, and that has an effect, China slowing down massive, Britain at a standstill.. sooner or later people stop buying new cars, people who own cars on finance start freaking out and try to rush to market sooner than their youtouber friend .. and there you go..
But the reality is that there's just too many "special" cars out there.. how many 650,670,720,570 McLaren can the market really absorb? How many special versions, GT, etc etc.. How many collectors and real buyers are there to absorb this limitless supply?
Look at 488 prices, why would you buy one now? Look at the bloodbath which is the GT4C market especially in V8T, FF are trading below 99k (incredible value). 355 the darling of the market is just not selling at the levels advertised, I see cars dropping 5k weekly.
Look at how many 991.1 and .2 GT3 and RS are hitting the market. I was offered 2 factory build slots for the RS (ok in EU...) without even trying, with weissach package available.
I just think the frenzy of buyers has come to an end and there's just too much stock that cannot get anywhere in RHD form..
Market is taking quite a correction, prices are there for all to see.. I really don't understand people trying to deny it. Probably the reason is not so much in terms of interest rate but rather in terms of dim economic outlook, a lot of uncertainty ahead, and that has an effect, China slowing down massive, Britain at a standstill.. sooner or later people stop buying new cars, people who own cars on finance start freaking out and try to rush to market sooner than their youtouber friend .. and there you go..
But the reality is that there's just too many "special" cars out there.. how many 650,670,720,570 McLaren can the market really absorb? How many special versions, GT, etc etc.. How many collectors and real buyers are there to absorb this limitless supply?
Look at 488 prices, why would you buy one now? Look at the bloodbath which is the GT4C market especially in V8T, FF are trading below 99k (incredible value). 355 the darling of the market is just not selling at the levels advertised, I see cars dropping 5k weekly.
Look at how many 991.1 and .2 GT3 and RS are hitting the market. I was offered 2 factory build slots for the RS (ok in EU...) without even trying, with weissach package available.
I just think the frenzy of buyers has come to an end and there's just too much stock that cannot get anywhere in RHD form..
rosino said:
How many collectors and real buyers are there to absorb this limitless supply?
Nail. Head.Years ago Aston Martin had years when they made <100 cars.
Lamborghini had years when they made 10s or low hundreds of cars. They made about 7,500 cars up to the Diablo, so over nearly 30 years.
It’s gone from real petrol heads to investors.
Investors need growth.
I have an Aston Martin car but no shares.
It all looked rather Metro Bank to me.
wisbech said:
Cheib said:
Very true about the "Cost of Carry" for cars....people wear those costs with pleasure when the market is rising but when it's flat to going down and you're looking at say £5k a year for your £100k car that is depreciating by say 10% a year it starts focusing the mind.
Whilst there is no GFC like in 2008 what we have is a market that from the early 2000's is up over a 1000% for some cars....no market goes up that much without a significant retracement. Especially one where there isn't finite supply....they obviously aren't making 458's any more but they're making the modern equivalent and that has a trickle down effect.
We haven't seen the "pain trade" yet/capitulation people selling at almost any cost. Although I think with some cars the market is very difficult already and you can't sell at anything close to prices that were achieved a couple of years ago. Something like a Daytona is not a £700k car any more....if you want to sell it's less than £500k.
Prices are dropping on Daytonas in the US as well. Basically they are now your granddads’ Ferrari, and starting to go out of fashion.Whilst there is no GFC like in 2008 what we have is a market that from the early 2000's is up over a 1000% for some cars....no market goes up that much without a significant retracement. Especially one where there isn't finite supply....they obviously aren't making 458's any more but they're making the modern equivalent and that has a trickle down effect.
We haven't seen the "pain trade" yet/capitulation people selling at almost any cost. Although I think with some cars the market is very difficult already and you can't sell at anything close to prices that were achieved a couple of years ago. Something like a Daytona is not a £700k car any more....if you want to sell it's less than £500k.
https://www.tomhartleyjnr.com/car/stock/1973/ferra...
