Are New Supercars Ever A Good Investment?
BY MEI ANNE FOO
NOVEMBER 02, 2016 09:47 PM
Traditionally, once a car is purchased and hits the asphalt, it begins its journey of devaluation. Most people would concur that buying a brand-new car is not a good investment.
However, Alex Prindiville, founder of supercar specialist Prindiville Cars, thinks some recent models of vehicles can make excellent financial investments.
If so, how does one choose the right coupé? “Go for small production-run models, meaning limited editions,” Prindiville says. “Many long-standing automobile manufacturers such as Porsche and Ferarri, plus newer ones such as McLaren, are starting to make controlled numbers of certain car variants, typically stripped-out road racers. Generally, there are more interested buyers than there are cars, thus driving the prices up.”
An ultra-exclusive, limited-production example is the LaFerrari. With only 499 units made, there was a waiting list of more than 1,000. Predictably, just a year after it was launched at a price of £1 million, the fastest street-legal car Ferrari ever built was changing hands for £2.3 million — a 130 percent increase.
Prindiville adds: “There are always small pockets of individual models that increase in price as soon as you buy them. The trick is to obviously know which ones are investment cars and which ones are good cars but not necessarily desirable to collectors.
“The Ferrari 488 is a wonderful car, with a new twin-turbocharged engine but it will not increase in value because Ferrari is making too many of them. However, the models with the naturally aspirated engines, which it doesn’t make anymore, are the more desirable ones. So, there are many different factors that you need to take into consideration.”
Are new high-volume production cars permanently doomed assets then? Prindiville says: “Not necessarily. There is a sliding scale where things come out of fashion for a while, but if it is a good-quality car, after a period of 10 years or so, the value may start to increase again. Some cars move around in terms of value according to time.”
Classic cars have recently been one of the best-performing financial assets, outperforming wines and arts over the past decade, according to the Historic Automobile Group International (HAGI), an investment research house of the rare classic motorcar sector. But there are indications that the market is slowing.
“The [classic-car] market has slowed slightly because a lot of average-quality cars are being sold at extremely good prices,” Prindiville says, adding that the market has been flooded as classic-car owners seek to take advantage of the rise in prices. “Years ago, people restored cars because they loved cars but as the market grows, it has gone from a passion-led exercise to a monetary one.”
According to the HAGI index, there has been a significant slowdown in the market compared to previous years. A representative says: “Increased supply is one of the reasons. Not so much because owners look to cash in but because dealers and auction houses are offering much more stock than before. There are many more cars on the market that have been restored over the last five to 10 years. Rising prices brought many more cars to the market.”
Still, restoration is massively relevant to what the car’s value is. “You just need to be careful about how much money you put into it,” Prindiville advises.