INTRODUCTION
It is with great pleasure and excitement that we share the first issue of Ferrista, a short (digital) financial publication for a factual glimpse into the local market for rare and collectable cars, a first for South Africa and many years in the making…
Over the last decade, I developed a deep passion for the investment potential of rare and collectable cars, particularly Ferrari. In 2016, when prices were at an all-time high, this became an obsession and we began to look at ways to offer reliable and quantifiable information to South African collectors and investors.
Since then, we have become proficient in methods for measuring and tracking financial market indicators, facilitated the valuations of hundreds of high-end cars/collections for financial institutions and have built the framework for the first South African Ferrari Index, the results of which you will soon begin to see.
This publication is the product of relationships and lessons acquired along the way and has been created to provide an objective perspective on our market.
I expect that this publication will evolve over time as we continuously look to improve.
We welcome your comments, thoughts and suggestions and invite you to join the conversation on our blog.
Enjoy.
Tommy Roes
Ferris Cars
FERRARI vs FERRARI
The amazing RACE.MI and South Africa’s favorite V8’s.
The concept of ‘demand’ is an interesting narrative. In this day and age, it seems financial markets move in vicious and sudden ways – driven primarily by news flow, and common sense seems to have been given the bench-warming role. Demand these days provokes thoughts of frenzied buying by the ‘hoodies’, otherwise known as the Robin Hood traders that are challenging social norms, disrupting traditional investment approach, and challenging what has value and what is valuable.
The rise and rise of RACE.MI
The question is, what exactly is the catalyst for the incredible rise in the share price of Ferrari, listed in Milan and New York (RACE.MIL – how cool is that ticker code)? If you don’t already know, the Italian car maker has experienced an astounding rise of 450% in US dollar terms over the past five years compared to the MSCI World Index of 95% (see graph below). Today, if compared on a traditional price-earnings ratio, Ferrari is expensive. However, if you compare the car maker to its peers, it has the best free cash flow, profitability, deliveries, order book, net profit, and earnings before interest, taxes, depreciation and amortisation (EBITDA) margin in the industry.
Just what is driving this demand? Is it the demand for the brand, or is it the brand which demands the price one pays, which in turn produces attractive margins with limited supply?
How is this relevant to the local Ferrari market?
This question becomes even more interesting if one compares the price of the physical cars to the listed share price. In comparison, we looked at a basket of the most frequently traded Ferrari V8’s in South Africa versus the Ferrari share price. The percentage gains for the Ferrari V8 basket were derived using actual sales tracked in South Africa over the past decade, research compliments of Tommy Roes, we compared this with the Ferrari share price data extracted from Factset research systems.*
In 1975, the 308 was born. Designed by the masterful Leonardo Fioravanti, with obvious nods to the 246 in the curving wing-tops and sculpted air intakes, with a clear relationship to Fioravanti’s clean-lined and then-recently launched Berlinetta Boxer, it was at once nostalgic and achingly modern.
The average price of 308’s appreciated the most in our V8 basket, with a price rise of 171%, peaking in 2016 at 254%.
In 2016, one might have paid around R1.7m for an average 308 and closer to R2.0m for a prime example, but fast forward five years to 2021, and that average is now around R1.2m.
The appreciation of this collectable took place exclusively between 2010 and 2016, with a price trajectory surpassing that exhibited by its successor and 2nd place performer, the 328, peaking in the same year at 231%.
The same trend is true for most, if not all the pre-millennium models in our V8 basket, comprising of the pre-millennium 308, 328, 348, F355 and post-millennium 360 and F430 (the only two which buck the trend somewhat, moving consistently sideways throughout the same period).
In fact, the average F355 was selling for around R2.5m in 2016, whereas today you could get yourself into a reasonable example for around R1.8m.
On average there has been a 25% decline in these particular models over the past four years.
The only model of our six which has not fallen in value during this period is the 348 tb/ts, which has risen 55% since 2016.
Conclusion
Since its IPO in 2015, RACE.MI has clearly won the battle by outperforming this basket of V8’s in pure financial terms, however, the opportunity may very well lie in the price of certain Ferrari’s in South Africa today.
Has the market bottomed out as second-hand high-end car dealers report exceptional trading since the start of the pandemic? perhaps the question you should be asking is, what do you want from your investment?
Either way, the market clearly still sees the brand as having its own inherent source of value.
So there you have it – there is a stark contrast in the battle for Ferrari paper assets over their physical counterpart, but you certainly don’t take your share certificates out on Sunday morning to invigorate your soul.
In future issues, we will look at these cars more closely and discover South African Ferrari’s which, for now at least, may very well be winning the war on all fronts.
Author: Leon Strümpher, Sanlam Private Wealth
(*) V8 basket data comprising:
- 308 data includes 308 GTB/GTS/GTBi/GTSi and GTB/GTS QV), data excludes Fibreglass (Vetroresina) and carburettor variants.
- 328 data includes GTB/GTS.
- 348 data includes tb/ts and Spider variants. Data excludes Challenge and Special Series variants.
- F355 data includes GTB/GTS and Spider, Manual and FI variants. Data excludes Challenge variants.
- 360 data includes Modena/Spider, Manual and F1 variants. Data excludes Challenge variants.
- F430 data includes Berlinetta/Spider, Manual and F1 variants. Data excludes Challenge and Scuderia variants.
Disclaimer
The data provided is the sole property of Ferris Cars and may not be replicated in any way without the express permission of Ferris Cars. The data provided is intended as an indication only. Ferris Cars assumes no responsibility for the accurateness and completeness of the data provided. Data provided is not intended to be used for any purpose other than that which is intended disclaims all warranties in connection therewith.
Author Profile
Leon Strumpher
Portfolio Manager
Sanlam Private Wealth
Leon is a portfolio manager at Sanlam Private Wealth. He manages investment portfolios for individuals, trusts, families and charitable institutions. Leon has been advising HNWI for more than a decade.
Leon is heading up the classic car investments initiative within Sanlam Private Wealth and is a classic car investor and owner himself.
Ferrari Global Performance
The HAGI F Index measuring the market for rare Ferrari declined by 1.83 points (-0.52%) reaching a price index of 351.97. Gains for 2020 stood at 13.77%, the strongest of all HAGI indices. That said, performance of the HAGI F over 3 years was all but unchanged (-0.01%). For more information, please contact Historic Automobile Group International info@historicautogroup.com
Stock
With reference to this article, Ferris currently have the following examples available for sale:
- 1978 Ferrari 308 GTB Vetroresina, 34000km, Red
- 1992 Ferrari 348 ts, 44000km, Red
- 1996 Ferrari F355 GTS, 51000km, Red
- 1998 Ferrari F355 Spider, 74000km, Red
- 1999 Ferrari F355 Berlinetta (Fiorano Edition), 29000km, Yellow
- 2001 Ferrari 360 Spider, 28000km, Red
- 2009 Ferrari F430 Coupe, 26000km, Red
- Access to numerous others on request.
For other queries, sourcing, buying or selling, please contact Paul at 082 851 3300, paul@Ferriscars.com