Starting to worry about value..

[Esprit9]

As I'm finalizing which color to get, I am noticing that the amount of '17 NSX's being sold at MSRP are rising. A month ago I had two dealerships asking $10K over MSRP and now they dropped the mark up (reason why I am now buying). I'm noticing that the amount of cars for sale at MSRP are rising around the US. Would you predict a bigger depreciation on generation 2 vs generation 1 in the next few years? How much would you say this 2nd Gen NSX would drop in price once it drives off the lot in 4 - 5 months from now (current ones and not low production #)?

(I know... "sports cars are not investments...", "If you're worried about value then don't buy..." Just worried if we are looking at a HUGE hit in depreciation)

Thanks for your replies

 

[nsx#fan]

You've already stated the obvious. So only buy it if you enjoy it. Every car will depreciate, hybrids even faster as new tech comes to market. You can't worry about such trivial things.

 

[JD Cross]

The new NSX will likely drop $50K in the first year or two.
If that's a concern don't buy it.

As far as Honda goes, they don't want the value to drop below MSRP any more than you do.
Hopefully they will reduce/divert production if US sales don't keep up.

 

[chrisn]

I don't think there is any reason to think that the NSX will hold its value more or less than any other car in its class. It is not like a Ferrari in its first year of production.

 

[9spd]

First of all, don’t let anyone tell you that resell doesn’t matter. It absolutely matters. Just look at the price of Ford GT today and the price of a Porsche 911 Turbo from the same time period (996/997).

I got countless other examples, to name a few (R32, Golf R (mk6), 1M Coupe, Challenge Stradale, AMG SLS, 964 Turbo, 993 Turbo/GT2, 959, McLaren F1, the infamous Ferrari 250 GTO, F40, F50, Enzo, LaFerrari, manual 599, manual California and I can keep on going all day long.

Some appreciate initially due to limited supply but eventually depreciates and never look back.The R32, Mk6 Golf R and 1M Coupe definitely falls into this camp. Many people paid a handsome premium for the Shelby GT500 and the Corvette ZR1. I wonder if the Hellcats will follow this same pattern and whether the transmission choice makes a difference. Time will tell.

Some stay flat or even depreciate initially, but price picked up after a few years or in some cases decades. The 360 CS, AMG SLS, air-cooled 911s, manual 599 and even the mighty McLaren F1 and 250 GTO all fall into this camp.

Without a magical crystal ball, I obviously cannot predict the future. Besides, you probably won’t trade stocks based on the advise from an Internet forum, so why do that with cars?

Having said that, and at the risk of looking like an absolute fool in the near future, here is my uneducated guess. Initially the NSX will hold its value well. Once the demand of enthusiastic fans have been met after a year or two (depending on the speed of production ramp up and level of enthusiasm and patience), the depreciation will begin.

By then it will probably track the 991.2 Turbo (S) depreciation curve, which will be anchored down by the 991.1 Turbo (S). The exclusivity should help the NSX maintain a premium (in % of depreciation versus the 911 rather than nominal price), as well as a price floor many years down the road. However, if the hybrid system turns out to be a maintenance nightmare once warranty expired, then that price floor can and will crack very quickly.

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I don't think there is any reason to think that the NSX will hold its value more or less than any other car in its class. It is not like a Ferrari in its first year of production.

Actually it should do reasonably well initially because of the limited supply, exactly like a Ferrari in its first year of production.

However, there is no reason why the NSX will appreciate 10 years from now. Not that I can see anyways. It's not naturally aspirated, not with a manual transmission, no gull-wing door, or being an modern interpretation of a classic design like the Ford GT. The performance is not exactly ground breaking and the driving experience has not been universally praised by the press.

 

[N Spec]

The hybrid system will fully command the path of depreciation for the NSX IMO.

 

[kendallj]

I'd be very cautious if you can't afford such a hit. I've no doubt these will depreciate faster than a lead sinker - there's too much to go wrong down the track with all the tech and the specialist services needed for any chassis repairs or re-paints. Plus it's a Honda (or Acura) - which in this part of the world is not considered a pedigree brand.

Secondly, if you can wait, there's going to be I suspect, a few decent bargains from repo sales - we're on the cusp of a major global recession due to the fragility of the European banking system, and industry watchers are already flagging a sharp down-turn in both high-end real-estate and high-end luxury/sport car sales. The traditional 'easy' buyers in those markets are often the 'canary in the mine' indicators for imminent descent of the financial markets.

I don't have my funding just yet, and even if I did, Honda NZ are refusing to take deposits and won't give a likely availability at this time. With the general scarcity in right-hand drive versions, I'm going to be forced to wait, possibly for quite some time. If eventually a suitable second-hand model came available at a good price via import from Japan or the UK, I'd be mighty tempted against paying the nose-bleeding NZ MRSP.

 

[shern]

If depreciation is bothering you. Don't buy. Quite simple.

