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At the Money: How to Buy a Supercar · Masters in Business

• 0:02
  Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
• 0:10
  Speaker 2: Oh lord, won't you buy me a Mercededes bands? My
• 0:17
  Speaker 2: friends all drive Porsches. I must make gamemns. We're hard
• 0:23
  Speaker 2: all my lifetime. No help from my friends. So, oh lord,
• 0:29
  Speaker 2: won't you buy me a Mercededes bands? Oh Lord?
• 0:35
  Speaker 3: Buying any car is an exciting milestone, but buying the supercar, well,
• 0:41
  Speaker 3: that's next level. It's fraught with a set of unique challenges.
• 0:45
  Speaker 3: It's big money and comes with big responsibilities. If you're
• 0:50
  Speaker 3: thinking about buying a Ferrari, Lamborghini, McLaren Pegani, or any supercar,
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  Speaker 3: there are some very expensive mistakes you want to avoid making.
• 1:01
  Speaker 3: I have the perfect expert discuss this topic. Hannah Elliott
• 1:06
  Speaker 3: is the supercar reviewer for Bloomberg. She's covered the auto
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  Speaker 3: industry and car culture for over fifteen years and has
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  Speaker 3: pretty much driven every million dollar car out there. Let's
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  Speaker 3: ask her what we need to know before dropping a
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  Speaker 3: lot of money on an exotic. So, Hannah, let's start
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  Speaker 3: with the basics. What makes something a supercar? Is it price, performance, exclusivity,
• 1:29
  Speaker 3: some combination.
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  Speaker 1: This is a great question, and it is a bit
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  Speaker 1: of a gray area because there's no one definition, but
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  Speaker 1: I would put back to you it's a combination of
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  Speaker 1: all those things. A supercar is a superlative vehicle that
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  Speaker 1: is at the top of the line of an automaker.
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  Speaker 1: Yes it's expensive, Yes it has top performance for that line.
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  Speaker 1: Yes it has a resting designs, and yes it has
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  Speaker 1: mind bending performance. Those are also of qualitative values that
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  Speaker 1: when you put them together, you'll get a supercar out
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  Speaker 1: of it.
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  Speaker 2: Now.
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  Speaker 1: I have a debate a lot with my colleague Matt
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  Speaker 1: Miller about is a Corvette a supercar.
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  Speaker 3: It's a mass market car, So.
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  Speaker 1: I say no, because supercars also need to be rare.
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  Speaker 1: They need to be built in small quantities. This is
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  Speaker 1: part of their They need to feel elite and exceptional.
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  Speaker 1: That's what makes them super. So it's a combination of
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  Speaker 1: all of these things. A car can't just be fast
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  Speaker 1: and be a supercar. It can't be just expensive. A
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  Speaker 1: Rolls Royce is not a supercar, even though that's an
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  Speaker 1: expensive car. It's a combination of all of those factors.
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  Speaker 3: If it's just a matter of speed, well then a
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  Speaker 3: lot of the evs that.
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  Speaker 1: Are out to Tesla's are fast, but they're not supercars.
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  Speaker 3: To say the very least. So let's talk about the
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  Speaker 3: experiencing of purchasing a supercar. How is that different than
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  Speaker 3: say you run of the mill Mercedes or range Rover
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  Speaker 3: or some other expensive vehicle.
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  Speaker 1: Okay, to purchase a supercar new it's going to it
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  Speaker 1: requires more of a relationship with the dealership selling it
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  Speaker 1: to you. Now, most dealerships are allocated small, small amounts
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  Speaker 1: of supercars. They might only have two or three for
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  Speaker 1: their whole area. So they way who will be afforded
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  Speaker 1: the opportunity to buy the supercar?
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  Speaker 3: Clearly, no flippers, right, that's right out.
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  Speaker 1: That is written in the contract. You cannot flip this vehicle,
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  Speaker 1: and if you do need to get rid of it,
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  Speaker 1: it goes back to the dealer. You can't flip it.
• 3:30
  Speaker 1: That is in the contract. Wow, So it is about
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  Speaker 1: establishing a relationship with your local dealer. Ferrari is notorious
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  Speaker 1: for rather requiring their customers to buy up the Ferrari
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  Speaker 1: food chain to the top level of their cars. You
• 3:48
  Speaker 1: cannot walk into a Ferrari dealership and hope to buy
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  Speaker 1: a Manza that just even if you have the money,
• 3:54
  Speaker 1: it doesn't work that way. You need to earn the
• 3:57
  Speaker 1: right and the opportunity to buy those hiring cars. So
• 4:00
  Speaker 1: it's about maybe you have to buy Aroma first, and
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  Speaker 1: then maybe you buy you know, two nine six, you
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  Speaker 1: work your way up to the opportunity to buy the
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  Speaker 1: top stuff.
