Economic Concerns?

While at Barnes and Noble I picked up the newest issue of Evo. The cover story was comparing the Pagani Zonda F, Porsche GT, and Ferrari F430? Obviously two of those cars are somewhat comparable (Zonda and Porsche GT), but the F430 was simply outmatched. In terms of price, you could buy 5 F430 for the price of one Pagani and almost two Porsche GT for the price of a Pagani. Although I personally would drop the money for all three cars if I was able, what are the implications of such high car prices? This is all a bit reminiscent of the early nineties-when wall streeters received 8 digit bonuses. I can’t help but remember the failed Bugatti EB110 and Jaguar Xj220. Both cars failed because the economy took a downturn as production began. No doubt we are living in a prosperous international economy. This optimistic market is boosting exotic car values because people have more disposable income. This is evident from rising classic car prices, home prices, watch prices…. However, I must remind you all that the market is cyclical. Interest rates will increase and even if they do not and homes remain at such high price points, demand will eventually shrink for exotic cars and with this transition the price a manufacturer can charge for a car will decrease. Remember, one can buy a Ferrari GTO for under $10M today that a Japanese Businessman paid $20M for in the early 90’s. My point? Although we love million dollar exotics, there is a chance that companies like Pagani are condemning themselves to doom by not diversifying the price range of its products. I was relieved upon reading that Pagani is planning on releasing an ‘entry level’ Pagani. In my opinion Pagani is the most elusive and remarkable exotic car manufacturer of today and I hope it will remain so indefinitely.

