Why the Z might be a GOOD investment

Mergnthwirker

Of course, almost no cars can be expected to appreciate.

But I just ran into the following article (on Autoextremist.com) which I thought was provocative. Basically it suggests that the cars we buy now will be in very high demand within two years. So enjoy the heck out of your Z with the expectation that now is an ideal time to buy one, and you may face much lower depreciation than in years past.

QUOTE:
Greg Martin has more than three decades of auto retail experience in a variety of capacities including new cars, used cars and leasing. He presently heads The Private Client Group, serving clients acquired over the years and acts as a "market maker" by providing new car dealers with trade-in figures. Here's what Greg wrote:

The Great Used Car Boom of 2012. It is coming, the numbers make it a certainty. Consider that U.S. new car sales are expected to be in the region of 9.5 million this year and are projected to be 10 to 11 million units next year. In addition, 12.5 million units have been coming off the road by various means consistently for the past several years. DMV data estimates that approximately three million new driver's licenses are issued annually. The average car on U.S. roads is 9.4 years old.

You see where this is going: Pent-up demand is at an all-time high, while supply is shrinking.

But wait, there's more! New vehicle prices are poised for a big increase. Recently mandated emissions and MPG standards are soon to add $1300 to the cost of a new vehicle according to the manufacturers, although some other estimates are much higher. The bankruptcy of two-thirds of the domestic industry has accelerated the loss of capacity, even while import manufacturers have been shuttering plants. Although excess capacity still exists, it is likely to be largely absorbed by the expected rebound in sales the next couple years.

The inevitable result is something the car companies haven't had in a long time: Pricing Power. So now we have painted a picture where demand is mushrooming, prices are skyrocketing, and the days of "any warm body qualifies" financing and sub-vented leases are pipe dreams of the past.

So what choice does the beleaguered American consumer have? Buy used! Signs of this trend have already begun to appear. Although YTD new cars are off by 41%, used cars are up by 3%. Compounding the imbalance of supply and demand is a shortage of used cars, due in large part to a lack of trade-ins. Future supply is due to further constrict as the number of off-lease cars begins to dwindle. Rental car companies are also extending the useful life of their fleets almost exponentially. By 2012 we can look back on this market as the "good ol' days" when by comparison used cars were bargain priced.

What does all of this portend for the dealers? The consumer? Insightful consumers should view the November-December-January time period as a buying opportunity. Historically, the used car market weakens at the end of the calendar year as demand softens and a flurry of trades come in on the new models. I anticipate this year should be no exception, but do not expect prices to approach the depressed levels of last year. Most late-model cars are now worth at least the same and in many cases significantly more than what they sold for last winter.

By next spring the used car market will be gathering momentum like a runaway train, and if you haven't bought your ticket your chances for a good buy will be rapidly vanishing. The opportunities for inexpensive auto ownership (little depreciation) will be great, particularly in the luxury segment.

Focus should be on cars that will be in shortest supply in the coming years. Generally this would include later model, lower mileage cars of current body styles, ideally with a least one and at most two years of depreciation realized. I'll have more next time... Greg Martin, The Private Client Group, Roswell, Georgia. gregmartin123@bellsouth.net

END QUOTE

Who knows what will happen to gas prices, and the economy? But I know for sure that I'll enjoy the heck out of my Z and avoid driving a wimpy electric green machine for as long as I possibly can. It may not be politically correct, but A) it's fun and B) now is a good time to do it!

What do you think?

jginnane

The 2009 370Z will have excellent resale value because of the production cuts. This car will always be hard for people to find. We are an exclusive group.

The question is -- assuming you're planning for long term value, do you try to get the most popular color, or the most unusual one? In the year 2049, a built-in GPS screen at VGA resolution is going to be a laughable curiosity, like a push-button dashboard transmission selector from a 1960s Chrysler Imperial.

baboola

i think limited production is hardly a reason for retaining good resale value. if the demand drops after 1-2yrs (like what happened with 350z), it won't matter if there is only a "limited" number of 370z around. In fact, I can see people who were originally interested in 370z opting for a used cayman s a few years later since price gap won't be as huge. and if i'm not mistaken, AMG always has a limited production, but their resale values usually plummet after 1-2years.

i think Z is a relatively good "investment" now because it's a big bang for the buck. Worst case scenario you lose 20-25k (guesstimates) after 4 years. not too bad considering the 2008 M3's probably dropped that much already in this crappy economy. if only i could afford a z right now...

