07 F430F1 Spider, Russo Corsa, Beige Lthr, 721 mi, $339,995’07 F430F1 Spider, Russo Corsa, Beige Lthr, 1,321mi, $324,995’06 F430F1 Spider, Nero, Cuoioe Lthr, 4,545mi, $314,995’05 F430F1 Spider, Grigio Silverstone, Girgio Lthr, 3,444mi, $289,995
These Ferrari ads are straight from yesterday’s business section. What can be gleaned from this, vis-à-vis the U.S. economy? Well, when you consider the base price of a 2007 Ferrari F430F1 Spider is $211,000 before any (extremely high priced) options are added, it means that there is tremendous demand for a car that costs upwards of a quarter of a million dollars. Now the price of admission to enjoy the wonderful shriek of a Ferrari power plant at full boil has never been cheap, but this makes that $1,995 2nd sticker your local Mitsubishi dealer has on a new Evo X look positively tame.
This indicates that certain segments of the U.S. economy are humming along nicely indeed. I call this the “Ferrari effect”. When there is such pent-up demand for extremely expensive goods, it indicates that there is an extreme amount of wealth floating around, and those that hold it aren’t afraid to spend it. That propensity for the wealthy to continue their unabashed spending on luxury goods is a great thing for the rest of the economy.
Ferrari must agree that those that have money will continue to spend it, as they just announced that carbon ceramic brakes, formerly a (are you firmly seated) $16,800 option on the F430, will be made standard equipment for 2008. Rest assured, they will not just give those beautiful discs of carbon away, a large portion of the $16,800 will be rolled into the base price of this year’s cars.
It is really quite astounding the level of demand of such an expensive vehicle. A client of mine recently took a journey to the local Ferrari dealer to buy Ferrari’s latest masterpiece, the 12 cylinder 599. The 599 lists for over $250,000, but that hasn’t discouraged a lengthy queue of buyers from forming. My client actually returned from the dealership with a 2005 F430F1 that he paid who knows how much for, after putting down the requisite deposit to secure his place in line for the 599. Sometime in the next 24 – 30 months, he’ll actually take deliver of it.
Something else that indicates the propensity of those that have money to spend it when they really want something
(As an aside, many of the very wealthy people I’ve known, and I've known quite a few (never been one of them, though), are extremely cheap. They won’t spend one extra penny if they don’t see the value in it. It’s an extremely common trait in those that have generated their own wealth. From that you can draw your own conclusions. Consider this, however; the major cause of the massive level of credit card debt exhibited by Americans today is a pattern of consistently spending beyond one’s means. Anecdotal evidence from those people I’ve seen that have accumulated a large amount of wealth do not have that trait.)
is the price structure of luxury vehicles, such as Porsches and Ferraris. Many would expect cars in this price stratum to have a very high level of standard equipment. Actually quite the opposite is true. Many things you’d expect to be standard are actually options, and very expensive options at that. For example, consider the Bose sound system (including 3-way component front door speakers with 10-inch subwoofers) on a new Infiniti G35, by all accounts a very nice car, is a $2,500. For good measure, Infiniti has also thrown in a power sliding tinted glass moonroof, heated front seats, a power tilt and telescoping steering column, automatic anti-glare rearview mirror with HomeLink® Universal Transceiver and compass, heated mirrors and a Bluetooth phone interface.
On the Ferrari F430, the Bose sound system option, all by itself, never mind such niceties as a Bluetooth interface, is a robust $7,250. Ouch! So, maybe you really don’t care all that much about a better sound system. You’d rather listen to the engine anyway. Well, you’d think a car that retails for as much as a house in Cleveland would at least include power seats, but no. In the Ferrari they will set you back an additional $2,653. The ones in my Jeep were only ¼ that much.
The point is that the Ferrari effect is still alive and well in many areas, although the economy looks like it’s poised for a slowdown. When the Ferrari effect goes away, we’re in for some rough sailing ahead. So, take a look at the business section. When the ads for overpriced Ferrari’s disappear, you’ll know we’re really in a lot of trouble.
Have a great, Debt Free weekend.
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