Investing in Used Ferraris Vs. Traditional Portfolios
Adam Merlin August 2019
What is the cost of owning a Ferrari is one of the most common discussions I have. I have written about Ferrari costs in the past because it is such a relevant and common topic, especially with exotics. However, over the last few years, I have shifted the focus when this discussion arises because the world of Ferrari and investing is much different today than it was a few, or even 10, years ago.
People used to look at me like I was crazy when I suggested investing in Ferraris vs. traditional investments, but now that is not always the case, and it is definitely not the case when I discuss this with my collector clientele. Recently, I had a conversation with one of my clients who has been investing in both real estate and Ferraris for decades and the facts could not lend more credibility to the collectibility of used Ferraris. According to this particular client, over the last ten years, his residential real estate in New York only increased by about 72%, still not recovering to pre-2009 figures. At the global level, his Hong Kong properties appreciated 220%, while high-end Europe is still recessing, with some portfolios losing half their value within a few months.
So what happened in the Ferrari portfolio? Entry-level Ferraris increased 143%, high-end Ferraris moved up 395%, and ultra high-end Ferraris (59 Ferrari Testarossa, 250 Ferrari GT Berlinetta, 275 Ferrari GTB) did a staggering 300-500% increase. Besides, many people believe the Ferrari Dino is likely to cross one million dollars in two to three years, and the Ferrari F40 will likely cross two million dollars. And if you have the stomach for it, the Ferrari F50, Ferrari Lusso, and Ferrari Daytona Spyder are all excellent for ROI.
With all of this data, the appreciation factor needs to be factored in when you are looking at a true cost of ownership for any used Ferrari. To get a more accurate picture, you need to look and analyze these three items:
- The purchase price of the Ferrari
- Projected value of the Ferrari at the time you wish to sell
- Operation and service costs for the period you will own the Ferrari
The purchase price of the Ferrari is the easiest item to figure out and know upfront. For the projected value of the Ferrari at the time you wish to sell it, this will require a bit more research. You will need to evaluate the car and determine the collectibility of the particular Ferrari model, the supply and demand on the market, and other factors that will add to the car’s value such as miles, color packages, etc. To determine the Ferrari service costs over the period you will own the Ferrari, you will also need to do a little bit of research. There are obvious service costs, such as the annual service, but I would also recommend a discussion with a Ferrari technician who has experience with the Ferrari you are considering so they can help with any known nuances, considerations, etc for that particular model.
Considering all the data, you can get a much better picture of what we are seeing in the Ferrari investment world and why it is becoming more desirable. Also, let’s not forget the other upside of investing in a Ferrari… driving the Ferrari! In our eyes, it is a win-win and something we see more and more of our clients taking advantage of.