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You guys are over reacting. Nothing fundamental about human behaviour has changed, we are simply in a perfect storm for sports cars, at the moment. Once everything has corrected, including the supply side, things will carry on, as before. Wealthy folks will still want an exclusive car. Performance never really mattered, only the perception of it. I think we are looking at 1-3 years for the dust to settle and see who is left standing. The lease and inventory cycles have to play out.

On the other hand, Chris, you listed a bunch of rare cars that are actually holding up quite well vs MSRP. Those are not the cars we are talking about. We are talking about tens of thousands of leased regular series production cars like 720S, 570S, Huracan, etc.


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I disagree. Human behavior is what it is, but it reacts to supply and demand. And the supply of supercars is crazy high and seems only likely to increase. Behavior will adapt to that.

I do agree that the bubble has burst a bit, and we have a pandemic and civil unrest etc etc going on, so the market right now is aberrant and it doesn't make much sense to extrapolate from it. That said, I think the supply side has fundamentally changed.

Curious why think things will go back to normal at some point with so many more supercars out there 6th?
 

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I disagree. Human behavior is what it is, but it reacts to supply and demand. And the supply of supercars is crazy high and seems only likely to increase. Behavior will adapt to that.

I do agree that the bubble has burst a bit, and we have a pandemic and civil unrest etc etc going on, so the market right now is aberrant and it doesn't make much sense to extrapolate from it. That said, I think the supply side has fundamentally changed.

Curious why think things will go back to normal at some point with so many more supercars out there 6th?
of course the supply side has fundamentally changed ... that’s also what I wanted to express ... even if McLaren or AM or also Ferrari decide to go back to build less cars there are still companies like Lambo and Porsche or AMG that just don’t care Bc they are measured in numbers and are part of a much bigger company ... they will than just grow into what the smaller companies wanted to take off the market and the effect will become zero ...

Ferrari, Lambo and Porsche are many times bigger than 20y ago ...

While in the 1990is there were maybe 2000 hypercars produced in one decade the 2000s already had maybe 5000 and the 2010s 10.000-15.000 ... same with supercars in the above 911 lvl ... in the 1990is these were practically non existent on normal roads/places ... In most environments a Lamborghini or Ferrari would be seen like sth. From outer space ... now they are cars that are produced in numbers of 15-20.000 units a year ...
 

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Think about the used $200K +/- segment alone: 458 Spider, 488, 675LT, 720S, GT3RS, Huracan Spyder, Aston DB11, Bentleys, RR, Urus, crazy G Wagons, etc.

There is more choice than ever, and yes there is more cheap money than ever, but the "drive 2000 miles a year and sell it for what you paid for it" are well over. I agree supply is way more than demand. The cars are luxury goods, but a pretty specialized niche. As far as YT, this category doesn't generate anywhere near the ad revenue as more expansive categories such as food or makeup or video games.

I think "most" of us can afford one or two of these toys at the most, and we are the most forgotten part of the buyers market because we don't do tons of social media and don't have brokers searching for cars and garages with lifts and what not.

And if we get scared of the market, because we have diminished small business returns or less clients, you better find more tech money and billionaires to soak up that excess inventory.
 

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Maybe entering this discussion late and I have said before, car companies don't care about you and the value of their cars in the secondary market. They care about their investors, employees and suppliers, that is it. And to be more blunt, car companies have to produce cars or they die, dealers have to sell cars or they die...a saturated market only does one thing, lower prices.

And I am surprised this has not been discussed, Mclaren is mortgaging the ranch (some say restructuring at a lower cost of debt, whatever) to stay afloat during COVID-19. BTW, I am a big fan, hope they stay afloat and eventually buy a > 2,500 VIN 720S as my retirement gift to me.

Christian

 

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Curious why think things will go back to normal at some point with so many more supercars out there 6th?
Capitalism.

I think you guys are wrong when you claim that the supply side has fundamentally changed. Nothing fundamental has changed; we are simply over the top of the current boom/bust cycle and headed towards the bottom.

Of course Covid-19 is accelerating the move towards the bottom, but the Malthusian check for cars was always going to happen, in one form or another. As we know, exotic cars cannot be leased with inflated residuals in perpetuity - somebody will eventually be left holding the bag.

As always, capitalism will not suffer the inefficiency and will "correct" the situation. It will not allow manufacturers to build ever-increasing volumes of cars into a market that isn't growing fast enough to absorb them. Simply because there isn't enough profit in that activity.

We are also too quick to confer various attributes to a car and think that it has fundamentally changed. Yes they are mostly turbo now, going to EV, digital vs. analog, or whatever. Fine, but the single most prevalent "value" an exotic car provides is to make the owner feel special. When people achieve success and have some bucks to spend, they look to buy things that make them feel special.