VCuomo

Although I seriously doubt buying a 370Z will be a "good investment", it might very well hold its value better than most stocks will over the next few years...

chubbs

I don't buy into this theory either. Your car will depreciate - accept it.

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'03 Grey >>> '06 Black >>>'10 Silver >>> '16 Grey ^

jginnane

[quote=baboola;114015] i think limited production is hardly a reason for retaining good resale value. if the demand drops after 1-2yrs ... [quote]

Well, that's what the main article was about. People won't be able to buy new on extended terms the way they used to, and the prices will be going up. So if you physically possess a gently-used model that people want ... resale will be good.

In almost two months' driving my own, there are no unusual wear parts in a base/touring/auto. Tires on both base and sport will be expensive, and summer treads aren't meant to last 60K miles. But considering that we can't rotate tires, all-seasons lasting 30K would be at the outer limits of practical expectations.

On the rest of it, well, the V6 being standard issue for many heavier cars in the Nissan/Infiniti lines improves both the availability of parts, and number of knowledgeable mechanics. Aluminum boot, doors and bonnet (to use the Brit words) and plastic cladding all under means the exterior should stay healthy -- much like a Bricklin. That's even discounting the crappy paint (that ALL car companies are using this year).

I would not expect $25K depreciation in 4 years. The 2010 roadster is a healthy price increase, and whatever Nissan is selling as a Z in 4 years will cost 20% more than this year's sticker. (After we get though this deflationary cycle there will be price inflation in a number of economic sectors, to catch up.) So if you paid $35K this year, and the 2013 equivalent new car is $42K, you might trade at $22K ... which would represent a realworld cost of ownership of about $5,000., or a little over $400 a month.

On economic fundamentals, this is a mainstream car, not an exotic. Many car companies are in the business of pushing tin, but the Z is (like the marketing says) an icon.

Will it depreciate? Of course! But would you prefer a Chrysler right about now?

baboola

that's why i said worst case scenario.

but your estimates may be a bit too optimistic, especially for a 2-seater. most cars don't hold >50% value after 4 years unless it's an actual mainstream car like toyota corolla. you're right that gently used cars will probably get you a bit more when you sell privately, but keep in mind there are many other german competitions with Z that may experience greater drop in price in the future. when their price lowers to within a few grand from Z, people will have a fun time choosing, unless they're die-hard Z-fan~

also, it's unlikely for nissan to introduce a 20% price hike in just 4 years unless they have some major redesign/improvement (when that time comes, will you take the newer Z or the 370z?). the state of the economy doesn't have that much influence over sticker price, and they'd risk losing many potential buyers to other brands. all in all, 370z is a good buy. but it's unrealistic to think that Z would an exception to the general trend in auto industry

FricFrac

I've seen a huge drop in the die hards like Toyota and Honda holding their values.... I doubt a sports car will fair better than these....

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'09 370Z - '93 300ZX Vert - '83 280ZX - '83 280ZXT -'81 280ZXT stroker - '72 240Z - Stillen CBE, HFC, G3, Grounding Kit, Sways // Swift Spring // H&R 15mm // 5% Tint // Clear Bra //

edeeZee

You often hear that Supra MIV's are ridiculously high in resale value right? The TT ones...I guess the "fast & furious" thing did it. Brand new, they were $50,000+ cars, I see used ones in "good" to "excellent" condition for listed at least $30-45K, yeah right!

Why do I say "yeah right"? How many times do you see the seller relist because it hasn't sold?--many. And even when they do sell, how do we, as outsiders, know what it actually sold for?

I don't buy any of it. Your car will depreciate, and it's a given.

Only cars that appreciate are the super exotics i.e. Bugatti's, McClaren's and the likes.

FricFrac

Most of the guys here in town that have them paid around 20K CND - I think they were as high as 80K here... that is one of the few modern exceptions to the rule and they are worth 1/4 of the purchase price....

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'09 370Z - '93 300ZX Vert - '83 280ZX - '83 280ZXT -'81 280ZXT stroker - '72 240Z - Stillen CBE, HFC, G3, Grounding Kit, Sways // Swift Spring // H&R 15mm // 5% Tint // Clear Bra //

edeeZee

I don't give a damn. A car loses its luster just like a hot chick will one day get heavier and uglier OK!

Megan Fox will look like a homely, overweight woman 10 years from now.