Sadly selling due to crisis

Original Poster

3,585 posts

105 months

Wednesday 25th March 2020

Met my neighbour on a walk yesterday (we stood safely apart on either side of the lane to chat), and he’s selling his v10 R8 due to the impact the crisis is having on his business. He’s not short of cash, but can’t justify the outgoings when he doesn’t have incomings.

I’ll be doing exactly the same with my California. In fact, this is now the third crisis I’ve been through, and sold a car each time (replacing it when things picked up again). Always sad to, but just can’t justify running an expensive car in lean times.

Anyone else out there sadly selling a car to match amended finances?

Original Poster

3,585 posts

105 months

Wednesday 25th March 2020

randlemarcus said:

Does taking a longer view perhaps justify keeping it? Surely he is looking at firesale prices right now, so a better solution might be to stick it in the garage, and keep a barge on the drive?

If prices are terrible (as they may be at present) then that’s true, would make more sense to keep.
But given the high running and depreciation costs of a supercar, if I can get anything sensible, I generally prefer to sell. This then covers the (hopefully small) risk that my business doesn’t recover and I would have just wasted money I could have better used. Plus I get to buy something new when times are better again, which always feels like a bit of a reward for weathering the storm...

Original Poster

3,585 posts

105 months

Wednesday 25th March 2020

nickfrog said:

I don't know the underlying cost of owning a R8 or a Cali but surely it's far lower over say 12 months than the crystallisation of exceptional and (hopefully) transient added depreciation. Or is there a cash-flow limitation at play?

Yes, appreciate this might look curious. That’s because you’re looking at the whole cost of the car as an investment going up and down. I don’t, I treat my cars from a financial perspective as two elements: an investment and a cost.

Take a £100k car to make the numbers easy:
1) Part of the purchase price is the value that the car will retain over 5 years. Say, £50k. I don’t mind taking this out of savings - it’s basically a low risk, low return investment. Maybe I’ll get £45k, maybe £55k, but it merits using cash.
2). The rest of the purchase cost is just going to depreciate. This, along with running and finance costs is not an investment, it’s just a cost. Hence I like to pay for this out of regular income (which is why I use finance, even if I’ve got the cash).

So when my income goes down, I can’t any longer justify the regular costs and want to offload the asset. As far as I am concerned, the depreciation is a sunk cost anyway - I wasn’t expecting to see it back, so don’t mind losing it. As long as I can recoup the investment as planned (always nice to see a bit more of course), I’m ok.

Fully expect to see now lots of people saying this makes no sense financially and it would be cheaper to buy cash and hold on in down-times. I get that, and if others choose to do that, can totally understand it. Just like my way, not least as it helps me justify an investment class that otherwise makes no sense financially!

Original Poster

3,585 posts

105 months

Wednesday 25th March 2020

ninepoint2 said:

Welshbeef said:

How will that practically happen? No one can buy or owe the car as it’s not one of the only 4 reasons you leave your house.

Want to sell Yes
Able to No

I think a few on this thread may have missed this post yes

Agree. Since I put the car up for sale, the rules have made it practically quite hard to sell a car (although car brokers are still permitted to deal, so not impossible). So looks like I’ll just have to keep it after all and review later in the year. I’ve had worse things happen...

Edited by 67Dino on Wednesday 25th March 23:18

Original Poster

3,585 posts

105 months