The top of the boom cycle was always going to be fuelled by greed and delusional business plans; it always is, no matter which market. Bust, fire the scapegoats, rinse & repeat.

Coming out of the bottom, the surviving players will necessarily be more focused on what makes buyers feel special, including a modicum of exclusivity. Why? Not because they care about buyers, but because they want to make money, of course.
 

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Capitalism.

I think you guys are wrong when you claim that the supply side has fundamentally changed. Nothing fundamental has changed; we are simply over the top of the current boom/bust cycle and headed towards the bottom.

Of course Covid-19 is accelerating the move towards the bottom, but the Malthusian check for cars was always going to happen, in one form or another. As we know, exotic cars cannot be leased with inflated residuals in perpetuity - somebody will eventually be left holding the bag.

As always, capitalism will not suffer the inefficiency and will "correct" the situation. It will not allow manufacturers to build ever-increasing volumes of cars into a market that isn't growing fast enough to absorb them. Simply because there isn't enough profit in that activity.

We are also too quick to confer various attributes to a car and think that it has fundamentally changed. Yes they are mostly turbo now, going to EV, digital vs. analog, or whatever. Fine, but the single most prevalent "value" an exotic car provides is to make the owner feel special. When people achieve success and have some bucks to spend, they look to buy things that make them feel special.

The top of the boom cycle was always going to be fuelled by greed and delusional business plans; it always is, no matter which market. Bust, fire the scapegoats, rinse & repeat.

Coming out of the bottom, the surviving players will necessarily be more focused on what makes buyers feel special, including a modicum of exclusivity. Why? Not because they care about buyers, but because they want to make money, of course.
yes you mostly right the only thing is you significantly underestimate how long such cycles take ... the last big peak cycle In the Late 1980is and early 1990 which was triggered by Enzo Ferraris Death and the sentiment that no one will ever build such cars again as he did lastest nearly 20 years before a significant amount of value keeping for not only the most selected cars started (even McLaren F1 or f40, 300SL and many vintage Ferraris among many other could be had for bargain prices during most of this period) ... Only in 2008 to now prices started picking up again till the absolute peak in 2017/2018
 
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We are also too quick to confer various attributes to a car and think that it has fundamentally changed. Yes they are mostly turbo now, going to EV, digital vs. analog, or whatever. Fine, but the single most prevalent "value" an exotic car provides is to make the owner feel special. When people achieve success and have some bucks to spend, they look to buy things that make them feel special.
I'd argue that people feel less special when the cars are way more prevalent, which they are. These cars aren't all getting sent to the scrapyard anytime soon and they are aging quite well. The number of exotics in existence is growing faster than ever, and since they aren't getting destroyed/scrapped it means they end up on the street in greater and greater numbers. It also means they're depreciating more and quicker, ending up in the hands of people with "lower" income and thus they become less exclusive. These people will "lower" incomes also tend to use them more and thus get more visibility on the street.

Sure, an LP560 isn't brand new, but it doesn't exactly look like a Mondial. It still looks like a relative modern exotic. So now they've depreciated a lot, they end up in the hands of people who will use them more, and they are seen on the streets a lot more. Now add up all the models -- R8s, 12Cs, 430s, 458s, Gallardos, Murcielagos, 599s, 612s, Aston Martins, etc.

The reality is that owning an exotic is no longer as special. Sure, you have the newest and hottest exotic, but some dude also has a nice looking $100K Lamborghini and he daily drives it.

I grew up in a middle-class suburb. I rarely saw an exotic. Once I saw a yellow Diablo at the country club. Don't think I ever even saw a Ferrari. I think I saw one exotic car drive through my general neighborhood practically my entire childhood. When I go back home to visit family nowadays, I see them much more often. OK, not on every corner or every day, but not once a year either. I can think of probably 10 I've seen in the last 6 months. That's compared to 1 in every 10 years when I was younger.

The reality is that they last longer, they're more accessible, they make more, and they're more common to be seen on the road. All these things mean they are less special to a lot of people.

I can say without a doubt, the allure and specialness of an exotic is not what it was 10 years ago and it sure as hell wasn't what it was 20 years ago. They're just getting less special.

That said, it's great for those of us who don't care so much about the status and just want a good deal on a cool car.
 

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Capitalism.

I think you guys are wrong when you claim that the supply side has fundamentally changed. Nothing fundamental has changed; we are simply over the top of the current boom/bust cycle and headed towards the bottom.

Of course Covid-19 is accelerating the move towards the bottom, but the Malthusian check for cars was always going to happen, in one form or another. As we know, exotic cars cannot be leased with inflated residuals in perpetuity - somebody will eventually be left holding the bag.

