Will Corona effect the Supercar Market

Will Corona effect the Supercar Market

Author
Discussion

av185

13,210 posts

91 months

Friday 20th March 2020
quotequote all
andrew said:
is on-one else of the opinion that ferrari, lamborghini, porsche et al stopping production for what could be several months will create a shortage of new cars, once this mess is over rippling across the late low miles used car market as a firming of values ?
Agree and as we saw in the 2008 financial crisis more desirable higher end cars recovered very quickly indeed post event as those who sold out too cheaply found out to their considerable cost in trying to buy back in.

Matty3

764 posts

48 months

Friday 20th March 2020
quotequote all
av185 said:
andrew said:
is on-one else of the opinion that ferrari, lamborghini, porsche et al stopping production for what could be several months will create a shortage of new cars, once this mess is over rippling across the late low miles used car market as a firming of values ?
Agree and as we saw in the 2008 financial crisis more desirable higher end cars recovered very quickly indeed post event as those who sold out too cheaply found out to their considerable cost in trying to buy back in.
Nice to see a little optimism amongst the gloom.

zedmtrappe

118 posts

60 months

Friday 20th March 2020
quotequote all
Bunty Killa said:
I work with a lot of Chinese and they're all saying everything is back to normal with full production
I would like to think that is true because if that is the case we could be through the worst of this in 3 months or so..


But... I have a good friend who has factories & business in China. I asked him yesterday how things were going over there as regards the economy and his reply was simply: ' I'm afraid you really wouldn't want to know..'


Jules360

1,922 posts

166 months

Friday 20th March 2020
quotequote all
av185 said:
As you rightly say I agree there will pressure on prices but some 'assets' will tank alot more than others. You mention shares and I take the view along with many others there are more drops to come especially to oil and travel companies which have already been pummelled but dont forget some companies will profit hugely from this situation such as healthcare and food producers etc. and in contrast these sticks will outperform.

Equally some cars will be affected alot more than others. Interesting threads are currently running ok more about mainstream cars and we are actually seeing some vehicles in short supply used actually rising in price due to factory shutdowns and dropping prices of suvs pushing up rarer 2/3 year old quality hatchback prices even from the likes of Vauxhall (suspended Ellesmere Port Astra production) and Ford. This applies to both petrol and diesel btw. These are the cars people want when times are tough.

Equally some essentially cheaper ££ higher end cars could actually hold up well primarily due to limited run and limited supply. The new 4.0 GTS Cayster is a prime example of this which really offers all the road performance you could ever need at a relatively low price and because it appears initial production numbers will be less than anticipated these cars should hold up fairly well in the medium term.

Edited by av185 on Friday 20th March 09:14
Out of interest, why will food producers' stock go up ? People will eat the same amount and increasing prices will not make you any friends longer term. Curiously, Reckitt Benckise's stock, who own Dettol, is down on the year.



Ferruccio

1,503 posts

83 months

Friday 20th March 2020
quotequote all
andrew said:
is on-one else of the opinion that ferrari, lamborghini, porsche et al stopping production for what could be several months will create a shortage of new cars, once this mess is over rippling across the late low miles used car market as a firming of values ?
I suspect that we are a long way from a shortage of new cars, given all the cars probably already sitting in the system?

Ferruccio

1,503 posts

83 months

Friday 20th March 2020
quotequote all
carspath said:
Taking out of the equation those genuinely rare and highly desirable ( usually older ) supercars , each of which are best regarded as an objet d'art , there is no reason to believe that most modern , relatively mass-produced supercars wont follow the same price trajectory as every other asset class

There are some of us who have a romantic association with ( any and all ) cars , but most vaguely sane people have a much more hard-headed approach .( the fact that we are even on PH must surely indicate at least a mild form of insanity !! )

It might also be the case that a higher proportion of people now buying supercars are not actually as mad-keen about them as was the case previously -- I have no empirical basis for this last statement , just a vague hunch .

Add to this the following less incontrovertible facts :

1) manufacturers are each now churning out many more cars per year ( Lamborghini produced 1998 Countachs between 1974 and 1990 ; an article in PH today says that 1104 Aventadors were produced in the last financial year alone ) ,

2) there are many more supercar manufacturers now than there were 20 years ago ( McLaren , Bugatti , Pagani , Koenigsegg etc ) , and each is producing a good number of cars

3) there is now an active and vocal CO2 and NOx lobby led by Greta ( with some justification , although overblown when the tiny number of supercars , and the tiny mileages they cover annually , are taken into account )

4) the classic and supercar market has been hyperinflated recently ( aided by cheap money from quantitative easing from the 2008 economic bust )

5) speculators have been far too active in the classic and supercar market , and now want a quick exit

6) many ,many supercars have been bought on credit / lease arrangements ( again encouraged by manufacturers desperate to register a respectable number of cars each calendar year )


So the Coronavirus issue is just yet another trigger ( albeit a rather significant one ) that will almost certainly lead to a fall in supercar prices .
It is hard to see how the currently available evidence and facts could lead to any other conclusion .


