On Depreciation: Where’s Your Sports-Car Sweet Spot? ""
Posted on: September 15, 2017

2014 Porsche 911 Turbo S and 2015 Nissan GT-R NISMO

An affordable sports car almost sounds like an oxymoron, like fast traffic or entry-level luxury. Behind those zero-to-60-mph time and skidpad ratings, there’s an equally body-shaking reversal that takes place over just a few years: the cost to buy that same sports car. In some cases, the market value of a no-holds-barred daily driver can decline almost 80 percent in just four years. I always tell folks that speed can be hazardous to your health and your wealth. But sometimes that’s not quite true. When the smoke clears, and the depreciation curve flattens out to a slow-dipping straightaway, that’s when you can aim straight for what I call the sports-car sweet spot.

It’s an amazing period, between the time a car sells new and when its second owner takes over, when the operating cost declines to just nickels and dimes. Depreciation is not unique to sports cars. A new-in-the-wrapper Audi A8L cost about $84,000 in 2011. That didn’t include all the options you could get on this 372-hp all-wheel-drive powerhouse. That Audi A8L has since depreciated down to $28,025, according to Black Book’s valuation for a clean example at retail as of September 14. Some primo cars, like the BMW 760Li, can go for a seven-year bender of depreciation hell and post a six-figure loss in value: the 2010 BMW 760Li we tested cost about $137,000 when new, and Black Book estimates its current retail value at $29,925.

So there is a steep cliff of depreciation for nearly any new car, but it’s worth noting that even those with a sports-car soul are not immune to this market phenomenon. Finding them at the right time is key. The less expensive sports cars, such as the 2012 Mazda MX-5 Miata and the 2012 BMW Z4 SDrive 28i, typically only experience about three years of depreciation before they settle in to an unusually attractive sports-car sweet spot.

2012 Mazda- MX-5 Miata

So let’s go shopping for a roadster. A new Mazda MX-5 Miata Club at press time had an MSRP of $29,675, including destination. But let’s take just that $29,675 and look at what happens to it over a two-year period. A new car depreciates to the tune of 10 percent the moment it drives off the dealer lot, according to Carfax. And then it averages another 10 to 15 percent in depreciation over the next couple of years. So let’s say it depreciates 12 percent the first two years after you own it. After taking the initial $2976.50 depreciation hit for being brand new, its value drops by an estimated $3205 per year thereafter. So the first two years you own the car, it loses about $9400 in value.

A lease would fare worse. Mazda recently featured a $479 lease special for 36 months for its MX-5 Miata RF. This artificially low monthly payment doesn’t take into account the tough prequalifying criteria, such as a high credit score, not to mention the stiff down payment of $1999, acquisition fee of $595, and other dealer fees. Nor does it include those pesky four-figure taxes and registration costs you will usually be charged once it’s registered. Those inconspicuous costs along with the monthly payments can easily inflate that two-year cost to over $15,000. Then you have another 12 months to go on the lease. That new-car premium will also make you a chronic debtor for three years.

Meanwhile, the forecast depreciation cost for a 2012 Mazda MX-5 over the next two years, according to Black Book, which bases the figures on wholesale value, is $2850. So it’s less than the front-end fees, taxes, and down payment you would likely make on a new MX-5.

Depreciation of new sports cars kills your bank account, and that level of wealth destruction is worth avoiding. That’s especially true when you start looking at cars that are $100,000 or beyond. Let’s say you want to go deep and get the best of the best. Exotic sports cars are the auto industry’s cream of the crop. Not too surprisingly, this is exactly where your sports-car sweet spot can get really enticing.

2013 Porsche 911 Carrera S cabriolet

A 2013 Porsche 911 Carrera 4S coupe is still quite a pricey proposition today at $79,575 retail for a clean example, according to Black Book. But, if you hold that car for two more years as a daily driver, you would only lose about $17,000 in value by 2019, according to how Black Book estimates depreciation. A $107,000-when-new Porsche gets progressively less expensive to own once you wait for that four-year bottom to fall out of its new-car price.

That Porsche isn’t even close to the sweetest of sweet spots when it comes to the more exotic sports cars. There are certain high-end cars that are truly rare, valuable, and difficult to imitate. The 2014 Nissan GT-R Premium is the rolling embodiment of that supercar ideal, with fewer than 1500 sold. In 2015, the GT-R was about to supplement its 545-hp flagship with the even more exclusive 595-hp GT-R NISMO. However, some at Car and Driver were still madly in love with the brutal bluntness of the old school non-NISMO street-legal track car that had already successfully taken on all comers from Silicon Valley to Stuttgart.

We weren’t the only ones. Those brave sports-car aficionados who bought the 2014 models instead of the more exclusive 2015 turned out to be right on the money. According to Black Book, the 2014 Nissan GT-R Premium is estimated to have experienced a mere $5700 worth of depreciation between September 2017 and September 2019. That’s a sports car that is now holding its value well.

2014 Nissan GT-R

However, nothing comes too easily for a sports-car lover unless you’re willing to go what can aptly be called the extra mile. If you do plan on becoming a two-year trader, guess what? You still have to invest well in that sports car. There are no shortcuts. Beyond making sure that all the recent maintenance has been done and that the tires have plenty of tread (a hidden expense that not all owners accurately measure), you also need to take your own temperature and visit an enthusiast forum for that specific sports model so you can clearly see the road ahead. This will help you forecast maintenance costs and learn whether certain repairs become common as the years and miles pile up.

Just as in the stock market, you need to do your due diligence when buying any sports car. Even when you buy it at the sweet spot, the buy-and-hold strategy isn’t 100 percent foolproof. But unlike the millions of folks out there who always ignore the tsunami-size leasing costs that are behind that seductive monthly payment, the math—when you decide to buy and keep in the short run—is overwhelmingly on your side. That edge, along with the outstanding long-term reliability of today’s sports cars, roadsters, and grand tourers, makes sports cars a perfect fit for the enthusiast who wants to enjoy the best out there at a small fraction of the new-car cost.

Steve Lang has been an auto auctioneer, car dealer, and part owner of an auto auction for nearly two decades. He is co-founder of the Long-Term Quality Index.


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