 

[goldNSX]

The Gen. 2 is in the middle of a 'pork cycle'. Too many cars around, not many buyers at this price level and no limited quantity supplied. The advertising hype won't cheat clever buyers. While the Gen 2 will hold it's value in the US with some decent depreciation over the years (wild guess), esp. of the cars being driven, it's only a question of time when the bubble of the Gen 1 which was pushed by the arrival of the Gen 2 will bust. Back in 2008 they were at 50-60% of todays ridiculous pricing.

The main reason are not the problems of the EU (banks), it's the massive worldwide QE after the real estate market in the US went kaboom back in 2008 and the following and neverending zero-interest-period which is raising the prices of all assets.

If you want to spend $200k on a car and have fun, why not? You only live once. As an 'investment' I'd rather take my money somewhere else.

 

[kendallj]

The main reason are not the problems of the EU (banks), it's the massive worldwide QE after the real estate market in the US went kaboom back in 2008 and the following and neverending zero-interest-period which is raising the prices of all assets.

If you want to spend $200k on a car and have fun, why not? You only live once. As an 'investment' I'd rather take my money somewhere else.

Quite right re the QE - the US stock market has been propped up by Benanke's massive QE injections since 2008, and since Yellen has recently started pulling back on circulation, it's only a matter of time. But as Lehman Brothers was to the 2008 crash, it's looking suspiciously like Deutsche Bank might be the trigger card this time.

If the car MRSP were equivalent to US$200,000 in NZ, I could agree, but here it's in another territory, and relative to the much poorer general economic wealth of NZ, it's considered a super-luxury buy. I'm not yet comfortable with the thought of throwing away that sort of money down the hole. But I do have hope there will be in time relative bargains to be had from importing internationally, and maybe a business opportunity to scout and import for sale on the local market.

 

[goldNSX]

Quite right re the QE - the US stock market has been propped up by Benanke's massive QE injections since 2008, and since Yellen has recently started pulling back on circulation, it's only a matter of time. But as Lehman Brothers was to the 2008 crash, it's looking suspiciously like Deutsche Bank might be the trigger card this time.

The focus is on Deutsche Bank and the Italian banks now. But the ticking time bombs are everywhere and esp. the ones you haven't heard anything (good) for some time: what about Greece? What about Portugal or Spain? What about Italy? Pretty much all driven asset values will bust. Not sure about physical gold (not ETF).
Interesting to see if Yellen definitly raises the interest rate by the end of this year as formerly expected.

 

[kendallj]

The focus is on Deutsche Bank and the Italian banks now. But the ticking time bombs are everywhere and esp. the ones you haven't heard anything (good) for some time: what about Greece? What about Portugal or Spain? What about Italy? Pretty much all driven asset values will bust. Not sure about physical gold (not ETF).
Interesting to see if Yellen definitly raises the interest rate by the end of this year as formerly expected.

You've hit the nail on the head - and the fallout this time could make 2008 look like tiddly-winks. But reading the general press here, you'd think all was well and prospering upwards. The real-estate pundits are trumpeting their best sales yet and new car sales are at record highs. The insularity is bizarre. The real estate market in my small provincial town is reporting average value increase of 18% year on year, which is unheard of.

Yellen like most reserve bank governors in the western world, it seems are trying to keep sentiment buoyant by alluding to the possibility of rate increases, but I can't see how they can deliver. The QE toolbox has is I think, run out of tools. Globally we are now in uncharted waters and the fallout I think could be massive beyond anything most of us will have experienced. And who knows, maybe it will precipitate a complete re-think of Keynesian economics and eventually a new world monetary system.

Physical Gold (incl silver and platinum) - my guess is in the longer term will hold value because they're commodities in demand for modern industry and tech manufacturing (I certainly don't support the fairy dust and unicorn green-dream of returning to agrarianism). But whether the ruling powers of the future will allow plebs to keep physical gold (or cash) for financial autonomy is a moot point.

 

[goldNSX]

You've hit the nail on the head - and the fallout this time could make 2008 look like tiddly-winks. But reading the general press here, you'd think all was well and prospering upwards. The real-estate pundits are trumpeting their best sales yet and new car sales are at record highs. The insularity is bizarre. The real estate market in my small provincial town is reporting average value increase of 18% year on year, which is unheard of.

Yellen like most reserve bank governors in the western world, it seems are trying to keep sentiment buoyant by alluding to the possibility of rate increases, but I can't see how they can deliver. The QE toolbox has is I think, run out of tools. Globally we are now in uncharted waters and the fallout I think could be massive beyond anything most of us will have experienced. And who knows, maybe it will precipitate a complete re-think of Keynesian economics and eventually a new world monetary system.

Physical Gold (incl silver and platinum) - my guess is in the longer term will hold value because they're commodities in demand for modern industry and tech manufacturing (I certainly don't support the fairy dust and unicorn green-dream of returning to agrarianism). But whether the ruling powers of the future will allow plebs to keep physical gold (or cash) for financial autonomy is a moot point.