Ferruccio said:
rosino said:
How many collectors and real buyers are there to absorb this limitless supply?
Nail. Head.Years ago Aston Martin had years when they made <100 cars.
Lamborghini had years when they made 10s or low hundreds of cars. They made about 7,500 cars up to the Diablo, so over nearly 30 years.
I agree with rosino, the high end market is flooded. The factories can’t stop churning out car after car and with confidence shaken the stock ends up stalling.
The interesting question is who is eating who’s dinner? McLaren have came in and shook up the market but it must be at the expense of someone-who is it and will it sustain as the market shrinks?
The manufacturers can kick the can down the road with incentives, discounts and free finance but at some point the merry go round will stop.
The interesting question is who is eating who’s dinner? McLaren have came in and shook up the market but it must be at the expense of someone-who is it and will it sustain as the market shrinks?
The manufacturers can kick the can down the road with incentives, discounts and free finance but at some point the merry go round will stop.
I wonder at which age the pricing will flip and a 997 GT will be worth more than a 991 GT / a Challenge Stradale or Scuderia more than a Speciale or Pista / a Superleggera more than a Performante etc - I think it will happen eventually, but might well be once the newer model hits 7-8 years old
More focused on the general classics market but nonetheless, an interesting article:
https://www.msn.com/en-au/motoring/news/is-the-cla...
"A pair of Dutch researchers from Tilburg University combed through the auction data of 29,000 car sales going back to the 1990s and came to a stark conclusion. Most classic cars have been horrible investments.
Economists Luc Renneboog and Dries Lauren sampled the data from 1998 through to the very peak of the market in 2015. During that period, gross returns worked out at 5.6 percent a year. Adjust that for inflation and it came to 3.4 percent per annum.
Now consider that this figure didn’t include incidental costs such as transaction costs, storage, transportation, insurance, maintenance and restoration bills. Even accounting for the fact that the research period started at the peak of the 1990s bubble and included two major bear markets, after adjustment for inflation, stocks returns of 4 percent still outperformed chrome-bumpered metal.
But let’s get back to that Buffett quote at the top of the feature. The market is now coming to terms with the fact that the classic car bubble has burst. There’s been a definite adjustment downwards. How far will it go? When can we afford to be greedy when the rest are fearful? If I could reliably answer that particular question, I wouldn’t be sitting here writing this but every indication would seem to suggest it has a way to go yet"
Just had a browse through the PH classifieds - 1st time in quite a while. WTF happened to 12C values? Last time I looked the retail market started at about 110k - now it's 70k. Genuinely shocked to see how quickly these and the general market has fallen
https://www.msn.com/en-au/motoring/news/is-the-cla...
"A pair of Dutch researchers from Tilburg University combed through the auction data of 29,000 car sales going back to the 1990s and came to a stark conclusion. Most classic cars have been horrible investments.
Economists Luc Renneboog and Dries Lauren sampled the data from 1998 through to the very peak of the market in 2015. During that period, gross returns worked out at 5.6 percent a year. Adjust that for inflation and it came to 3.4 percent per annum.
Now consider that this figure didn’t include incidental costs such as transaction costs, storage, transportation, insurance, maintenance and restoration bills. Even accounting for the fact that the research period started at the peak of the 1990s bubble and included two major bear markets, after adjustment for inflation, stocks returns of 4 percent still outperformed chrome-bumpered metal.
But let’s get back to that Buffett quote at the top of the feature. The market is now coming to terms with the fact that the classic car bubble has burst. There’s been a definite adjustment downwards. How far will it go? When can we afford to be greedy when the rest are fearful? If I could reliably answer that particular question, I wouldn’t be sitting here writing this but every indication would seem to suggest it has a way to go yet"
Just had a browse through the PH classifieds - 1st time in quite a while. WTF happened to 12C values? Last time I looked the retail market started at about 110k - now it's 70k. Genuinely shocked to see how quickly these and the general market has fallen
Edited by Candellara on Wednesday 16th October 11:13
LaurasOtherHalf said:
I agree with rosino, the high end market is flooded. The factories can’t stop churning out car after car and with confidence shaken the stock ends up stalling.
