Some people believe that today’s market of classic Ferrari’s is a hype, which could eventually end like the crash in late eighties of the 20th century. Obviously there are similarities, but more important there are clear differences, which, in the opinion of many economic market analysts, make it unlikely that the market will develop like the crash in 1989-1992.
Similar to the development in the late eighties and the last few years are the extreme and exponential value increases in only a few years time. Many true Ferrari enthusiasts sold their loved cars and many of these cars came into the hands of traders and speculators. Matchmakers advertise with cars they don’t even own and the media and auction houses publish sales record after sales record.
But the differences are more important. In the late eighties many economies were growing and loans were easy to get. Many investments in classic cars were made with loaned money. UK Banks even advertised with loans to buy (classic) cars. When the recession started and the prices of classic cars dropped, many speculators had to sell their cars in order to repay their debts. The market wasn’t very transparent and buyers were difficult to find. Owners feared a further decrease, so many cars were sold as quickly as possible for extreme low prices. Also many cars came into the hands of banks, which had no patience and also sold the cars as soon as possible for low prices. This caused a negative spiral and an ongoing decrease of prices until 1993 when the prices stabilized.
The strong value increase from 2010 until today has other backgrounds. Many Ferrari experts and investment analysts are convinced that the value increase was a direct effect of the financial crisis in 2008. After the crash, the confidence in the financial system was gone and the future of the traditional financial markets was very insecure. In some economies there was also the danger of high inflation. As a result much investment money moved from stocks and bonds to tangible goods, such as gold, art and classic cars.
An important difference with 1989 is that many cars today are bought by new rich people with their own money (not with loans), by collectors and yes, investors too. But due to the fact that most of the cars are not bought with loans, this will make it less likely, that in case economic problems, owners are forced to sell their cars in order to repay their debts.
Substantial value decreases are not likely too, because owners will not sell their cars for lower values than they paid. If there is no urgent reason to sell, they would rather wait. They are aware of the limited number of classic cars and the growing wealth and population in the world.
Many owners believe in the law of supply and demand, so when products become scarce, values go up. For this reason it is not to be expected that many cars will be brought on the market at the same time, what would lead to a value decrease.