It seems that for some time now, RL and many other forums are inundated with threads, all well-meaning I'm sure, about cars as investments/current vs. future market values/what's it worth and what's it going to be worth. I ignore most of them, but at times they range from highly entertaining to very informative. The latter few have gotten me to thinking about the wide-ranging debate(s) and thus, today I sat down and studied a few numbers and am here to share them.

First, my CNBC-esque disclaimers:

1. I am expressly NOT making a ROI comparison to any other asset class;

2. I have not factored inflation into this, nor taxes, because both of these effect each individual differently;

3. I have been collecting Porsches since 1988 and have seen prices go up and down many times during this nearly 27 year period - they will certainly do both in the future.

Here is what I studied today: A 1998 GT2 Evo, which cost 348,960DM in July, 1998. Using www.history.ucsb.com and their average DM to US$ exchange rate for 1998 of 1.76, the car cost $198,273 then. Next, using www.usinflationcalculator.com, I extrapolated the actual cost in 1998 dollars to today, arriving at $284,281. Finally, using a standard investment calculator and the value of this car today ($1.5M), I determined that if it was bought new and sold today, excluding inflation and taxes, it provided an annual ROI of ~11.5%.

Now for my observations:

1. I find it fascinating that the cost of a 993 GT2 in today's dollars is almost exactly the same as the current market value of the next closest car Porsche has since built in spirit - the GT2RS. This really shows you how advances in technology, efficiency and market forces have worked together and in this case, completely nullified the effect of inflation over 17 years;

2. There are very few cars like the 993GT2 that have appreciated to this extent, and likely there will be very few more produced that will do the same. However, this is one example of a (small) many that I'm sure we can all come up with;

3. I see the hands shooting up saying "wait", you haven't accounted for carrying costs of an automobile (such as insurance, storage, maintenance) which other forms of investment don't have. You're right for two reasons: first, I have already disclaimed that I'm not making a comparison to other asset classes; second, I feel that these costs are a very small price to pay for the pleasure of owning the cars in question, and therefore don't feel they need to be part of the analysis.

My intent was really to satisfy my own curiosity relative to the myriad of pricing/value/investment threads because I've never, not once, paid any attention to the cost basis or present value of my collection nor anyone else's. I'm glad I did it, though, because the numbers present interesting facts, which lead to at least 10,000 valid points and counterpoints. I also fully realize that had I picked two different cars, the results would be very different from these.

I'm going to cozy up to the bar with a 25 year Yamazaki now...I'm guessing over the weekend a few of those 10,000 points and counterpoints will find me here and enliven the discussion!

 

Congrats, if your return on anything over any time period is ~$1.2mm in present value, you made a good decision, whether you knew it at the time of purchase or not. The fact you also enjoyed owning it over that time is additional intangible value that is not factored into the equation. Not sure there are any more meaningful points/counterpoints that would be material enough to impact the analysis. Enjoy the Yamazaki, well deserved.

 

secretcollector:

Thanks for this and your other "lets ponder value" threads. I love reading them.

I have a question back to you if you don't mind answering: do you collect out of pure love of the cars with appreciation as an afterthought or with appreciation and ROI as a primary factor in your collection decisions? I'm going to guess more the former.

Thanks

 

CT944 - I think my writing must not have been as I hoped, as your reply makes me sound a bit of a braggart, which is never my intention. I did not (unfortunately) buy the GT2 new but ran the numbers as if so. I apologize if the OP came across this way, was only trying to launch an interesting discussion.

ChrisF - I collect solely for the appreciation of Porsches. I just love them, always have. If they rise in value, it's a bonus but not my objective. And thank you for the nice comment, I'm glad you enjoy them, just as I enjoy reading the replies.

 

secretcollector - re (1) how is inflation nullified if you are comparing the inflated cost of a GT2 to the Mtm of the RS today? Sorry for the question, maybe too much The Glenrothes in my system currently.

 

I think what secretcollector may be saying in (1) above is that it is interesting, and perhaps intended by Porsche, that the pricing of the their-top-of-the-line, limited edition 911 - the RS concept with their most powerful 911 engine - has remained fairly constant at about $260-280K in today's dollars (or its equivalent in 1998 $).

Point (1) in itself does not address the current outsized value of the 993 GT2, but more of Porsche retail pricing, although the rest of the post does touch on the GT2 mtm.

As a related data point, the 964 Turbo S Leichtbau - the spiritual ancestor of both cars, produced jointly by Porsche Exclusive and Porsche Motorsports and described by Porsche as the high water mark of the 964 line, was priced at DM 295,000 in late 1992, or in the same range a the $260-280K above today (I have not done the math).

Interestingly, however, the 964 Leichtbau and the 993 GT2 were priced at about the equivalent of the Ferrari 12 cylinder car of their day. That same money in constant dollars would get you the Ferrari 8 cylinder car these days, the Italia of the 488, so Porsche has done a relatively good job of keeping prices in check.

 

^thanks Carlos. He's comparing the inflation adjusted cost of the gt2 to the mtm of a gt2rs today, still don't get the point. Anyway find these threads interesting and broadly speaking I'd agree with you that Porsche ramping up production has resulted in their cars becoming more accessible.

 

SecretCollector: I've always enjoyed your posts and the photos of your cars but closing your post by saying that you're going to cozy up to the bar with a 25 yr old Yamzaki does sound a little, um, well...

 

I'll never understand the mentality and mind of a collector. I buy cars to drive, not to have them sit around and collect dust with only taking them out for coffee once a month. Even if I had millions and wasn't working, I'd only have a handful of cars that I would drive on a regular basis...maybe one car for every day of the week. Sure the appreciation of the 997 GT3 has been nice with collectors stepping in, but it's a shame that more and more of those cars are getting bubble wrapped and put away in some huge garage or warehouse only to collect dust.

 

Personally I prefer some cheap Johnnie Walker with coke while I'm cozying up with my 25 yr old girlfriend

 

Agreed. I don't get the collector mentality either - most of my neighbors have some sort of collection. My immediate next door neighbor has watches; one of them retailed over $1MM... He has it stored away with some company that specializes in storing expensive jewlery. Füćking crazy. But he is into his watches and can take them apart and rebuild them. To each his own. The only things I collect are miles and memories.

Drive the CGT secret, your turbo love, while not a one way street, won't be reciprocated as much as the NA love.

Cognac vs. whiskey? Cognac.

 

They are rolling works of art. I can find enjoyment in looking at them.

 

Hi secretcollector,

I think you have over analyze this car appreciation thing. At the end of the day, there is no rule. I do not believe anyone can predict which car will cost more than the other in 20 to 30 years time.

For example, I think 4.0RS cost about 30% more than my 3.8RS when new, now it is more than 100 to 200% more in value. But can you say this ratio will remain the same in just 5, 10 or more years? I predict my 3.8RS will slowly close the gap, although of course it will never ever catch up.

Will this change the way I use my cars? Definitely not. RS is my track car. I appreciate that it is maintaining its value, but the only reason that I buy it is to track.

I am happy for collectors that own a big collection of cars, but I don't think I will ever do it. First, I do not have space to park them. Second, I don't want to just look at them, I want to drive them.

 

Love hearing that from owners like you. Collectors don't seem to realize that they can't take the cars with them when they are 6 feet under. So drive and enjoy them while you are still breathing.

 

I have never said that I don't drive my cars, only that I don't track them. Not sure where that came from or how it has been perpetuated.

And I wholeheartedly agree, I would rather cozy up with any drink and the 25 year-old girlfriend - well put!