We begin with a quick history lesson.
The Baby-Boomers are those born from 1946 to 1964, during the baby boom that followed the end of World War II. Today the youngest are 61 years old and the oldest are 79. They are the majority of our client base, many have been clients for multiple decades.
Ferrari’s cycles of booms, busts and booms again
Once in high school and then on to college in the mid-60s, 70s and early 80s, they were “car guys” who couldn’t wait to get their driver’s license and first car, at a time when owning a car meant freedom, mobility, status and a makeshift mobile bedroom. Their home bedrooms and dorm rooms were adorned with road tests from Road & Track and Car and Driver featuring the then-new and state-of-the-art Dino, Daytona and on to the Berlinetta Boxer and Testarossa.
In October 1974 the world suffered through the first Arab oil embargo as gas prices rocketed from an affordable 30 cents a gallon to a then-shocking $1 a gallon in only months. The market for exotic cars imploded with near-new Dino coupes and spiders available for $5k – $7.5k and Daytona coupes at $15k. By 1977 the economy recovered and hardworking baby boomers did well. Thanks to low prices, a then-booming global economy and tens of thousands of car-crazy baby-boomers entering the market, the collectible Ferrari market was born.
There have been many more market booms and many more busts over the last fifty years, with most booms and busts tending to follow three to five year up cycles, followed by a three to five year down cycle. All boom cycles, and likewise all bust cycles, eventually end.
A major demographic and generational shift
Over the last seven decades their sheer demographic size has made the Baby Boomer Generation the most influential generation in history to both the economy and society as they moved through the system. In the United States alone, about 85 million babies were born between 1946 to 1964. Add in another 100 million plus born in Australia, Japan, Canada and Europe and you have a massive global market. Their average life expectancy in the US is currently 75 years, about 32 million have already died and about 7,000 to 9,000 American baby boomers go to the big long-term storage-garage in the sky every day.
Early this year we noted a sizable uptick in calls from wives (now widows), or daughters, or sons or brothers that are usually not “car guys,” whose’ husband’s, or fathers, or brothers have asked them to contact us when they passed. Close behind are clients who advised their trust lawyer, or trustee, to contact us to help with the sale of their husband’s, or father’s or sibling’s car or cars when they passed!
A major part of our business is now dealing with estate sales!
A second but related group is owners dealing with the illness and medical issues of later life. They have accepted that the car or cars in the garage haven’t been driven in years, many have substantial deferred maintenance issues and the owners don’t want to leave their car or cars as problems for their wives or kids to deal with.
A third group are those who agree with the Great Gordon Murray of F1 & McLaren fame who opens his garages each new year and any car that was not driven during the previous year is sold. A small but growing fourth group of sellers are Californian owners who are fed up with California’s high taxes, toxic business environment and inflated real estate prices who are downsizing and moving to more tax-friendly states.
Economics dictate that so long as there are more than 36 billionaires wanting to own one of the 36 Ferrari 250 GTOs, or more than 165 multi-multi-millionaires wanting to own a 250 GT SWB, etc, etc ….. then the value of these Holy-Grail Ferraris will always be high. As for the hoi polloi street cars, not so much…. Most of the Baby Boomers that could afford the Ferrari or other collector car of their dreams have (or had) the car or cars they wanted years ago; while today’s younger buyers want the newer cars of their generations aspirations.
The conversation usually starts by putting a value range on the owner’s Ferrari, be it an Enzo-era or newer Ferrari or other marque car. The first problem to overcome is agreeing on the current value range, as all too often the now-deceased husband had told his wife that his collector car, whatever it might be, is worth whatever a near similar car sold for at an auction, years ago, at the highest point in the market. Once a value range is agreed upon or substantiated, the conversation eventually goes to the non-Ferrari cars many enthusiasts also have, such as a Porsche, Jag E-type and various off-brand race cars and other collector cars that also need to find new homes. We’ve even sold boats as part of an estate package!
Newer, faster, safer
Each new generation of cars is faster, safer, and more user-friendly. Today’s sports car will blow the doors off the last generations similar model, let alone a car decades older. What is nostalgic and desirable to one generation is merely old fashioned or obsolete to the next. Our grandchildren often can’t drive a stick shift, have no desire to learn and look at a car with a stick-shift, no A/C, no sat-nav and no blue-tooth connectivity to their i-phone …… with, at best, amusement. A 250 Lusso may be a timeless design, but it is not much fun to drive for any extended period and is dead slow and uncomfortable by any modern standard. Simply put, more of the cars that the baby-boomers coveted are coming to market while the buyer pool is shrinking. Today’s middle-age buyers are 35 to 60 and their dream cars start where the Baby-boomers left off. While there will always be a buyer for any car at the right price, no one wants to date their dad’s prom queen!
Because many cars haven’t been driven in years, and some are in pieces, we start by arranging trucking to our warehouse and coordinate any service work needed with the appropriate local shop(s). We clean and detail the car(s), take a full photo set, often with several hundred photos, and do a walk-around and driving video of the car. We also research the ownership and service history and outline both in a descriptive write-up. We then post the cars or cars on our website and, because many are estate sales and all parties want closure, if the offers are not as expected, we sometimes go to Bring a Trailer (BaT) or other online auction site such as RM Sothebys’.
When it does come time to sell, there are multiple reasons to also use one of the online auction sites, as we would have already taken the hundred-plus detailed photos, done the walk-around and driving video, collated any and all supporting docs and written a positive write-up. If there are multiple heirs involved, all wanting closure, online bidding is transparent, easy to watch and follow and everyone knows what the highest bid is or was. Secondly, and equally as important, there will be a bid, that bid might be less than was expected, but it will be a current market bid. Thirdly, while we’ve been selling cars world-wide for many decades, online auctions only help to reach an ever-expanding global audience. Last but not least we have the expertise and the patience to deal with the many questions and requests for supporting documents and/or additional photos that always come up on some online auctions.
Death and Taxes
The good news for children and grandchildren is that estate sales are on a stepped up basis vs the long term capital gains obligation the owner might have had, if they sold their car(s) before passing, so in almost all estate sale cases there are no capital gains or any other taxes to pay!
Enjoy every day and have a plan!
One can’t write constant columns on a limited universe of Ferrari-related subjects, over four decades, without being, at heart, an optimist about the future! I’m 76, so every morning, when I wake up, I have a sigh of relief that I have indeed woken up. I wiggle my fingers, then my toes and confirm I feel pretty damn good. A new day begins and I cherish every day! So dear Baby-Boomer” (Yes, YOU!), if you are reading this, it’s time to get your title and any supporting paperwork in place, have “the talk” with your wife, kids or grand kids, be realistic on current value and condition and have a plan for that future. Dealing with all of this is all part of our job description, let us know if we can help!
