Alc

No, high end cars are not a necessity but if you think the price of all “necessity” vehicles goes up and high end sports cars will go down just isn’t reality. High end car makers will curb the supply to save money and maintain profits. As supply dwindles so will the used car market for those vehicles making them less available and therefore more sought after since owners will be less likely to part with them.

​​​​​​….what is a 356 or a 912 worth?

I bet 95% of Porsche owners have been through the recent painful recessions unless you are in your low 20s 🙄. At the end of the day if new car prices are high, used car prices will be high. Exotics will maintain their premium. As to why, it’s complex…but you’re spot on, elections have consequences.

PorscheC2S

but you’re spot on, elections have consequences.[/QUOTE]


Got that right!

wardrive

Agree to disagree. New car prices will not be high in a recession, even Porsches. Exotics will not maintain their premiums either. You ever seen cheap Ferraris? Yep happened in 2008 and years afterwards where you could have bought any modern Ferrari cheap on the dollar.

Yes the supply chain and limited inventory may change the equation some but if this becomes another 2008, no one will be buying new cars at full ask unless you're part of the 1% and you don't give a **** about the money and enjoying the fire sales. I'm not a 1 percenter but I remember some of the best deals on cars I had came post 2008 cause no one was buying and dealers were giving away cars. Remember local Porsche Dealer was trying to sell a 2007 997.1 Carrera S fully loaded, low mileage, and with aerokit for 51k - MSRP was easy over 100k when new. I bought my first Range Rover (big version) cause no one wanted them, certified and out the door for under 40k. Brand new E92 M3 coupe (came out in 2008) for close to 20% off.

I'm hoping for some of the same deals in the next downturn, hence I'm cash heavy.

K C

not a true statement. Most exotics will not devalue much since their owners (assuming unleveraged), they are not impacted by the recession. Of course there's always a few outliers. 2007 was an anomaly by itself but laws and regulations have been put in place to prevent that from ever happening again. Wealthy bankers sitting atop Bear Stearns and others came toppling down. But doubt it'll happen this time around. Nobody wants a LR period, gas guzzling and not useful at all in most metropolitans. Good luck waiting it out though. prices will come down as mean reversion but will not correct.

TimYH

EDITED (reposted the same Youtube video)

I'm a fan of this guy's analysis although I'm always curious where he gets his data from since a part of me wants to review it myself.

Myself and a lot of my peers are in the tech world who live off RSUs. We've enjoyed wonderful gains the past few years that are probably going to be gone for a while. A lot of folks had RSU packages that were equal to or double their base salaries. When they matured, it was a boatload of money to put towards big purchases. A couple friends scooped up second houses to rent/hold as assets. But just in the past few weeks people's RSU packages have taken a big hit. In the past companies would do a "true up" where they hand everybody more shares to makeup for the loss in the market (mostly to remain competitive). I'm wondering if that trend continues throughout the next economic phase. Luckily for me I'm now in startup land with really high base salaries to make up for the shares that are essentially worthless in the near term.

PatrickBateman

Though unaffected, you’re talking about the shrewdest group of buyers. Overpaying is not the MO, regardless of having extreme wealth.

PorscheC2S

Everyone has made valid points on this post and I tend to agree with you. Ferrari dealers are seeing younger buyers cancel their orders. Several Porsche dealers are starting to see it as well. Get on FB and follow some of the groups and their all saying it to. A good friend of mine was able to get on the list for the SF90 & F8, ordered both and had folks calling to buy his allocation for both cars......now the phone calls have stopped. We'll see stagflation before we know it. I truly believe this one is going to be worse then 2008 and the recovery time will be longer. Sucks since I was supposed to be retiring next month!

d--

I feel you on this, but there's a risk in this strategy too which is being cash heavy during times of big inflation is expensive on it's own. Unless you're making an immediate purchase I'd be looking for a place to stash your cash or else you'll be looking at 7-9% deflation of it's value which erodes the 'deal' you'll end up getting.

You've probably accounted for this, what are you thinking?

d--

Yup.

wardrive

Not sure what is not true, its only an opinion based on my actual experiences in the 2008 recession.

What I do find interesting is some of your 'replies'.

I think the keyword you said is 'assuming'. I'm assuming much of the new exotic owners in the past 10 years - and I see more exotic cars on the streets in the past 10 years then ever before - are leveraged buyers. I see tons of young buyers on YouTube showing off their new 'exotic' cars, I don't think many have 250k plus in their pockets to buy in cash. Then you have guys like ExoticCarHacks that tell people that they can make money by buying the right exotic car, drive it and sell it later with no loss - by financing.