The interesting question is who is eating who’s dinner? McLaren have came in and shook up the market but it must be at the expense of someone-who is it and will it sustain as the market shrinks?
The manufacturers can kick the can down the road with incentives, discounts and free finance but at some point the merry go round will stop.
Absolutely and none of them will stop making cars to manage residuals in the second hand market....Ferrari might have done in days gone by but not now. Very expensive to slow down or stop production so they will all keep churning out cars. The interesting question is who is eating who’s dinner? McLaren have came in and shook up the market but it must be at the expense of someone-who is it and will it sustain as the market shrinks?
The manufacturers can kick the can down the road with incentives, discounts and free finance but at some point the merry go round will stop.
An awful lot of people bought these cars because they were cheap to run in % depreciation terms or to get access to your Pista/GT2 RS/675 LT. That game is gone now.....buying cars now the depreciation you would suffer to get access to a limited edition car just makes absolutely no sense at all.
Turbo cab said:
Thanks for the info, spose it's best not to believe everything you hear!
Knew that YT wasn't responsible but again credit where it's due, at least he grafts and tries to make a living from his passion instead of being a lazy trust fund bum.
He grafts and tries to make a living? He makes videos.Knew that YT wasn't responsible but again credit where it's due, at least he grafts and tries to make a living from his passion instead of being a lazy trust fund bum.
rosino said:
Look at the bloodbath which is the GT4C market especially in V8T, .
Fairly sure Harry Metcalf said on the Collecting Cars podcast that he was recently offered a GTC4 Lusso (not sure if it was a V8 or V12) with a few thousand miles on it which was £150K less than its list price which is pretty staggering (scary).I agree on the comments about supply though. So many new cars coming out and if you believe everything you see on social media everyone is buying them. Ferrari and Porsche especially are brilliant at making people want the latest and greatest cars.
Afzal Khan was moaning recently that he was unsure if he should take an order for the new 812 Spider as he lost a large amount on his 812.
Davey S2 said:
Fairly sure Harry Metcalf said on the Collecting Cars podcast that he was recently offered a GTC4 Lusso (not sure if it was a V8 or V12) with a few thousand miles on it which was £150K less than its list price which is pretty staggering (scary).
I agree on the comments about supply though. So many new cars coming out and if you believe everything you see on social media everyone is buying them. Ferrari and Porsche especially are brilliant at making people want the latest and greatest cars.
Afzal Khan was moaning recently that he was unsure if he should take an order for the new 812 Spider as he lost a large amount on his 812.
I believe he paid Tom Hartley £400k for it soon after the car came out...it was on one of the Kahn office Youtube channel vids...ouch
I agree on the comments about supply though. So many new cars coming out and if you believe everything you see on social media everyone is buying them. Ferrari and Porsche especially are brilliant at making people want the latest and greatest cars.
Afzal Khan was moaning recently that he was unsure if he should take an order for the new 812 Spider as he lost a large amount on his 812.
I believe he paid Tom Hartley £400k for it soon after the car came out...it was on one of the Kahn office Youtube channel vids...ouch
Davey S2 said:
Fairly sure Harry Metcalf said on the Collecting Cars podcast that he was recently offered a GTC4 Lusso (not sure if it was a V8 or V12) with a few thousand miles on it which was £150K less than its list price which is pretty staggering (scary).
Seriously? 
How much is that car new?
Davey S2 said:
Fairly sure Harry Metcalf said on the Collecting Cars podcast that he was recently offered a GTC4 Lusso (not sure if it was a V8 or V12) with a few thousand miles on it which was £150K less than its list price which is pretty staggering (scary).