I'm with you on this. It started in the Greenspan area with low interest rates and we haven't had a bigger recession so far, maybe a mini-recession which was flooded away with QE. My reasoning goes like this: when you get a caught and you know why there's no reason to swallow a big amount of pills to fight it. You'll have to stay in bed for some time and after this you're back to new. It would not hurt the economy to stay in bed for a while instead of swallowing all the pills it has in the medicine cabinet. The FED is far from being independent IMHO, it's just an marionette of the government, esp. in the US and in the EU. Switzerland is an exception here. It's a safe heaven but the side effect is that is gets too strong and the SNB is forced to 'cheat' as well.

I believe that reserve bank governors are going very far as there is no real substitute for paper-money in the real world. So far people believe in paper-money. You can't even trust gold. It's an easy tradable item via ETF. The conspiracy theory is that the ETFs storing phyiscal gold by a much lower volume than they promissed to the ETF buyers. There have been stories of people being offered only money for their ETF shares instead of the 'real thing' as the treasure is nearly empty. I always wondered why the price of gold didn't shot through the roof, now I think I know why.

I've a (low) mortgage and don't know what will happen when things go south. But I'm hesitent to spend higher amounts as I don't know the cascade of the chain reaction whereever it hits me.

This month the new NSX will be here in Switzerland in the showroom. Pretty interesing to see how it sells. There's no hype like in the US but it surely will find it's buyers but at what price....

 

[JD Cross]

Esprit9
Sounds like you're not able to get a Nord Grey and you're concerned about loss of value as well.
Can't fathom why a dealer would deny you the color of your choice unless they're concerned you won't come up with the $ once it's delivered.
And with your concern about value this may not be the time for you to buy an NSX.

It looks like there have been about 200 NSX's delivered so far and about 50 of them (or more) are unsold at various dealers.
Perhaps you should wait because if the car isn't selling, a dealer(s) may change their tune in a month or two.

 

[Esprit9]

Completely agree with you JD. I will be patient and wait a few months. Who knows... possibly a Nord Gray will show up on used market or new with discount with few miles in a few months. Thanks for all replies.. this helps my next steps.

 

[Hothonda]

Real money depreciation on new 2017 991TTS after you drive it off the lot is about MSRP -25%.
If you find a new one in dealer stock, 5% - 6% off MSRP seems to be an OK deal.
MSRP's typically run $195 to $225K.....great cars, brutal depreciation!

Now (10/16) 991TTS dealer allocations to order are at -0- till late 1st quarter 2017.

I would predict the new NSX depreciation will be similar to regular 911's & TT's - (GT3, GT3RS models hold value very well).

 

[9spd]

The economy matters, the McLaren F1 and Jaguar XJ220 are good examples that. Of course, that also helps with their value today by virtue of their limited production at the time.

We doesn't need to look back very far to see how the exotic car market can be heavily influenced by market downturn, I can still remember the cars that flooded the market back in 2008/09.

But at the same time, I would also caution everyone that even the economists, traders and professional money managers get things wrong all the time.

Remember back in February when the S&P500 took a nose dive? Many so called advisors were on the media bragging about having their client's money in cash. Well, I guess they didn't look very smart 2 months after that.

Or how about Brexit? Just look at how many traders and bookmakers got that wrong and incorrectly positioned themselves. A similar episode might repeat itself with the US election.

I do agree that QE and low interest have seriously skewed the market and people have done some rather foolish things chasing yield e.g. Third Avenue Junk Bond Fund. In fact people are still doing it today.

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I'd be very cautious if you can't afford such a hit.

It is not a matter of whether someone can "afford such a hit" or not. It is more about estimating the actual cost of ownership in order to make an informed decision on the purchase.

 

[JD Cross]

It is not a matter of whether someone can "afford such a hit" or not. It is more about estimating the actual cost of ownership in order to make an informed decision on the purchase.

I agree with kendallj
It is totally a matter of whether a potential buyer can take a hit in asset value or not.
Of course a buyer will estimate the cost of vehicle ownership including the expected value of the car in a year or two or three.
And if they see a potential loss in value of say $50 K in two years and conclude they can't afford a "hit" of that amount in two years on a car they won't buy.
If they can afford a hit of that size they may go ahead and buy.

 

[chrisn]

In terms of depreciation, you need to pay attention to the mileage and use pattern of the cars you are using to benchmark used car prices. Often people will claim high resale values with reference to garage queens. If you buy a car to drive (and perhaps track), you need to look at resale values for cars that are treated similarly. A GT3RS under a car cover with a battery tender will hold value well. If driven 10-15K miles a year and used for a few track weekends a year (with the inevitable signs of such wear), I'm not so sure.

I seriously considered a used 458 instead of the NSX, but I went back and looked at the price history of the 430 and concluded that the service and depreciation costs of a used 458 that was driven and tracked a bunch would render total costs of ownership at least as high as the NSX. Lots of subjective assumptions in my analysis, but don't make the mistake of using show-and-shine low mileage cars as your comparables unless that's how you use (or don't use) your cars.