How To Make Money From A Supercar Investment
Can I Really Make Money From A Supercar Investment?
Making money investing in supercars is a very risky strategy, but can be very lucrative.
As with all investments you require a good knowledge for the reasons why a supercar’s value appreciates and should you back the right car at the right time you could earn a very attractive return on investment.
For car enthusiasts, purchasing a supercar as an investment can be one of more rewarding ways to combine their passion with financial gain.
In this guide we’ll try to summarise why supercars make great investments. And we will also give you of our tips for the best supercars to invest in over the coming years.
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How To Make Money Investing In Supercars
The secret to making a return on your investment from a supercar or classic car purchase is to invest in a collectible car which had a limited production run.
The most exclusive manufacturers tend to only produce limited quantities of their most luxurious models.
One reason for this is the manufacturer knowing they will struggle to sell high numbers of their cars. Porsche recently did this with the 918 Spyder. They knew that due to its £625,000 price tag it wouldn’t be a huge seller, so they limited production to just 918.
On the flip side, manufacturers may choose to limit production numbers for special edition cars. Looking at Porsche again, they did exactly this with the 911R. At the time the 911R was the sportiest version you could purchase when looking at the expansive 911 range. Despite this, and despite knowing it would sell unbelievably well they only ever made 991 models.
By manufacturing a limited number of cars the supply level is capped. Over the years after production, demand for certain limited edition models can rise.
This allows those who purchased a supercar at list price to sell their car for a much higher price, and therefor profiting from their investment.
When a car is announced and pre-production sales start being taken, buyers will be given a build slot. This is the order in which the cars are manufactured. So if you purchased build slot 250, your car would be the 250th to roll off of the production line.
Buying a build slot is the first step to securing your investment. Of course before getting too excited and purchasing a build slot for the next flashy supercar to be announced, you need to understand which supercars have the best chance of appreciating and which don’t. What makes a supercar appreciate in value.
The rather shady practice of securing a build slot, then selling it at an inflated price before production starts is generally frowned upon. Many manufacturers try to stop this practice from happening through various methods. McLaren for example ensure they have first refusal to purchase the car back at list price if the buyer has changed their mind and didn’t want to proceed with purchasing their car.
Putting the selling of a build slot to one side, buying a build slot, taking delivery of the car and selling soon after can lead to a nice yield.
Putting this in to practice we just have to look at the recent Ferrari LaFerrari. It had a list price of €1,000,000, and now sells for €2,000,000 upwards.
Are Supercar Investments Safe or Risky?
Like investing in other forms, investing in a supercar or classic car does carry a few substantial risks.
Yes, if you get it right you can make a very good return on your supercar investment, however there are a few expenses to consider before purchasing.
What Are The Costs Of Keeping A Supercar?
If you want to keep your high value investment in pristine condition, you will be looking at storage costs for a safe garage. Along with this you’ll have on going annual costs such as regular servicing, maintenance and insurance.
On top of the expenses that you’ll have to factor in just to keep a classic car or supercar, there is also the chance that the car you have invested in doesn’t actually increase in value.
It is recommended to seek professional advice when choosing which supercar to invest in, as many will simply depreciate as soon as they roll out of the factory.
Examples Of Cars Which Have Lost & Gained Value
As an example, when the first Dodge Viper was unveiled, many investors purchased the aggressive 400bhp American sports car with the hopes that it would rapidly appreciate. Unfortunately this wasn’t the case.
The list price in the USA was roughly $50,000 back in the early 90’s. Today you can pick up these early models for less than $40,000. This yields a rather hefty loss when you factor in maintenance across the past 20 years along with inflation.
This single example goes to show that not every impressive looking supercar that rolls out of production is worthy of investment.
But for every Dodge Viper, there is also a Ferrari Enzo which has appreciated by over 4 times! From it’s initial £400,000 list price to almost £2,000,000.
What Factors Lead To Supercars Appreciating
There a few factors to consider when weighing up which car you think will appreciate in value.
Generally if a car has a very short production run, such as in the hundreds, this would be a great starting point.
With only a limited amount of cars going into a production, manufacturers will have queues around the block of potential buyers all looking to secure their build slot.
Once the car has been manufactured and delivered, if any nearly new models pop up for sale, those who missed out the first time round will jump at the chance of finally purchasing their limited edition model.
This can lead to the initial owner being able to sell their car for much more than the list price that they paid.
Cars such as the McLaren Senna and the upcoming Aston Martin Valkyrie are sold out already and haven’t even been manufactured yet.
The McLaren Senna is limited to just 500 models and costs £700,000. And the Aston Martin Valkyrie, which has been developed with the Red Bull Racing formula 1 team, is being limited to just 150 production models.
Both of these cars are expected to appreciate very quickly once the production models become available in the almost new market.
When looking at classic supercars to consider for purchasing as an auto investment, historical importance can be a winning formula.
Cars to consider could be the Jaguar E-Type which was pioneering in the 1960’s. It brung a host of technological improvements, extraordinary and a competitive price tag.
Which Supercars Will Appreciate In Value?
Here are our pick of a few future classics and supercars which will appreciate in value over the coming years.
When the McLaren Senna was first revealed many who had put down deposits weren’t overly pleased. There was a group of buyers who even contacted McLaren trying to cancel their orders.
However since further reveals, announcements and previews the McLaren Senna has been widely praised. Those who have been lucky enough to test the car in person praise its incredible track performance and believe it is more than worthy of the Senna name.
This has turned many early investor’s opinions, with buyers paying hundreds of thousands over the list price to make it on to the 500 short buyers list.
The first Senna models are being delivered June – July 2019 and we would look to see a few of these exclusive models hitting the market in late 2019, early 2020 with a price well above the initial list price.
If you are lucky enough to have a couple of million to invest, we would highly recommend the ever appreciating Ferrari Enzo.
It has come a long way since it’s initial £400,000 launch price back in 2002, and models are now worth just shy of £2,000,000. This is up on it’s 2018 valuation of £1,500,000.
If you can afford an investment of this price, it could be worth while purchasing an early model before it breaks the £2 million barrier.
Ferrari 599 GTO
Our pick to keep an eye on for the future is the Ferrari 599 GTO. The GTO is the road going version of the 599XX track concept car and only 599 were ever made, with 125 being shipped across the Atlantic to the USA, and the rest staying in Europe.
The 599 has depreciated fairly steadily since it’s launch in 2010, with newer models seeming more collectible. It has dropped slowly from its £350,000 list price and we predict it to continue to depreciate for another year or so. After that we believe it will begin to see an upturn in value due to its limited production numbers and it’s V12 engine.
Not many supercars going forward will utilise a classic naturally aspirated 6litre V12, and this alone will help the 599 GTO’s value.