At the Money: How to Buy a Supercar

0:00I'm Hannah Fry, and as we rely more and more on artificial intelligence in every facet of our lives and businesses, I'm on a mission to find out how we can build the internet that AI needs. Learn more later in the podcast. Bloomberg Audio Studios. Podcasts. Radio. News.

0:25Oh, Lord, won't you buy me a Mercedes Benz? My friends all drive Porsches. I must make amens. Worked hard all my lifetime, no help from my friends. So, oh, Lord, won't you buy me a Mercedes Benz? Oh, Lord, won't you buy me a Mercedes Benz? Buying any car is an exciting milestone. But buying a supercar, well, that's next level. It's fraught with a set of unique challenges. It's big money and comes with big responsibilities. If you're thinking about buying a Ferrari, Lamborghini, McLaren, Pagani, or any supercar, there are some very expensive mistakes you want to avoid making. I have the perfect expert to discuss this topic.

1:20Hannah Elliott is the supercar reviewer for Bloomberg. She's covered the auto industry and car culture for over 15 years and has pretty much driven every million-dollar car out there. Let's ask her what we need to know before dropping a lot of money on an exotic. So, Hannah, let's start with the basics. What makes something a supercar? Is it price, performance, exclusivity, some combination? This is a great question. And it is a bit of a gray area because there's no one definition. But I would put back to you, it's a combination of all those things. A supercar is a superlative vehicle that is at the top of the line of an automaker.

2:01Yes, it's expensive. Yes, it has top performance for that line. Yes, it has a resting design. And yes, it has mind-bending performance. Those are all sort of qualitative values that when you put them together, you'll get a supercar out of it. Now, I have a debate a lot with my colleague Matt Miller about, is a Corvette a supercar? It's a mass market car. So I say no, because supercars also need to be rare. They need to be built in small quantities. This is part of their, they need to feel elite and exceptional. That's what makes them super. So it's a combination of all of these things. A car can't just be fast and be a supercar.

2:45It can't be just expensive. A Rolls Royce is not a supercar, even though that's an expensive car. It's a combination of all of those factors. If it's just a matter of speed, well, then a lot of the EVs that are out there are crazy fast. Teslas are fast, but they're not supercars. To say the very least. So let's talk about the experiencing of purchasing a supercar. How is that different than, say, a run-of-the-mill Mercedes or Range Rover or some other expensive vehicle? Okay, to purchase a supercar new, it requires more of a relationship with the dealership selling it to you. Now, most dealerships are allocated small amounts of supercars.

3:24They might only have two or three for their whole area. So they weigh who will be afforded the opportunity to buy the supercar. Clearly no flippers, right? That's right out. That is written in the contract. You cannot flip this vehicle. And if you do need to get rid of it, it goes back to the dealer. You can't flip it. That is in the contract. So it is about establishing a relationship with your local dealer. Ferrari is notorious for rather requiring their customers to buy up the Ferrari food chain to the top level of their cars. You cannot walk into a Ferrari dealership and hope to buy a Monza.

4:07that just even if you have the money, it doesn't work that way. You need to earn the right and the opportunity to buy those higher-end cars. So it's about maybe you have to buy a Roma first, and then maybe you buy a 296. You work your way up to the opportunity to buy the top stuff. So that's if you're buying new. Let's talk about buying used. A lot of these cars used to trade at a discount when they were, I guess the term is pre-owned, but in a lot of cases, that's gone away. You're paying a premium even for a pre-owned car. What's the story with that? Is this just a function of the waiting lists for new cars?

4:50What's driving used supercar prices? Instant gratification drives used supercar prices because the thing about supercars is, again, they're made in small batches. So usually, if you want one new, you're going to have to order it, you're going to want some of your own custom touches on it. That takes time. You might have to wait a year. So if you don't want to wait that long, you want one quick, you want instant gratification, you buy a used supercar. So what's the process like for purchasing a used car? Is it the same sort of pre-purchase inspection, maintenance records? What's the due diligence like with this?

5:26I would say it's the same as any other car, really. I mean, it's potentially a lot of money, I would certainly have a pre-purchase inspection. It depends on who you're buying it from. Are you buying it from an individual or are you buying it from a dealership, like a certified pre-owned thing? If you're buying for the dealership and it's been certified as okay, whatever that means for the automaker, I think that's pretty straightforward. If you're buying it from a private individual, I think you would want to do some real due diligence. Supercars are tricky and stressful to drive if you're not on a track.