As always, capitalism will not suffer the inefficiency and will "correct" the situation. It will not allow manufacturers to build ever-increasing volumes of cars into a market that isn't growing fast enough to absorb them. Simply because there isn't enough profit in that activity.

We are also too quick to confer various attributes to a car and think that it has fundamentally changed. Yes they are mostly turbo now, going to EV, digital vs. analog, or whatever. Fine, but the single most prevalent "value" an exotic car provides is to make the owner feel special. When people achieve success and have some bucks to spend, they look to buy things that make them feel special.

The top of the boom cycle was always going to be fuelled by greed and delusional business plans; it always is, no matter which market. Bust, fire the scapegoats, rinse & repeat.

Coming out of the bottom, the surviving players will necessarily be more focused on what makes buyers feel special, including a modicum of exclusivity. Why? Not because they care about buyers, but because they want to make money, of course.
Sorry I'm not getting it. It seems to be that the supply of exotics has basically increased by roughly 100% in say the last 5 years. To me, that seems to be a big change in scarcity. I guess the argument is there are enough markets that opened up to swallow all that up, which would be fair. Asian markets and others coming on line could swallow it up. But that leads back to my original point, that the cars are just not that special anymore. To sate such a big market, you get to numbers that make the cars no longer really scarce despite enough demand swallowing them up. To me that's a fundamental change.

I agree there will still be cycles and prices varying, and I don't mean that it's the end of exotics and supercars, just it's the end of them being rare (with some exceptions I'm sure).
 

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Sorry I'm not getting it. It seems to be that the supply of exotics has basically increased by roughly 100% in say the last 5 years. To me, that seems to be a big change in scarcity. I guess the argument is there are enough markets that opened up to swallow all that up, which would be fair. Asian markets and others coming on line could swallow it up. But that leads back to my original point, that the cars are just not that special anymore. To sate such a big market, you get to numbers that make the cars no longer really scarce despite enough demand swallowing them up. To me that's a fundamental change.

I agree there will still be cycles and prices varying, and I don't mean that it's the end of exotics and supercars, just it's the end of them being rare (with some exceptions I'm sure).
I don’t think Asian markets will ever swallow that ... I myself worked in HK in that business and it’s not the same demographics of ppl buying these cars as in the US or EU ... Asian buyers are by far wealthier on average ... most of the ppl there pay cash no questions asked ... than there is taxes which make cars 2-3x more expensive and additionally you don’t even need a car and especially not a fun toy car worth 500-800k usd (that’s what a 600LT or 720s costs you in HK,SG,Malaysia or Thailand among many others) ... China has also very hard restrictions on car ownership and registration is very expensive plus nearly all of these places within the big Cities a parking space costs a fortune (600-1000 usd/month in central areas are not uncommon) ... so taking all this into account I generally question what ppl think of they say Asian markets can really absorb these cars ... (small and cheap cars - especially EVs yes - but not super and hypercars) ...
 

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I don’t think Asian markets will ever swallow that ... I myself worked in HK in that business and it’s not the same demographics of ppl buying these cars as in the US or EU ... Asian buyers are by far wealthier on average ... most of the ppl there pay cash no questions asked ... than there is taxes which make cars 2-3x more expensive and additionally you don’t even need a car and especially not a fun toy car worth 500-800k usd (that’s what a 600LT or 720s costs you in HK,SG,Malaysia or Thailand among many others) ... China has also very hard restrictions on car ownership and registration is very expensive plus nearly all of these places within the big Cities a parking space costs a fortune (600-1000 usd/month in central areas are not uncommon) ... so taking all this into account I generally question what ppl think of they say Asian markets can really absorb these cars ... (small and cheap cars - especially EVs yes - but not super and hypercars) ...
I could be wrong, but I think that China and Russia and probably some other pacific countries accounted for like 30% extra sales to the exotics. I could easily be misremembering.
 

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I could be wrong, but I think that China and Russia and probably some other pacific countries accounted for like 30% extra sales to the exotics. I could easily be misremembering.
unfortunately totally wrong if you mean McLaren: China and SEA is less than 15% ... you need to exclude Japan, Australia and NZ which are totally different markets, remaining China and SEA is less than 12%

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Well, if the argument is that exotics are too prevalent now to make owners feels special, that just means that the definition of exotic has now changed. i.e. a Senna is an exotic, while a 720S is becoming more like a Corvette.

When I was a kid, a BMW was a really nice and fairly rare car!

Don’t underestimate the human desire to one up the neighbour by bringing home something newer, shinier and more rare/exclusive. That isn’t going away.