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  Speaker 3: So that's if you're buying new. Let's talk about buying used.
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  Speaker 3: A lot of these cars used to trade at a
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  Speaker 3: discount when they were I guess the term is pre owned,
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  Speaker 3: but in a lot of cases that's gone away. You're
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  Speaker 3: paying a premium even for a pre owned car. What's
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  Speaker 3: the story with that? Is this just a function of
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  Speaker 3: the waiting lists for new cars? What's driving us supercar prices?
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  Speaker 1: Instant gratification drives you supercar prices because the thing about
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  Speaker 1: supercars is there again they're made in small batches, so
• 4:47
  Speaker 1: usually you're gonna have to if you want one new,
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  Speaker 1: you're gonna have to order it. You're gonna want some
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  Speaker 1: of your own custom touches on it. That takes time.
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  Speaker 1: You might have to wait a year. So if you
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  Speaker 1: don't want to wait that long, you want one quick.
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  Speaker 1: You want instant gratification, and you buy used supercar.
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  Speaker 3: So what's the process like for purchasing a used car?
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  Speaker 3: Is it the same sort of pre purchase inspection, maintenance records.
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  Speaker 3: What's the due diligence like with.
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  Speaker 1: This, I would say it's the same as any other car, really,
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  Speaker 1: I mean it's potentially a lot of money. I would
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  Speaker 1: certainly have a pre purchased inspection. It depends on who
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  Speaker 1: you're buying it from. Are you buying it from an individual?
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  Speaker 1: Are you buying it from a dealership like a certified
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  Speaker 1: pre owned thing. If you're buying for the dealership and
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  Speaker 1: it's been certified as okay, whatever that means for the automaker,
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  Speaker 1: I think you know that's pretty straightforward. If you're buying
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  Speaker 1: it from a private individual, I think you would want
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  Speaker 1: to do some real due diligence. Supercars are tricky and
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  Speaker 1: stressful to drive. If you're not on a track, you
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  Speaker 1: know they are low. They are finally calibrated and highly tuned.
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  Speaker 1: So when you're driving around the city and there are
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  Speaker 1: potholes and there are inclines, there's just a lot more
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  Speaker 1: that can be slightly off on a supercar rather than
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  Speaker 1: an suv, and suv is a lot more durable. So
• 6:02
  Speaker 1: these are these are I don't want to say fragile,
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  Speaker 1: but they are not made to go all over everywhere,
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  Speaker 1: so I would go a little bit slower.
• 6:13
  Speaker 3: It makes a lot of sense. One of the things
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  Speaker 3: I noticed when I'm trolling bring a Trail or a
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  Speaker 3: Cars and Bids or any of the other auction sites
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  Speaker 3: is the frequent mentioned no after market modifications. Why is
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  Speaker 3: this such a concern.
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  Speaker 1: It's a concern because after market, Uh, the aftermarket is
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  Speaker 1: the wild West. You're you're you are not under dealership
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  Speaker 1: guarantees at all. You are you are in the wild West.
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  Speaker 1: There is no guarantee. I mean, we all have seen
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  Speaker 1: those terrible cars with exhaust exhaust things and sound systems,
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  Speaker 1: and cars that have been chopped up and things have
• 7:00
  Speaker 1: been welded on.
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  Speaker 3: To say nothing of all the wraps and things along
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  Speaker 3: those lines.
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  Speaker 1: Neatly wraps. You know, that's one thing. But when you
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  Speaker 1: change anything in these highly refined vehicles, that changes everything.
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  Speaker 1: Physics do matter. So when you're adding weight or you're
• 7:21
  Speaker 1: cutting something off, you're cutting fenders, or you're welding on fenders,
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  Speaker 1: that changes the structural integrity of the car potentially, and
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  Speaker 1: it just seems like a minefield unless you really know
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  Speaker 1: who and what you're dealing with.
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  Speaker 3: Not everybody a singer to say the very least, right,
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  Speaker 3: What about costs beyond the purchase price? How different is
• 7:42
  Speaker 3: it maintaining a supercar, storing it and ensuring it.
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  Speaker 1: Well, it's going to be a lot more expensive in
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  Speaker 1: general to repair and replace things components of supercars, like wheels,
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  Speaker 1: Like supercars, have a lot of carbon fiber, splitters, air ducks, venting, spoilers.