5:58They are low. They are finely calibrated and highly tuned. So when you're driving around the city and there are potholes and there are inclines, there's just a lot more that can be slightly off on a supercar rather than an SUV. An SUV is a lot more durable. So these are, I don't want to say fragile, but they are not made to go all over everywhere. So I would go a little bit slower. Makes a lot of sense. One of the things I notice when I'm trolling Bring a Trailer or Cars and Bids or any of the other auction sites is the frequent mention, no aftermarket modifications. Why is this such a concern?

6:45It's a concern because aftermarket, the aftermarket is the Wild West. You are not under dealership guarantees at all. You are in the Wild West. There is no guarantee. I mean, we all have seen those terrible cars with exhaust things and sound systems and cars that have been chopped up and things have been welded on. To say nothing of all the wraps and things along those lines. Completely. Wraps, you know, that's one thing. But when you change anything in these highly refined vehicles, that changes everything. Physics do matter. So when you're adding weight or you're cutting something, you're cutting fenders or you're welding on fenders, that changes the structural integrity of the car potentially.

7:44And it just seems like a minefield unless you really know who and what you're dealing with. Not everybody a singer, to say the very least. What about costs beyond the purchase price? How different is it maintaining a supercar, storing it, and insuring it? Well, it's going to be a lot more expensive in general to repair and replace things. Components of supercars like wheels, like carbon. Supercars have a lot of carbon fiber. Splitters, air ducts, venting, spoilers. All of these things typically are made out of carbon fiber, which is rather fragile and rather expensive to replace. So it just everything is compounded price wise, I would say, in general.

8:30It makes a lot of sense. What about insurance? I know certain insurers don't necessarily cover the Bugattis and Pananis of the world. I was going to say Panini. I guess I got lunch on my head. What about insurance coverage? Not everybody covers the Bugattis and Paninis of the world. Paganis. Yeah. Paninis. Panini. Not everybody covers the Bugattis and Paganis of the world or even the Ferraris and Lamborghinis of the world. What sort of coverage should a supercar owner be seeking? Again, I would go to a specialty provider like Hagerty or Chubb or any of these other ones. Go to a specialist. Do your research.

9:15And again, you can probably stipulate that this is not a daily driver. It's going to have less miles per year and you can get a specialty. So I tend to fall in love with a different car every week. When you see all the variety of things, Bugatti, Pagani, Ferrari, Aston Martin, McLaren, Lamborghini, Bentley, Porsche, it seems like the choices can be endless. How does someone figure out which car is right for them? Well, that's a good question. Again, it sounds so cliche, but follow your own interests. If you've got somebody in your town who has a car that you like the look of, go up and talk to them and ask them how their experience has been at the dealership.

10:01Ask them where they keep the car. You know, there's no dumb question, really. I think if you identify someone who has a car that you like the look of, go talk to them and ask them, how is it working with, you know, maybe even the factory? If it's a highly customized car, they work directly with the factory to customize the car. Find out how that relationship is, because, again, if you're buying a new supercar, it's going to take some time to get it. And you're going to be in contact getting updates about the car, about how the production is coming along. I think you want to try to find someone that feels a good fit for your personality, what you're looking for.

10:42I think you just got to talk to people who you think own the car. What about test drives? I can't imagine that you could walk into a Bugatti dealership and say, hey, I'd like to take that Vyron out for a spin. No, I don't think you can. Maybe they'll take you for a ride. That's tricky. I think that's tricky. I don't really know the answer to that other than, again, make friends with people who have that car. And I know that sounds maybe trite, but these cars are out there. And I think if you see someone out driving that car, generally people are pretty friendly. They're proud of their car. and I would just start asking questions about, hey, who can I talk to?

11:23Where did you get this? I really love it. I don't think it's wrong to hang out at the dealership and try to get a ride. It's the relationship. I have noticed in places like Paris and Amsterdam and then in the United States in Vegas and Miami, you can rent a Ferrari or Lamborghini for a shockingly little amount of money for 20 minutes. is that that's a good idea will that give you the same experience um uh you know i don't i don't know about the mechanical uh standard of those cars that are being rented but it's something i don't think it's wrong i mean we have that in la it's a good idea you can drive through hollywood in a rented ferrari at least it's something to get you in the driver's seat and get a taste of what it might be like.

12:11So let me ask you about a pet peeve I have with supercars. I believe that if you aren't paying your taxes on your car, then our roads are much worse wherever you happen to live. What are your thoughts on people who buy supercars and then register them in Montana to avoid state sales tax? You know, I did a whole story on this, Barry. Yes, I do. It's not really looked at kindly among the car community because everybody knows that's what's happening. So I used to be a member of an online car community that wasn't any specific marquee. It just was everything. And I vividly recall the BMW and Ferrari guys talking about representing the brand.

