The perils of personalizing your $500,000 Ferrari: Chris Bryant

Ferrari, Europe's most valuable automaker, is seeing a pile-up of nearly new models in the used market despite long waitlists for new orders. The Italian brand blames its wealthy clients' esoteric customization choices for affecting resale values. While bespoke personalization boosts Ferrari's revenue, the diminishing value of over-customized models highlights the financial risks for owners. For prospective buyers, the message is clear: personalization should be approached with caution..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..By Chris Bryant.Ferrari NV became Europe's most valuable automaker by increasing sales volumes and prices while persuading customers to purchase lots of expensive options. But now its finely tuned business model is showing signs of wear. .___STEADY_PAYWALL___.While new vehicle orders extend well into 2026, nearly new sports cars are piling up in the used market. The Italian manufacturer has put part of the blame for weaker resale values on the esoteric choices of its wealthy clients, which I think is a bit cheeky..Some options, such as special paintwork, are "maybe not so appreciated by the second client," Chief Executive Officer Benedetto Vigna told investors in August, citing an analysis of 20,000 used transactions. In contrast, "functional" personalization choices maintain their value, he added, insisting overall residual values remain "strong.".No one will shed tears for the super-rich losing money because they picked a hideous supercar spec — it's the definition of a first-world problem and a good advertisement for wealth taxes. But one shouldn't forget Ferrari has profited handsomely from clients customizing cars to the max. Many clients are now facing a big financial hit when selling their vehicle, and not just because they picked unappealing options..A few decades ago, almost all new Ferraris were red; nowadays, the percentage is just 40%. Classic Rosso Corsa is still a safe choice for a first-time buyer, but collectors want a vehicle reflecting their unique tastes and may prefer more adventurous hues like Bianco Artico or Verde Toscana — shades of white or green to the non-cognoscenti. .Read more: Toyota Hilux GR-S III – A robust evolution in off-roading prowess.Ferrari is only too glad to satisfy this demand for personalization, which accounts for almost one fifth of its vehicle and spare parts revenue. This financial windfall has helped the prancing horse overtake European automotive peers in market value while selling fewer than 14,000 vehicles a year..There are several tiers for Ferraristi wanting a bespoke vehicle, including being doted on at an atelier, or participating in the more exclusive Tailor Made program in Maranello, Shanghai or New York where a team of experts led by a personal designer assists in making every element of the car unique. While the company tries to accommodate customer wishes, there are limits: Hot pink is a no-no, whereas arresting tones like Bronzo Masaru or Viola Hong Kong — metallic bronze and purple — are acceptable, for a price. .Exterior, interior and technology options can easily add six-figures to the already eye-watering purchase price. A panoramic roof for the £313,000 Ferrari Purosangue SUV costs around £13,400, while special two-layer paint is £22,500, for example. An airbrushed Scuderia shield on the sides of the vehicle will set you back £9,500, while a Tricolore livery stripe is more than twice that much. These extras are listed on a plaque in the cargo area, so the buyer can show off what they've purchased — though regrettably the prices aren't shown. (But if you're curious about how to spec a luminous green Pursosangue with £120,000 of options, there's a full breakdown here.) .Read more: 🔒 The $165,000 Porsche 911 Carrera GTS hybrid: Tradition meets innovation."Ferrari encourages clients to spec vehicles like crazy to get one of the first delivered, they invite them over to the factory and more often than not they get carried away spending fortunes on options," Tom Jaconelli, a director at UK supercar dealer Romans International, told me. "But a lot of that value is instantly diminished.".Personalization isn't necessarily a poor investment. Without sought-after features like a front suspension lifter (which helps avoid damaging the vehicle when driving over bumps), vehicles won't stand out in a crowded used market..Ferrari offers a long list of ways to add lightweight carbon fiber to its vehicles, with each exterior body panel or interior element costing thousands of pounds. These carbon finishes are retaining more of their value compared with other types of tailoring, Ferrari told me; while there's no direct correlation between personalization and residual values, vehicles "rich in customization" and "closely aligned with the car's spirit" are "more sought after in the market" the company said. .Well, maybe. I agree that lavishly customizing a limited-edition Ferrari might make financial sense, because these models tend to appreciate and some are destined for museums. But heavily personalizing a regular model might be asking for trouble because options are inherently subjective; one buyer's dream car is another's horror show. And good luck persuading a second-hand buyer that the gaudy paintwork you fell in love with is worth an extra £22,000. .Read more: The $367K Ferrari 296 GTS: A hybrid marvel with stunning design and performance.The Italian company deliberately maintains long waiting lists to reinforce exclusivity, and earning the right to purchase limited-edition models requires a long purchase history. Ferrari says expensive customization does not influence vehicle allocation, which is rather determined by when the order is placed. Still, I suspect some wealthy clients splash on options anyway, either because they're unbothered by resale values or they're hoping to gain favor with Ferrari headquarters and their dealer, whose commissions are partly determined by the personalized options they sell..Almost 75% of the new vehicles sold by the company in 2023 went to existing Ferrari clients, and an astonishing 40% to current owners of more than one of its vehicles. These loyal customers couldn't lose during the pandemic when a shortage caused used prices to soar, but placing repeat orders to climb the Ferrari loyalty ladder might now require taking a hit on depreciation..Clients were required to own a £376,000 hybrid SF90 Stradale to have the opportunity to purchase a limited edition SF90 XX costing more than £670,000 (before options); there are now many of the former for sale, and they're rapidly losing value, as I explained here. Similarly, Romans International is marketing a Roma Spider with £120,000 of options. The original owner never intended hanging on to it long-term and sold soon after delivery, taking a loss of £80,000..Strong residual values are vital to Ferrari's business model; even loyal customers may tire of losing money on their exotic habit eventually and either cancel existing orders or decline to place new ones. While the UK market is particularly weak — second-hand hybrid 296s and SF90s are available for around 30% below list price — the US and Germany also look well supplied — perhaps too well. .Ferrari said the volumes of vehicles for sale "does not suggest any critical issues," with order cancellations consistent with historic trends; requirement to purchase multiple vehicles haven't triggered a high volume of resales. Models such as the SF90 and Roma coupes have been phased out or are nearing the end of production, which should support resale values. Meanwhile, Ferrari is trying to ensure more of its vehicles are handled by certified dealers, allowing it to better influence used pricing and supply..My advice to prospective customers is simple: Pimping your new Ferrari can be fun — but don't get too carried away..Read also:.🔒 Ferrari's first electric car to cost over $500,000Ferrari falters in Montreal qualifying after Monaco highThe $367K Ferrari 296 GTS: A hybrid marvel with stunning design and performance.© 2024 Bloomberg L.P.

The perils of personalizing your $500,000 Ferrari: Chris Bryant

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