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  Speaker 1: All of these things typically are made out of carbon fiber,
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  Speaker 1: which is rather fragile and rather expensive to replace. So
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  Speaker 1: it just everything is compounded price wise, I would say,
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  Speaker 1: in general, it.
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  Speaker 3: Makes a lot of sense. What about insurance? I know
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  Speaker 3: certain insurers don't necessarily cover the Bugattis and Pananis of
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  Speaker 3: the world. I was gonna say, Panini. I guess I
• 8:27
  Speaker 3: got lunch on my my head. What about insurance coverage?
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  Speaker 3: Not everybody covers the Bugattis and Pananis of Panis, Paganis, Panini.
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  Speaker 3: Not everybody covers the Bugattis and Paganis of the world,
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  Speaker 3: or even the Ferraris and Lamborghinis of the world. What
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  Speaker 3: sort of coverage should a supercar owner be seeking?
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  Speaker 1: Again, I would go to a specialty provider like Haggarty
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  Speaker 1: or Chubb or any of these other ones, go to
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  Speaker 1: a specialist, do your research, and again you can probably
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  Speaker 1: stipulate that this is not a daily driver, it's going
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  Speaker 1: to have less miles per year, and you can get
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  Speaker 1: a specialty.
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  Speaker 3: So I tend to fall in love with a different
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  Speaker 3: car every week. When you see all the variety of
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  Speaker 3: things you Gotti Pegani, Ferraris and Martin McLaren, Lamborghini, bet
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  Speaker 3: only Porsche, it seems like the choices can be endless.
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  Speaker 3: How does someone figure out which car is right for them?
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  Speaker 1: Well, that's a good question. Again it sounds so cliche,
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  Speaker 1: but follow your own interests. If you've got somebody in
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  Speaker 1: your town who has a car that you like the
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  Speaker 1: look of, go up and talk to them and ask
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  Speaker 1: them how their experience has been at the dealership. Ask
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  Speaker 1: them where they keep the car. You know, there's no
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  Speaker 1: dumb question.
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  Speaker 3: Really.
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  Speaker 1: I think if you identify someone who has a car
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  Speaker 1: that you like the look of, go talk to them
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  Speaker 1: and ask them how is it working with, you know,
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  Speaker 1: maybe the factory. If it's a highly customized car, they
• 10:02
  Speaker 1: work directly with the factory to customize the car. Find
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  Speaker 1: out how that relationship is. Because again, if you're buying
• 10:10
  Speaker 1: a new supercar. It's going to take some time to
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  Speaker 1: get it, and you're going to be in contact getting
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  Speaker 1: updates about the car, about how the production is coming along.
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  Speaker 1: I think you want to try to find someone that
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  Speaker 1: feels a good fit for your personality what you're looking for.
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  Speaker 1: I think you just got to talk to people who
• 10:28
  Speaker 1: you think own the car.
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  Speaker 3: What about test drives. I can't imagine that you could
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  Speaker 3: walk into a Bugatti dealership and say, hey, I'd like
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  Speaker 3: to take that viron out for a spin.
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  Speaker 1: No, I don't think you can. Maybe they'll take you
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  Speaker 1: for a ride. That's tricky. I think that's tricky. I
• 10:44
  Speaker 1: don't really know the answer to that other than again,
• 10:49
  Speaker 1: make friends with people who have that car. And I
• 10:51
  Speaker 1: know that sounds maybe trite, but these cars are out there,
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  Speaker 1: and I think if you see someone with out driving
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  Speaker 1: that car early, people are pretty friendly. They're proud of
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  Speaker 1: their car, and I would just start asking questions about, Hey,
• 11:05
  Speaker 1: you know, who can I talk to? Where did you
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  Speaker 1: get this? I really love it. I don't think it's
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  Speaker 1: wrong to hang out at the dealership and you know,
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  Speaker 1: try to get a ride.
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  Speaker 3: It's the relationship I have noticed in places like Paris
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  Speaker 3: and Amsterdam and then in the United States, in Vegas
• 11:24
  Speaker 3: and Miami, you can rent a Ferrario Lamborghini. First shockingly
• 11:28
  Speaker 3: little amount of money for twenty minutes. Is that that's
• 11:32
  Speaker 3: a good idea? Will that give you the same experience?
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  Speaker 1: You know, I don't know about the mechanical standard of
• 11:42
  Speaker 1: those cars that are being rented, but it's something I
• 11:44
  Speaker 1: don't think it's wrong. I mean, we have that in
• 11:46
  Speaker 1: la It's a good idea. You can drive through Hollywood
• 11:49
  Speaker 1: in a rented Ferrari. At least it's something to get
• 11:52
  Speaker 1: you in the driver's seat and get a taste of
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  Speaker 1: what it might be like.