Property prices and share prices over the last 10 days have taken a huge hit .
With very little sentimental love associated with many of the latest mass-produced supercars , it would be reasonable to think that these cars would lose the same as what the FTSE has lost in the recent past : Down to about 5000 from about 7200 ie about a 30% drop .



Add in the 6 factors mentioned above , and then add in the fact that you are talking about a non-essential asset class that doesn't pay a dividend , but instead demands regular insurance and servicing costs , and a 40% drop in value would seem a reasonable guestimate .


it would be good to hear other viewpoints , and it would be particularly good to hear contrary viewpoints based on , or argued upon , some logical foundation ( I appreciate that hard facts are simply not available ).
Too often on this forum , it would appear that some people who have invested their hard-earned are reluctant to acknowledge that the value of their cars has decreased .
And saying '' its a car , just drive it '' is not a useful contribution to the OP's question .

And to those who say that talking about price , value and depreciation has no place on this forum , I would say that you are just plain wrong .
Plain wrong for 2 reasons :

1) No sensible person would want , or agree to pay more for a car than they need to
2) If the same £X could buy you a car further up the food-chain , surely you would want that car rather than the lesser car

So I think that discussions about price , value and depreciation are an integral part of this forum , and should be encouraged .
Particularly at a time like this , when prices are in a state of flux , and some enthusiasts might be able to bag their long-dreamt-about supercar at the expense of some speculators .

To answer the OP's question : In my opinion , it would be reasonable to expect a fall of between 25% and 40% in the value of supercars -- coronavirus would be both a trigger and a cause for this fall , but there are also other more permanent factors underpinning this fall .

I’d agree.

Ferruccio

1,503 posts

83 months

Friday 20th March 2020
quotequote all
zedmtrappe said:
Bunty Killa said:
I work with a lot of Chinese and they're all saying everything is back to normal with full production
I would like to think that is true because if that is the case we could be through the worst of this in 3 months or so..


But... I have a good friend who has factories & business in China. I asked him yesterday how things were going over there as regards the economy and his reply was simply: ' I'm afraid you really wouldn't want to know..'
Yes, isn’t Wuhan still in lock down?
Remember this only started on 31.12.99. So we are only about 11 weeks in.
And the Chinese went first so really had to do all the learning.

Bunty Killa

496 posts

163 months

Friday 20th March 2020
quotequote all
Yes but that's the equivalent of Nottingham been on lockdown. All the other major cities are operating fine.

Ferruccio said:
Yes, isn’t Wuhan still in lock down?
Remember this only started on 31.12.99. So we are only about 11 weeks in.
And the Chinese went first so really had to do all the learning.

Legacywr

8,994 posts

152 months

Friday 20th March 2020
quotequote all
Ferruccio said:
Legacywr said:
This should give an indication of the interest for non essential cars ATM?

https://www.classiccarauctions.co.uk/cca-march-202...
Lots at no reserve - brave
I’m pretty sure some of those have been changed to ‘no reserve’ since I last looked.

Taffy66

4,426 posts

66 months

Friday 20th March 2020
quotequote all
Bunty Killa said:
Yes but that's the equivalent of Nottingham been on lockdown. All the other major cities are operating fine.

Ferruccio said:
Yes, isn’t Wuhan still in lock down?
Remember this only started on 31.12.99. So we are only about 11 weeks in.
And the Chinese went first so really had to do all the learning.
Personally, going on previous examples i wouldn't trust a solitary word from the Chinese authorities regarding the true state of their domestic economy. They've been grossly exaggerating their economic growth for years in a feeble attempt to fool the West into thinking that they deserve equal billing with the US in terms of being a global super power.
In 2012 an audit was done to see where local government money had gone..Turned out with all the rampant corruption the local governments alone had amassed a huge $3Trillion debt..I can only imagine that figure has at least doubled since then taking other factors in account..There are countless huge airports in China lying unused due to over spending and lack of demand.
I think the Chinese economy was in a pretty poor state before this Pandemic took hold..All IMHO.

cgt2

1,751 posts

152 months

Friday 20th March 2020
quotequote all
Ferruccio said:
I suspect that we are a long way from a shortage of new cars, given all the cars probably already sitting in the system?
And that's just the unsold McLaren's!

Ferruccio

1,503 posts

83 months

Friday 20th March 2020
quotequote all
Bunty Killa said:
Yes but that's the equivalent of Nottingham been on lockdown. All the other major cities are operating fine.

Ferruccio said:
Yes, isn’t Wuhan still in lock down?
Remember this only started on 31.12.99. So we are only about 11 weeks in.
And the Chinese went first so really had to do all the learning.
Close:

Nottingham 328k; UK 66.44m = 0.49%

Wuhan 11m; China 1.4bn = 0.79%

Bunty Killa

496 posts

163 months

Friday 20th March 2020
quotequote all
I said equivalent!