By this statement it tells me you don't really understand what happened in 2008. Yes the first banks went under but the WHOLE banking industry was then bailed out by the gov't and all these banks are stronger and richer then before. The key issue was the freeze in credit, mass losses of income by the population who bought overvalued homes on easy credit, and a crashed stock market. Trust me we'll seeing some of the similar situations now with real estate with both overvalued home prices and an upcoming time bomb with commercial and retail space with many office buildings not back to pre-covid normal levels and retail businesses leaving storefronts.

This is all circular, we have booms and busts cycles. We rode a 10 year bull market and real estate market. Nothing stays up forever. My opinion is that we may hit another 2008 level recession.

What? I live by NYC and everyone wants or drives a Range Rover/LR. I don't know where you live, but if its near any major city you're see a RR. In the last 10 years Range Rover has increased their sales in the US by 142% (2011 - 38000 units sold to 2021 they sold 92000 units). You have no clue my friend.

Definitely your opinion and we'll see again how it plays out this year. I'm fine either way.

wardrive

You're totally right, you don't want to stay on the cash for too long in a inflation period like we have going on. You need to put the money to work.

Disclaimer - I'm not a financial advisor or expert, I just work with many advisors and have many friends in the financial markets, and I'm curious by nature so always asking questions.

What I have done in the past year for myself is:
- unloaded much of my debt on credit
- shored up my credit and monitor it (I'm in the highest bracket for maximum best credit loans)
- put cash to the sidelines in the market MINUS my retirement accounts. For your IRAs, 401ks, I'm still making my contributions even in a downmarket. I'm not retiring anytime soon and you need to make contributions to avg out in a downturn market

What am I doing with the cash?

- I'm looking for property. Home prices are overvalued in most markets I'm looking at. I'm waiting for a break in record pricing to put it into real estate. 2nd home or rental property.
- Financial experts don't like this but I took my money out of the stock market in my managed accounts and will start scaling in when I see a bottom or close to a bottom. Financial professionals always say its hard to time the market, which it is, but I rather save myself from a 20% loss in equities and buy lower
- look for other physical assets that are oversold like hopefully a GT car or air-cooled 911.

K C

Yes I was there on the ground, you think you're the only one alive at that time?

Make sure you follow their channels as you're talking about a handful of cars, highly doubt you'll be able to get one of them before others pounce


you don't have to regurgitate the national geographic special. we all lived through that, but regulations have adapted and ensure FIs are capitalized

good luck waiting

hilarious - they had to give it away to sell. They were offering employee discounts before this supply chain fiasco. Gas guzzlers, unreliable, and DOA. it's always easy to push 100+% sales increase when they sell nothing. 92000 units? BMW hits that in a qtr.

wardrive

I don't know what world you live in. Anytime you put 100% in sales especially luxury SUVs its an achievement. Its easy for BMW to make sales when you pushing low lease plans on 2 and 3 series BMWs. Thats their bread and butter.

BTW your math is wrong, BMW sells around 300k units in the US a year. 92k units a qtr math is off.

Alc

Drill baby drill, lower gas and diesel prices and watch this economy take off like a rocket ship again. This looming “recession” is completely internally developed that could change with elections.

Prices can’t go down significantly because manufacturing costs have gone through the roof due to the electric conversion, let alone the dollar is worth less due to inflation.

Can anyone imagine how much it now costs to fill a ship or aircraft with fuel?? And those are the ONLY way to transport goods/parts oceanic hence those prices also increase MSRPs; consequently if new car prices stay high, used car demand stays high and ALL vehicle prices stay high. There may be an initial adjustment as manufacturers balance supply/demand/profits but all car companies cannot be successful long term relying on mass sales at little to no profit. To combat this they will significantly reduce supply to maximize the ratio while lowering manufacturing costs. In the past, like 2008, dealerships were completely full of inventory on EVERY lot. They were losing money fast and needed to dump the inventory and fast. Now, it’s the exact opposite, there is no inventory! Now the automobile industry can reduce production to meet demand without first having to dump inventory.

PorscheC2S

Fuel prices are what makes the world go round. I do agree with the statement about the potential "recession" turn around with Republicans hold both houses but it will take time to make the adjustment (but will happen). As for manufacturers balancing supply, I disagree. If no one is buying (which is starting to happen) they have no choice but to discount to move old inventory. There are 100's of cars & trucks awaiting chips and once that happens there will be a flood of availability on your dealers floors. What was a "2022" model year will now be a "2023" model year.