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  Speaker 3: So let me ask you about a pet peeve I
• 11:58
  Speaker 3: have with supercars. I believe that if you aren't paying
• 12:04
  Speaker 3: your taxes on your car, then our roads are much
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  Speaker 3: worse wherever you happen to live. What are your thoughts
• 12:11
  Speaker 3: on people who buy supercars and then register them in
• 12:14
  Speaker 3: Montana to avoid state sales tax.
• 12:18
  Speaker 1: You know, I did a whole story on this ferry
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  Speaker 1: I do. It's not really looked at kindly among the
• 12:24
  Speaker 1: car community because everybody knows that's what's happening.
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  Speaker 3: So I used to be a member of an online
• 12:31
  Speaker 3: car community that wasn't any specific marquee. It just was everything.
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  Speaker 3: And I vividly recall the BMW and Ferrari guys talking
• 12:42
  Speaker 3: about representing the brand and when you're tanking up with
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  Speaker 3: gas or you're at it any sort of social function
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  Speaker 3: cars and coffee, be a good brand ambassador. Don't be
• 12:54
  Speaker 3: that sort of jerk. What's your experience with that.
• 12:57
  Speaker 1: There's etiquette involved here with cars, especially with supercars, and
• 13:03
  Speaker 1: in my experience, the people who are revving the engines
• 13:07
  Speaker 1: making a ton of noise pop pop pop pop in
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  Speaker 1: the parking lot are eighteen year old boys. Yeah, don't
• 13:14
  Speaker 1: be an eighteen year old boy. Act like you've been
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  Speaker 1: here before. Act like you have a sense of respect
• 13:19
  Speaker 1: and appreciation and situational awareness what I like to call
• 13:23
  Speaker 1: read the room. You're already in a really expensive car.
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  Speaker 1: That's awesome. It's important to be open and friendly. You're
• 13:30
  Speaker 1: driving something that yells look at me, so people are
• 13:33
  Speaker 1: going to look at you, which is awesome. And I
• 13:36
  Speaker 1: would just say, just have a sense of decorum. Act
• 13:39
  Speaker 1: like you've been around for a long time and you
• 13:41
  Speaker 1: know what you're doing.
• 13:42
  Speaker 3: What's the best advice for interacting with the public when
• 13:45
  Speaker 3: someone comes up to you while you're either getting gas
• 13:48
  Speaker 3: or whatever.
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  Speaker 1: I would just say be friendly and anticipate and expect
• 13:53
  Speaker 1: that people are going to comment on your car. If
• 13:56
  Speaker 1: you want to be incognito, drive a black Honda, or
• 13:59
  Speaker 1: don't go out. I think when you go out in
• 14:02
  Speaker 1: a flashy car, that is that that is an indicator
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  Speaker 1: that you're going to be approached, and that's awesome. That's
• 14:09
  Speaker 1: what cars are about. It's about sharing cars, sharing the experience.
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  Speaker 1: So just expect it and just be friendly. You know,
• 14:15
  Speaker 1: they don't have to sit in the driver's seat if
• 14:17
  Speaker 1: you don't want them to do that, but I would
• 14:18
  Speaker 1: say welcome it.
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  Speaker 3: That's fair enough. Let's quickly discuss cautionary tales. You could
• 14:25
  Speaker 3: go to YouTube and there is a series of videos
• 14:30
  Speaker 3: called supercar fails, some really embarrassing, just dumb self inflicted accidents.
• 14:37
  Speaker 3: What's the warning for people who are driving really expensive
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  Speaker 3: cars as to what they should not do.
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  Speaker 1: Don't show off, no sudden movements. Be aware of the
• 14:50
  Speaker 1: size of your car, the size and dimensions of your car.
• 14:53
  Speaker 1: You know, I see a lot of people who have
• 14:56
  Speaker 1: rims that are scraped on the side because they've curbed
• 14:58
  Speaker 1: it or splitters under under the chin because they're not
• 15:01
  Speaker 1: aware of how low the car is. So I think
• 15:03
  Speaker 1: the number one thing is be aware of the size
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  Speaker 1: and dimensions of your vehicle. It's less prominent than you
• 15:11
  Speaker 1: might think. Number two, you don't need to show off.