Wuhan 9th highest populated city in China and Nottingham is 9th in England

Ferruccio said:
Close:

Nottingham 328k; UK 66.44m = 0.49%

Wuhan 11m; China 1.4bn = 0.79%

MrVert

3,679 posts

203 months

Friday 20th March 2020
quotequote all
Bunty Killa said:
I work with a lot of Chinese and they're all saying everything is back to normal with full production

The mass panic is worse than the virus itself




MrVert said:
Just because there’s photos and reports floating around of people in China going back to office work does not mean they’re over this outbreak. It only means there’s photos and and reports of what they want their public and the world to see.

Everything we have known, for some time, as a privileged asset based class of people, is about to mean nothing. All that will matter for the majority of people will be having a home and food to feed their family.

Reports today suggest the Govt. will effectively pay a universal wage to people to get them through the coming months. If that doesn’t trigger some sort of reality for you, nothing will. Our children will be paying for this for years to come.

This will be like nothing we have ever seen.
That's not what I'm hearing, have contacts who also work directly with the Chinese.

The answer is simply we don't know the Chinese figures. If you look at Italy & Spain that will be more indicative...and bloody horrendous.

Even more so in this country as all the morons are still going to the bloody pub!

SVJBalboni

323 posts

18 months

Friday 20th March 2020
quotequote all
Canada just had 500,000 people sign up for EI, think about that considering most Canadian cities haven't gone into a full lock down yet. The global economy is imploding and a quick recovery doesn't look possible at this point.

Kid A

54 posts

28 months

Saturday 21st March 2020
quotequote all
davek_964 said:
To put it simply - I really don't care what the value of my car is. I bought them on the assumption that the money I'd spent was gone.

If people want to spend all their time worrying about the current value of their car - good luck to them.

Will the current situation affect the supercar market? Of course it will - it's affecting pretty much every market. But frankly, I don't really care if my cars are worth 50p - I will enjoy driving them. The idea that I am "limiting my self to this one aspect" - is frankly a massive assumption and over simplification. But the one thing I do NOT worry about is how much my car is worth.
We understand that you don't care what the value of your car is. That makes sense for you.

Not everyone is in your position. I'm looking to buy a car in the next few years so I greatly care about the value of new and used cars. Especially now that this coronavirus situation is gutting every country's finances which will obviously just result in tax hikes and pain for workers like me. So my purchasing power is going to decrease because my taxes are going to increase. In such a financially sensitive time, I'm interested in knowing about market fluctuations to see what my buck can buy when I jump in.

No one is saying you need to limit yourself to this or that - but rather, that you can't limit others' views to only what you care about.

Desert Dragon

875 posts

48 months

Saturday 21st March 2020
quotequote all
Taffy66 said:
Bunty Killa said:
Yes but that's the equivalent of Nottingham been on lockdown. All the other major cities are operating fine.

Ferruccio said:
Yes, isn’t Wuhan still in lock down?
Remember this only started on 31.12.99. So we are only about 11 weeks in.
And the Chinese went first so really had to do all the learning.
Personally, going on previous examples i wouldn't trust a solitary word from the Chinese authorities regarding the true state of their domestic economy. They've been grossly exaggerating their economic growth for years in a feeble attempt to fool the West into thinking that they deserve equal billing with the US in terms of being a global super power.
In 2012 an audit was done to see where local government money had gone..Turned out with all the rampant corruption the local governments alone had amassed a huge $3Trillion debt..I can only imagine that figure has at least doubled since then taking other factors in account..There are countless huge airports in China lying unused due to over spending and lack of demand.
I think the Chinese economy was in a pretty poor state before this Pandemic took hold..All IMHO.
I've worked in China. Zero corporate governance and perhaps the most corrupt country I have ever operated in. I'd put them behind Nigeria and thats saying something.

LaurasOtherHalf

19,702 posts

160 months

Saturday 21st March 2020
quotequote all
Has the collecting cars auction of the Scuderia selling at £104k been discussed yet?

LHD and fully serviced at 24k miles.

Desert Dragon

875 posts

48 months

Saturday 21st March 2020
quotequote all
LaurasOtherHalf said:
Has the collecting cars auction of the Scuderia selling at £104k been discussed yet?

LHD and fully serviced at 24k miles.
Whats the point? Any car inc Speciale is arguably worth half what the current ask is in the current market. Call up any dealer and ask for a bid on your car. Its worth somewhere between nothing and very little.

In fact thats a very good price considering..

LaurasOtherHalf

19,702 posts

160 months

Saturday 21st March 2020
quotequote all
Desert Dragon said:
Whats the point?
Of a discussion on a car forum? Surely that's what we're here for.