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Well, if the argument is that exotics are too prevalent now to make owners feels special, that just means that the definition of exotic has now changed. i.e. a Senna is an exotic, while a 720S is becoming more like a Corvette.

When I was a kid, a BMW was a really nice and fairly rare car!

Don’t underestimate the human desire to one up the neighbour by bringing home something newer, shinier and more rare/exclusive. That isn’t going away.


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I dont think I'm looking at the subjective view. People can feel special just getting a greetings card, that doesn't make the card rare.

Rarity and scarcity affect supply and demand. My sense is that we've breached a threshold where supercars are just not rare/scarce as they once were. That changes markets. Basically, everything becomes a "Jaguar".

I agree, keeping up with the Jones is and will still be a demand draw. But scale matters. There were way a few hundred gull wing mercs for the entire world. It's a different level of scarcity IMO. That level of scarcity allows for irrational pricing. The levels of supercars being put out now allows for easy tracking of depreciation curves.

And I totally hear you! When I was a kid growing up, forget Mercedes, that was for super rich people! There was a Fiat X1/9 and the Honda CRXsi. Those were dream cars for me and also for rich people.
 

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I dont think I'm looking at the subjective view. People can feel special just getting a greetings card, that doesn't make the card rare.

Rarity and scarcity affect supply and demand. My sense is that we've breached a threshold where supercars are just not rare/scarce as they once were. That changes markets. Basically, everything becomes a "Jaguar".

I agree, keeping up with the Jones is and will still be a demand draw. But scale matters. There were way a few hundred gull wing mercs for the entire world. It's a different level of scarcity IMO. That level of scarcity allows for irrational pricing. The levels of supercars being put out now allows for easy tracking of depreciation curves.

And I totally hear you! When I was a kid growing up, forget Mercedes, that was for super rich people! There was a Fiat X1/9 and the Honda CRXsi. Those were dream cars for me and also for rich people.
CRXsi!! Thought I'd never hear that again. I wanted a yellow one.

I guess I'm saying that the manufacturers will find ways to make buyers feel special again. If they can't do it by coming out with limited editions models, they'll create new brands. There are endless ways to accomplish it. I just don't think we've seen the end of wealthy people buying brand new exotic cars.

Maybe Chris is right, it could take a very long time. But, at some point, the flippers will return and for those with the means, the serial trade in schemes will start anew.
 

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CRXsi!! Thought I'd never hear that again. I wanted a yellow one.

I guess I'm saying that the manufacturers will find ways to make buyers feel special again. If they can't do it by coming out with limited editions models, they'll create new brands. There are endless ways to accomplish it. I just don't think we've seen the end of wealthy people buying brand new exotic cars.

Maybe Chris is right, it could take a very long time. But, at some point, the flippers will return and for those with the means, the serial trade in schemes will start anew.
YES! The yellow one!

I suppose we're agreeing past one another. I think in the financial plane where these cars used to sell (say cost adjusted 300k), there is oversupply and I suspect it will stay that way. But to your point, you can always charge more. And that doesn't stop a 5million car that sells just 50 copies... The Dubai police department has needs. :D
 

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YES! The yellow one!

I suppose we're agreeing past one another. I think in the financial plane where these cars used to sell (say cost adjusted 300k), there is oversupply and I suspect it will stay that way. But to your point, you can always charge more. And that doesn't stop a 5million car that sells just 50 copies... The Dubai police department has needs. :D
Oversupply is a function of price. If the price goes down enough, supply diminishes (not in number of extant units but in number of units for sale) and demand increases to the point where you have an under-supply. :)
 

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Oversupply is a function of price. If the price goes down enough, supply diminishes (not in number of extant units but in number of units for sale) and demand increases to the point where you have an under-supply. :)
Which basically means some manufactures need to get smaller or leave the field ...
 

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Which basically means some manufactures need to get smaller or leave the field ...
Or to lower their prices, or for the market to want more of these cars instead of SUVs and electric BS, or for enough people to get enough more wealthy, or for the template to be less power, aero, hi-tech and 'Ring times and more simple driving machines
 

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Oversupply is a function of price. If the price goes down enough, supply diminishes (not in number of extant units but in number of units for sale) and demand increases to the point where you have an under-supply. :)
Not in this case, there is an oversupply of millionaires demanding and supporting a way bigger market than ever before.
 

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This is an interesting discussion amongst knowledgeable folks.

It does seem fair to say that the exotic car market has seen increased demand because it is less niche? Fewer people seemed to care about cars either in terms of performance or status 50 years ago. The mainstreaming of expensive cars seems to be a more recent trend. (When I saw expensive I mean relative to any given individuals position on the net worth/income curve.)
 
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