Consider what happened to an East Coast investment banker who requests that he remain anonymous. He had always lusted after Ferraris, but it wasn't until he hit age 42 that he decided he would go out and buy one. That was in the spring of 1985, and he paid $61,000 for a red '66 275 GTB, a model that had sold for $14,000 when it was new. "I paid one of the highest prices ever for a 275," he says. "But I went ahead with the deal because I thought the car would maintain its value."
Three years later an appraiser informed him that his car was worth $400,000. That came as a shock, but it wasn't all pleasant. Insuring the car became onerous. Furthermore, costly as the coverage was, the banker discovered that it constantly lagged behind the continually soaring value of his GTB.
The best thing about a Ferrari, as far as he had been concerned, was driving it. Nothing sounded or felt quite as good as the crescendoing roar of that 12-cylinder engine as the needle on the tach approached its 7,600-rpm redline. However, with the Ferrari's selling price continuing upward, he began to fret about accidents, parking-lot dents and, most of all, theft. He found himself leaving his Ferrari in the garage more and more. Finally, he decided to get rid of the car. Four years after he bought the Ferrari, he sold it for $750,000, an increase of more than 1,100%.
The huge price tags have raised questions about what constitutes a true Ferrari. Many of the Ferraris bought and sold today are not the car that left the factory. Take the 250 GT that Cowell used to own. "It had the original engine, chassis and gearbox," he says. "But it had been reskinned—it had a new body. While that was done properly, it wasn't the exact car that had left the Ferrari factory 23 years earlier." In extreme cases, restoration specialists have been known to re-create entire autos from little more than an identification plate. Some observers argue that getting a Ferrari back into driving shape is a laudable pursuit, no matter how it is done, but purists believe recreations cheapen the market. They figure that if Ferrari made 454 of the 275 GTBs, then that's all there should ever be of that model.
This dispute wouldn't amount to much if recreations were properly represented when they are sold. Trouble is, the recent price hikes have tempted some profiteers to try to pass off re-creations, or even complete counterfeits, as originals. Cowell believes the problem is manageable. "Many of the Ferraris, especially the real classics, are registered and very well known," he says. "They can be easily checked out by anyone who is willing to do a little research."
Cowell can afford to be sanguine. His Ferrari was featured in several magazines for its racing successes, and after each story he was offered ever higher amounts for the car. Eventually he sold it for a price that surprised even him, and he now has an Elva Spider 001, which he races with abandon in vintage car events.
The speculative market surrounding Ferraris has been fueled partly by the car's racing history—no other marque has won as many Formula One events, and Ferraris have won at Le Mans, the Targa Florio, Daytona and Sebring—and partly by supply and demand. Perhaps 55,000 Ferraris have been made since 1947, the year the car was introduced. General Motors cranks out that many cars in less than a week.
Some Ferrari owners believe their cars afford them a chance to be a part of history. But many of the new breed of owners have a far less romantic reason for writing seven-digit checks for their cars. Since the Wall Street crash in October 1987, interest in collectibles of all kinds has increased. A lot of nervous investors have diversified their portfolios, moving some of their money out of stocks and into tangible assets, like paintings, sculptures, stamps and Ferraris. The downside to collectibles is that they pay no interest and have high insurance premiums. Then again, you can't mash the accelerator of a mutual fund.
No one is sure how long Ferraris will continue their rapid appreciation, but anytime prices rise as fast and as high as those for Ferraris have in the past few years, the possibility of a crash always looms. In May Automotive Investor, a respected financial newsletter, warned of a softening in the Ferrari market. The publication urged owners of late-model Ferraris, especially 308s and Dinos, to sell. Roush, however, remains bullish. "The market is getting a little soft for some models, but the Ferrari boom won't end until people can't make money anymore," he says. "Only then will they get out and go into some other faddish investment."
Dick Fritz, former general manager of the Ferrari North American Racing Team, says, "The value of Ferraris soared as the size of the market grew. I don't see that market diminishing. In fact, it may actually be getting larger."