Most car flippers operate at the lower end of the market. But what it you have the means to flip exotics and supercars? Investing in high-end cars is not really anymore complex than trading in low-end cars. But often the market can be trickier to understand and of course the risks are higher. Having said that the potential profits are also much greater.
One of the most common way people flip high-end cars is to by getting their name down to buy the latest and greatest supercar or hypercar. Then either selling their allocation on before the car has even been built or flip the car the second its been delivered.
The other more traditional way is to speculate on older or classic supercars that are appreciating and either flip them for a profit or sit on them hoping they continue to appreciate.
Below I will cover the basic principles you need to understand if you want to be successful in this part of the market and how to buy and sell supercars successfully.
Understanding the market
All parts of the car flipping market are driven by the forces of supply and demand. But none more so than the super and hypercar markets. Ultimately the demand for even the most normal of supercars will well outstrip supply and this can cause some huge price rises above the recommended retail prices(RRP).
It is not uncommon for franchised dealers to receive letters of intent and deposits before a car is officially announced. This exclusivity has caused speculation in the car market. With people wanting the latest cars first, and willing to pay a premium for them. Both car dealers and individuals are using this speculation to make profits.
Manufactures encouraged by the success of the modern supercar market now often launch even more exclusive models or special editions aimed at the ultra wealthy. When an ultra limited production model is announced, its not uncommon for the whole production run to selling out before they are even public knowledge.
This has only served to fuel the market and speculation further. Getting on the list for these limited edition models is almost impossible. Ferrari for instance will only offer limited production cars to existing customers who have bought lots of lesser cars. They will often want to be involved in any future sale of the car and in some cases you will have to acquire permission to sell a car, or risk being black listed.
It’s a similar story with Aston Martins recently announced Valkyrie. Not long after the cars official announcement an online dealership advertised a build slot for sale. Prompting Astons now former CEO Andy Palmer to tweet a statement saying anyone found to be flipping a car would either not receive a car or would not be allowed to buy an Aston in the future.
Obviously these brands are simply trying to protect their halo products. But sometimes these cars do come to market and when this happens they often make a massive premium.
At the other end of the market you have collectors, speculators and dealers buying and selling older supercars and so called modern classics. These typically involve cars from the 1960’s to the early 2000.
Think Lamborghini Miura, Ferrari F40/288 GTO or Porsche Carrera GT all the way up to a Bugatti Veyron or McLaren F1. Other lesser models such as the Lotus Esprit, Porsche Turbos and GT models are also on the list. Along with more left field choices like the Venturi 400 GT or say the De Tomaso Mangusta. The market is very diverse and full of opportunities for investors and enthusiasts.
This part of the market is not only driven by speculation but also by nostalgia and childhood dreams or the simple pleasure of driving. But exclusivity still plays it’s part with rare models fetching a premium, along with car with race history or famous owners. This market is more predictable and stable but there is still big money to be made.
Flipping an allocated build slot car
In some cases getting a your name on a list for a limited production car is relatively easy. For example Porsche make a large number of cars and a good percentage of them are limited production cars. Most GT models they produce are limited production models. To get your name down for one of their cars, you can simply walk into a dealership and put your name down for a car, at this point they will ask you for a deposit and your name will be added to the list. Sounds simple right?
However there is no guarantee you will actually get a car, or even the car you want. The dealership will often have a large number of people on a waiting list and be holding multiple deposits. But with your name and deposit down at some point you will be offered a car. I’ll give you an example of what often happens below.
For example a client of mine placed a deposit for a 991.1 GT3 RS when they were first announced. It was a car he was told he would be getting as the dealer had four allocations and his name was second on the list. He was also told he would have to wait around 12 -18 months for delivery. He was happy to wait as he liked the idea of the car and thought it would be worth it.
However nearly twelve months after being told he had an allocation and paying the deposit he was contacted by the garage and informed that his allocation was not going to be fulfilled. He was obviously a little upset, the car had been well received, the reviews positive and he had been looking forward to driving it. Plus he also had a sizeable deposit tied up for over a year. He asked me what he should do and whether I could supply a car. I told him I could find a car for him today but it was going to now cost him almost twice the RRP.