• 15:13
  Speaker 1: The car is already showing off. And that goes back
• 15:15
  Speaker 1: to our other thing about etiquette. You don't need to
• 15:17
  Speaker 1: show off and do a burnout or you know, past
• 15:20
  Speaker 1: five guys down the sunset strip. We already see you
• 15:23
  Speaker 1: in the car. We already know it's a cool car.
• 15:26
  Speaker 1: No sun movements. The other thing about supercars is there
• 15:29
  Speaker 1: does their high performance machines, which is awesome, which also
• 15:33
  Speaker 1: means there's a less room for error. So any mistake
• 15:37
  Speaker 1: that you make in that vehicle is going to be
• 15:39
  Speaker 1: exaggerated and amplified a lot expensive and a lot quicker. Yeah,
• 15:44
  Speaker 1: quicker and a lot more expensive. So no sun movements.
• 15:47
  Speaker 1: Smooth as fast, stay calm. You know, you don't need
• 15:52
  Speaker 1: to get all worked up. Just be relaxed, slow as smooth,
• 15:55
  Speaker 1: smooth as fast, exactly exactly. And there's one more thing
• 15:58
  Speaker 1: I wanted to say, kind of on our the etiquette thing.
• 16:01
  Speaker 1: I just got back from Portugal from driving the Lamborghini Temorrio.
• 16:05
  Speaker 1: And there's an interesting thing that Lamborghini's doing on some
• 16:08
  Speaker 1: of their supercars. The Rivelto is another one. These are
• 16:11
  Speaker 1: hybrid supercars. They've got something called stealth Mode, which is
• 16:15
  Speaker 1: six miles of electric only driving. Now you sneak out
• 16:18
  Speaker 1: of the right you might think that's not actually enough,
• 16:21
  Speaker 1: but it has a very important purpose, which is it
• 16:24
  Speaker 1: makes the car fully electric while you leave the neighborhood
• 16:28
  Speaker 1: or while you come into the neighborhood. And I actually
• 16:32
  Speaker 1: love it because again it's it's out of respect for
• 16:36
  Speaker 1: the neighbors. And I love cars, but I don't want
• 16:39
  Speaker 1: to hear your Lamborghini at five am. So I kind
• 16:41
  Speaker 1: of like that.
• 16:41
  Speaker 3: Any other aspects of supercar purchasing, the ownership, that's worth mentioning.
• 16:46
  Speaker 1: You know. The one thing I would also say too
• 16:48
  Speaker 1: is if you're buying a new one, be really careful
• 16:51
  Speaker 1: about how you speck it. Please try to have some restraint.
• 16:55
  Speaker 1: And I say this for two reasons. One because again,
• 16:59
  Speaker 1: these cars are wild, they're attractive, they're stunning, they're made
• 17:03
  Speaker 1: to grab attention. You don't need to then add on
• 17:07
  Speaker 1: a bunch of colors and textures and textiles and details
• 17:12
  Speaker 1: to just make it look like vomit. So just try
• 17:15
  Speaker 1: to have a little restraint, and I promise you the
• 17:18
  Speaker 1: car will look really cool because it's already designed to
• 17:21
  Speaker 1: look really arresting. The second thing I would say is
• 17:25
  Speaker 1: for resell values, the cars that do not have really
• 17:29
  Speaker 1: weird one off custom jobs inside will probably be a
• 17:35
  Speaker 1: higher value than a car that looks terrible that someone spect,
• 17:39
  Speaker 1: you know, in the nineties, that is just terrible.
• 17:42
  Speaker 3: So to wrap up, hey, if you're fortunate enough to
• 17:45
  Speaker 3: be able to buy a supercar, bring some self awareness
• 17:50
  Speaker 3: and some rationality to the process. Make sure what you're
• 17:56
  Speaker 3: buying is something that you're really interested in. Prepare yourself
• 18:00
  Speaker 3: to have conversations with people every time you tank up
• 18:04
  Speaker 3: the car or take it somewhere. Just be aware that
• 18:07
  Speaker 3: you've already managed to get one of the most sought
• 18:10
  Speaker 3: after vehicles in the world. Behave well, don't do anything
• 18:15
  Speaker 3: too stupid, own the car, display it, speak to people,
• 18:19
  Speaker 3: and try not to end up on YouTube's supercar Feles.
• 18:24
  Speaker 3: I'm Barry Ridolts. You're listening to Bloomberg's at the Money
• 18:28
  Speaker 3: the Town.
• 18:29
  Speaker 2: Everybody, Oh lord, won't you buy me a Mercedes bands
• 18:35
  Speaker 2: My friends, all draft pushes. I must make amends. Worked
• 18:41
  Speaker 2: hard all my lifetime, no help from n