I agree on the comments about supply though. So many new cars coming out and if you believe everything you see on social media everyone is buying them. Ferrari and Porsche especially are brilliant at making people want the latest and greatest cars.
Afzal Khan was moaning recently that he was unsure if he should take an order for the new 812 Spider as he lost a large amount on his 812.
Was a lovely spec that 812, blue with Daytona bucket seats. I agree on the comments about supply though. So many new cars coming out and if you believe everything you see on social media everyone is buying them. Ferrari and Porsche especially are brilliant at making people want the latest and greatest cars.
Afzal Khan was moaning recently that he was unsure if he should take an order for the new 812 Spider as he lost a large amount on his 812.
Cheib said:
Absolutely and none of them will stop making cars to manage residuals in the second hand market....Ferrari might have done in days gone by but not now. Very expensive to slow down or stop production so they will all keep churning out cars.
An awful lot of people bought these cars because they were cheap to run in % depreciation terms or to get access to your Pista/GT2 RS/675 LT. That game is gone now.....buying cars now the depreciation you would suffer to get access to a limited edition car just makes absolutely no sense at all.
To the benefit of mid level cars like the GT4.An awful lot of people bought these cars because they were cheap to run in % depreciation terms or to get access to your Pista/GT2 RS/675 LT. That game is gone now.....buying cars now the depreciation you would suffer to get access to a limited edition car just makes absolutely no sense at all.
Spoke to my dealer (of 20 years) yesterday about px-ing my 992 for a pdk GT4 next year and he said I had absolutely no chance what so ever. I only buy 1 new Porsche a year and just retired so no more need for Cayennes etc. Maybe if I was a more prolific flipper............
wait and see.
a pdk GT4 spec would edge closer to 90+. i can't see the frenzy for gt4 when lightly used exotic metal would trade for not much more. besides, the gt4 won't be limited. it'll be in production for a while. you may not get the first few but down the line they'll be calling you.
a pdk GT4 spec would edge closer to 90+. i can't see the frenzy for gt4 when lightly used exotic metal would trade for not much more. besides, the gt4 won't be limited. it'll be in production for a while. you may not get the first few but down the line they'll be calling you.
Perfect storm at the moment with Brexit here and the aforementioned global slowdown. For us in the UK I think post Brexit things still pick up as confidence returns but the supercar market will now always resemble the normal car market as supercar ownership has become more normal with financing deals and really the number one culprit for the whole thing is McLaren. McLaren have been disruptive in the market with their products which is always good for them but pumping out as many cars as they do just watch over winter they will reset expectations as sub 90k 570s become the norm.
Anyone then looking at any supercar has to first not buy a cheap 570/720 then look at the other stuff. Everything is benchmarked against their products from a performance angle but the numbers and lack of people with confidence to buy one leaves the prices dropping which feeds into the rest of the market.
Porsche seem to be bent on normalising the GT cars whilst still playing their silly games with the dealers. Why anyone would be queuing up for a GT4 when there are deals galore to be had on McLaren's is anyone's guess. The flipping market will be very very short on the new GT4 if it exists at all. The range of proper supercars available at that pricepoint now imho makes them look a bit daft at 90k.
Anyone then looking at any supercar has to first not buy a cheap 570/720 then look at the other stuff. Everything is benchmarked against their products from a performance angle but the numbers and lack of people with confidence to buy one leaves the prices dropping which feeds into the rest of the market.
Porsche seem to be bent on normalising the GT cars whilst still playing their silly games with the dealers. Why anyone would be queuing up for a GT4 when there are deals galore to be had on McLaren's is anyone's guess. The flipping market will be very very short on the new GT4 if it exists at all. The range of proper supercars available at that pricepoint now imho makes them look a bit daft at 90k.
Edited by fridaypassion on Sunday 20th October 22:49
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