I had seen this happen before and it isn’t an uncommon story in the motor trade. Since his initial deposit went down and his order was excepted the cars second hand values had shot up. So the dealer had simply resold his allocation for more money.
But all was not lost. After initially trying to return his deposit the supplying dealer agreed to supply him a standard GT3. He wasn’t keen at first, but after seeing what had happened to the RS values he reasoned that even if the car wasn’t what he wanted he could make a profit on it anyway.
He took delivery of the GT3 a few months later. He then used the car sparingly for a few months adding minimal mileage to it. After that he contact me and I sold the car on his behalf making him a £35,000 profit on a £115,000 investment.
After having flipped the car and making a profit he simply returned to the dealership and put the profit down as a deposit on another GT car. Now being a previous customer and already having a relationship with the garage he was now in a stronger position to get his name down for another GT car, and is currently awaiting delivery of the latest GT3 RS.
So building this kind of relationship can be very profitable even if it’s not always plain sailing. If you want to speculate on new supercars you can deploy similar tactics with other manufactures and dealers so you have a constant supply of cars to flip.
Unlike the ultra exclusive and rare special edition cars, manufactures are happy for you to flip their less exclusive cars and dealers are always looking for easy guaranteed sales. So using this simple business model can be a very rewarding and profitable long term strategy.
Selling a modern Supercar or build slot
The easiest and simplest way to flip a physical car or allocation is to approach a specialised non franchised dealer. There are lots that are looking for cars to fill the demand. They will often offer to buy a car outright or sell it on a sale or return basis.
Alternatively you can place a simple classified advert in a car magazine or classified website. If you have read the market right the phone will ring and you might even get a desirable part exchange which you can make even more money on.
Flipping older and modern classic Supercars
Flipping older supercars is easier than you might think and you can make good money. The market demand is strong and finding good pampered cars isn’t that hard. Buyers are also varied, from people buying their childhood dream or poster car to investors looking to diversify their portfolios. Making for a stable and diverse market.
Prices start around a hundred thousand with top Italian cars from the 60’s with outstanding provenance making tens of millions.
You can sell cars in the lower part of market yourself, via private ads or auction. The mid to high end cars are typically sold by specialist dealers or large International auction houses. The auction houses have dominated the market in recent years and look set to continue to do so due to strong results and high sell through rates.
Brands such as Porsche, Ferrari, Lamborghini and Bugatti are obvious choices and make up the majority of the market. Porsche 930’s from both the 70’s and 80’s make a good starting point, the cars are well understood and have an established following and dealer network. Prices are firm or rising slowly and they are reasonably rare with either the early none intercooler cars from the 1970’s or late LE models being the best picks.
Early 250 Ferraris may be big money. But Ferrari’s from the 1990’s are still good value at the lower end of the market and have risen in value over the last few years. F355’s can be a great starter supercar and are a very similar proposition to a Porsche Turbo. Services are more expensive however and you will find some ruff cars, but it’s hard to see how you can go wrong with a good manual car with history.
The market is driven by these iconic cars and brands. With 80’s poster cars and famous film cars seeing a marked increase that’s set to continue.
But if you are serious about investing in supercars and have the means then the top cars from the 1960’s and 70’s will always be blue-chip investments. These cars have the most desirability and prices of the best examples are only ever going to go up. The cars are often treated more like art than cars and are seen that way by buyers and investors alike.
With such demand for rare and limited edition cars, and manufactures responding with more and more limited production models. It’s a great time to enter the market if the have the means. Just remember to follow the rules of supply and demand that drive the speculation and it’s hard to go wrong.
The market for older cars is less speculative and much easier to predict. Cars are easily sold and you can make good money. The main thing to remember when flipping super or hypercars cars is that they are still just cars. You still need to follow the same rules and always do your homework and make sure you have a car carefully inspected before you commit to buying it.
We hope you enjoyed this article and good luck!