This is an old story, but my thought process has only just caught up with why I care about it. Basically, there’s a Bugatti Chiron for sale through an independent classic car specialist in Surrey. It’s proudly declared to be the ‘first used example’ to be offered for sale in the UK. Fine. It was bound to happen.
It’s the next bit that riles me a little. The news item from Romans International, via Newspress, says “While simply driving the majority of new cars off the forecourt can wipe thousands off their value, the 261mph supercar has bucked the trend and soared in value to £3.6 million – an increase of £1.1 million over its list price of £2.5 million”.
The operative word above is ‘value’, and what I’m getting at is, just how on earth is £3.6m anything but a heinously greedy random figure?
The press release mentioned above was immediately pounced upon by disposable British tabloid and chip-wrapper The Sun, who polished it to the the expected sensationalist sheen, but did little to investigate the matter further. Notably, it’s not at all clear exactly how that ‘value’ was arrived upon.
There are a number of organizations that specialise in valuing cars. The most famous in the USA is undoubtedly Kelley’s, whose Blue Book has been the go-to guide for many a trader since 1918, while CAP has been doing the same in the UK for generations, too. The latter company’s modus operandii is outlined in its name, literally Current Auction Prices. So, a rough value given for a 2013 Mercedes E220d, for example, will be based on the kind of numbers that such a car actually makes in trade auctions across the country.
In cases where a certain derivative of the E-Class hasn’t been recorded at auction, CAP has invariably gathered enough information from other, comparable sales to extrapolate the missing information. And even if this ‘educated guess’ proves inaccurate, the organisation has so much influence and authority that any figure it publishes will end up as taken as fact. So, when it comes to setting values of used cars, CAP pretty much controls the industry.
But what about setting a value on something as esoteric as a Bugatti Chiron? Well, though many will protest otherwise, my argument is that you can’t.
Nobody has ever bought a used Bugatti Chiron in the UK, so nobody can predict how much one will sell for today. You can make certain assumptions – with a waiting list for new examples, a turnkey machine that you can leap straight into and drive away is bound to attract a premium among the rich and impatient. But a £1.1m premium?
I’m gonna go out on a limb here, and tentatively suggest that the same greed is being shown here as that displayed by the London property market. For a long time, with ever more imaginative and lavish developments being constructed in the capital, the casual and uninformed bystander could be excused for harbouring doubts that anybody could possibly know what anything was worth. If nobody has ever offered a 5,000 sq ft Canary Wharf penthouse apartment before, exactly what price can you set on a property that represents a new peak, a new ultimate? Surely all you can do is set a figure and hope.
You can only base a value on what has gone before, though you can detect patterns and make predictions therefrom. But is a 5,000sq ft property worth twice as much as a 2,500sq ft place, or ten times as much because of its rarity? It all depends on how daring / ballsy or outright greedy the developer and its agent wants to be. So, if a figure of £6million is set and achieved, where do you go from there? Is it sustainable? Will the next 5,000sq ft Canary Wharf penthouse reach that figure, exceed it because of the envy / me-too factor, or plummet in value because nobody really needs such a property?
If this Bugatti Chiron sells for £3.6million, what does this even mean? Does this become a baseline indication of what such machines are worth, or will it be seen as an anomaly caused by being the first one ever offered? My guess is that Romans are a bunch of chancers, hoping that some utter lunatic will pounce at an opportunity to snap a Chiron up quickly rather than waiting patiently in a queue. And with the grotesque amounts of money that seem to be washing around in entirely the wrong hands right now, that could well happen.
However, if it doesn’t – if the world decides that £3.6m is a ridiculous over-valuation, Romans will be left looking a little foolish. The dealer and its valuations team are in a great position to shape the fledgling used Chiron market. However, in the high-stakes casino that is the ultra high-end supercar market, it’s a game that should be played in a rational, calculated manner, like Poker. Instead, it seems they’ve taken everything to the Roulette table and bet the lot on 13.
(All images from www.Newspress.com)