“Europe will be out of the recession by early next year” one economic analyst said on Sky news last week, “Then Britain will follow shortly” he said. So are we really going to see an end to this dark period? The city blames the risk takers and the rest of the money makers blame the banks for the recent downturn. It’s a bit of a minefield to try to get the bottom of this but high borrowing between the banks, risky investment and bad financial advice were apparently all it took to tip the world’s finances into free fall. As we all know that’s had an effect on just about everything we do. And for many of us in the motor trade it’s been an absolute nightmare. We’ve seen redundancies, garage closures and well known dealer brands go under, and not forgetting the core of our business, the manufacturer, all have suffered as a result.
Pretty much from the start of the recession the European governments saw the risks ahead and set aside cash creating the now famous ‘scrappage schemes’ that would see public traffic return to dealers. Nearly a year later the UK government followed suit. The scrappage scheme is rightly looked upon as a rescue package but as successful as it’s been, there’s a lot of punters who have just decided to grin and bear it and hold onto their cars and who can blame them? With the financial analysts forcing us to stop spending the motor industry has been on edgy to say the least.
Things are a lot different, however, on the other side of the fence. If we look at the high end of the market, the “supercar”, ask any dealer about their specialist market place and they would probably look at you with a dead pan face as if nothing has happened. Most would say that they haven’t been affected by the recession and sales are as normal. One particular well known London based showroom told us that it had a normal steady trade and had barely noticed what’s been happening outside the financial bubble.
“We haven’t seen a significant dip in sales for a while. Sure, there are the particular times of year when the obvious number of enquiries fall slightly, but I wouldn’t say we’ve been so-called ‘hit’ by the recession”.
One city trader told us that the wealthy have been careful with their money recently but have still been investing but, conversely, it’s the risk takers we can thank.
“Without the risk takers money wouldn’t go around and money wouldn’t be made”, he said.
The sensible supercar owner, who has a valuable stable of cars, would have been too cautious to sell during the last year, but the risk taker has probably sold his entire collection. “I’ve had a steady stock of supercars available out there over the last six months thanks those risking selling during the recession. This had given me a choice of some hard to find cars that I would normally have trouble getting hold of” one independent supercar seller told us last week.
“Without the risk takers supercar values would have dropped dramatically and we would have had a repeat of the nineties”.
Sports and supercar values have remained buoyant whilst the really rare stuff has stayed steady. Just take the Bugatti Veyron. At 1.1million Euros plus local taxes, values are still holding. One example is Formula One star Jenson Button’s Veyron currently up for sale at £899,995. At a year old and having two owners, supercar dealer Tom Hartley recently said that he expected Veyrons to start going up in value.
Any dealer who had the courage to buy in the chaotic market of late 2008, when no one in their right mind would have gambled on buying any car let alone one which appeals to footballers, film stars, musicians and Russian oligarchs – and more importantly the foresight and financial muscle to sit on these assets until the market recovered – are now reaping some spectacular rewards. Back in November a brave dealer purchased a Ferrari Enzo for £625,000. According to Quentin Wilson in the Mirror he’s just sold it, without having covered a single mile, for £725,000 which goes to show how much the supercar market at least, has recovered in nine short months.
OK, so these are extreme examples but it does indicate that things are looking up. If supercar values are starting to increase then surely the rest of us can see a healthy trade on its way. Speaking to the trade most independent dealers are reporting a turnaround. One Berkshire based dealer told us that his stock is starting to generate some interest again.
“Go back to March and I couldn’t find any stock as everyone was holding onto their cars. Whether the scrappage scheme has generated a boost it’s hard to say but I’m getting more people on the lot which hasn’t happened for months”.
It’s hard to quantify but it seems as if the trade is starting to buzz again. Yes, the scrappage scheme has helped, but when its stops in a few months quite a few seem confident that traffic will steadily continue.
Maybe that financial analyst was right. With positive vibes coming from the city it seems people are starting to spend again.