The Secret Supercar Buyers Club
... that is the approximate number of new, high-end luxury cars hitting the roads of South Africa every year. The market is growing every year - in fact, growing every year since 2010 (a time when the Rand/ dollar exchange rate was at R7/$). More and more brands are building their empires on the loyalty of their customers? How do they do this? Experiences. Products.
How will you afford it?
Many clients purchasing high-end luxury cars have multiple, diversified income streams. Relying solely on a 9-5 to fund a new exotic car is possible... but for most people, very unlikely. If you have been following our Telegram group and you climbed into some GameStop, you may be on your way to the nearest luxury car dealer too (or living under a bridge right now if you didn't make it out in time).
What's the ticket to the 400 club?
R3M is the entry fee that puts you into the 400+ Club, this is what you are going to need to spend on the wheels to be between the top crust and the upper crust of the premium brands.
Average net worth of the 400 club?
R65M, the average net worth of those in the 400+ Club, but it goes right up into the billions. Also, the further up, the harder it becomes to tell this person is actually wealthy. You will be surprised how many billionaires make sure they aren't listed on the public Forbes lists...
Average value of a car within the 400 club?
R3.75M, the average value of the car in the 400+ Club. These range across sports and supercars, GT cars, and ultra-luxury sedans and SUVs.
Why would anyone fork out THAT much to get from point A to point B?
The experience. You're eating down the best kota of your life, the music is a vibe, the people around you are all having a good time, and everything feels, just how it is supposed to be. Sounds like a pre-Covid world. Now, what is scintillating about that image? The product is good, and the experience is better.
Many supercar owners are buying into an exclusive club which comes with a crew on standby 24/7 for any minor issue they experience, extended warranties (15-year extensions), invites to member only events, access to experiences anywhere in the world, the head turning encounter of stepping out of a supercar and most of all, the thrill of driving powerful vehicles only a small fraction of people will ever get to experience.
So, what is it going to take you to enter the ranks of the 400+ Club? As at the end of 2020, there are approximately 35,000 high net worth individuals in South Africa, those are high net worth individuals with net assets that exceed $1 million.
You are probably thinking, well, there are folks who kit themselves out in Gucci and LV, adopt the latest Rolex and drink the most expensive alcohol at the most exclusive spots in town. While that may be true, it's not what we usually see.
Many of the supercar owners we see resemble people you walk past in shopping malls or see chilling at the park.
I have taught many of the students of our internship program that they are to treat everyone who walks through our doors with the utmost respect and leave them with a long-lasting experience. The guy with the shorts, flip flops, and stain on his t-shirt, is buying before the one bossing the showroom in his tailored suit, and custom mix cologne. But both walk around treated like a million bucks. Lasting experience. Treating anyone differently based on their appearance is a mistake by itself & sometimes that mistake will cost you millions.
I don't have R3m lying around but I want to invest in cars, is that even possible?
Cars, for the most part, are depreciating assets. The rate of depreciation varies according to year, model type, mileage and brand. There are, however, cars which increase in value over time, collector cars.
There's a growing movement towards fractional ownership. Fractionalisation is carving up an ownership into smaller pieces, so you own a piece. Shares are a perfect example of fractional ownership. The concept extends too basically anything. Today you can own a fraction of a Ferrari, rare sneakers, a Rolex & even a Picasso painting.
There's a New York based company, Rally which recently raised $17m on the back of reaching 200,000 users investing in 120 IPOs. They have raised $27m in total. So, you buy a small fraction in a classic car and can trade your fraction with other investors. The assets are securely stored in a purpose-built, climate-controlled facility. They are monitored and are kept under 24/7 video surveillance.
Here's an excerpt from Rally on how it all works:
"When you purchase shares on RallyTM you invest in an ownership stake in a mini-company that owns and operates a specific asset. If its value rises, so should the value of your shares. If it earns more money than it costs to operate, you can get paid dividends. When you decide to sell your shares, you place an order through our partner broker dealers who will match you with potential buyers."
South Africa takes a bit more time to start reflecting the hottest new global trends and while Rally isn't available here, yet it shows that as fractional ownership becomes popular, we can expect to see many more platforms allowing for the partial ownership in collectible vehicles.
Another way to get exposure to the success of vehicles is to buy stock in the actual companies. Ferrari stock has returned 4x over the last 5 years. Stocks in electric vehicles such as Tesla and NIO have done incredibly well. If you were fortunate to get in early, you would be in a really great place. An argument can be made that at current levels, these company valuations already reflect very strong future growth and heavy expectations on them to deliver. That said, many people have lost plenty of money betting against them.
Another interesting opportunity to consider is investing in companies within the value chain, component manufacturers, battery makers, bespoke parts, etc. There's an entire universe of great investable opportunities.
My assets are worth a bit less than R65M, can I still end up driving a supercar?
Definitely. Supercar driving experiences will put you behind the wheel of an exotic sports car for a tiny fraction of the cost of owning a supercar. Check out your local circuit or vehicle dealer for their driving experiences. As a future supercar owner (or even a current one), here's to more rich success! BankerX is here to ride alongside you on the journey!