12:59And when you're tanking up with gas or you're at any sort of social function, cars and coffee, be a good brand ambassador. Don't be that sort of jerk. What's your experience with that? There's etiquette involved here with cars, especially with supercars. And in my experience, the people who are revving the engines, making a ton of noise, pop, pop, pop, pop in the parking lot are 18 year old boys. Don't be an 18 year old boy. Act like you've been here before. Act like you have a sense of respect and appreciation and situational awareness. What I like to call read the room. You're already in a really expensive car.

13:41That's awesome. It's important to be open and friendly. You're driving something that yells, look at me. So people are going to look at you, which is awesome. And I would just say, just have a sense of decorum. Act like you've been around for a long time and you know what you're doing. What's the best advice for interacting with the public when someone comes up to you while you're either getting gas or whatever? I would just say be friendly and anticipate and expect that people are going to comment on your car. If you want to be incognito, drive a black Honda or don't go out. I think when you go out in a flashy car, that is an indicator that you're going to be approached.

14:23And that's awesome. That's what cars are about. It's about sharing cars, sharing the experience. So just expect it and just be friendly. They don't have to sit in the driver's seat if you don't want them to do that, but I would say welcome it. That's fair enough. Let's quickly discuss cautionary tales. You could go to YouTube and there is a series of videos called Supercar Fails, some really embarrassing, just dumb, self-inflicted accidents. What's the warning for people who are driving really expensive cars as to what they should not do? Don't show off. No sudden movements. Be aware of the size of your car, the size and dimensions of your car.

15:07You know, I see a lot of people who have rims that are scraped on the side because they've curbed it or splitters under the chin because they're not aware of how low the car is. So I think the number one thing is be aware of the size and dimensions of your vehicle. It's less prominent than you might think. Number two, you don't need to show off. The car is already showing off. And that goes back to our other thing about etiquette. You don't need to show off and do a burnout or, you know, pass five guys down the sunset strip. We already see you in the car. We already know it's a cool car. No sudden movements.

15:42The other thing about supercars is they're high performance machines, which is awesome, which also means there's less room for error. So any mistake that you make in that vehicle is going to be exaggerated and amplified. And expensive. And a lot quicker. Yeah, quicker and a lot more expensive. of so no sudden movements, smooth is fast, stay calm. You know, you don't need to get all worked up. Just be relaxed. Slow is smooth. Smooth is fast. Exactly. Exactly. And there's one more thing I wanted to say kind of on our the etiquette thing. I just got back from Portugal from driving the Lamborghini Temerario.

16:20And there's an interesting thing that Lamborghini is doing on some of their supercars. The Revuelto is another one. These are hybrid supercars. They've got something called stealth mode, which is six miles of electric only driving. Now you sneak out of the right. You might think that's not actually enough, but it has a very important purpose, which is it makes the car fully electric while you leave the neighborhood or while you come into the neighborhood. And I actually love it because again, it's, it's, it's out of respect for the neighbors and I love cars, but I don't want to hear your Lamborghini at 5am.

16:55So I kind of like that. Any other aspects of supercar purchasing or ownership, that's worth mentioning. You know, the one thing I would also say too, is if you're buying a new one, be really careful about how you spec it. Please try to have some restraint. And I say this for two reasons. One, because again, these cars are wild. They're attractive. They're stunning. They're made to grab attention. You don't need to then add on a bunch of colors and textures and textiles and details to just make it look like vomit. So just try to have a little restraint. And I promise you the car will look really cool because it's already designed to look really arresting.

17:39The second thing I would say is for resale values, the cars that do not have really weird one-off custom jobs inside will probably be a higher value than a car that looks terrible that someone specced, you know, in the 90s that is just terrible. So to wrap up, hey, if you're fortunate enough to be able to buy a super car, bring some self-awareness and some rationality to the process. Make sure what you're buying is something that you're really interested in. Prepare yourself to have conversations with people every time you tank up the car or take it somewhere. Just be aware that you've already managed to get one of the most sought after vehicles in the world.

18:28Behave well, don't do anything too stupid. Own the car, display it, speak to people and try not to end up on YouTube's Supercar Fails. I'm Barry Ritholtz. You're listening to Bloomberg's At The Money. Everybody, oh Lord, won't you buy me? a mercedes-benz my friends all drive Porsches i must make amens worked hard all my lifetime no help from my friends