The Best Sports Car for Investors (FCAU, VLKAY)
Ferrari, perhaps the best known sports car brand in the world, will have its IPO soon, issuing common shares to investors for the first time. This Italian automobile maker is famous for both its Formula 1 racing legacy as well as its appeal to wealthy individuals. The price of a new Ferrari can range from $188,425 and go upwards of $400,000 depending on the model, and are produced in limited numbers.
Ferrari is being spun off via an IPO from its current owner, Fiat Chrysler Automobile Group (FCAU), and will represent the only pure play for sports car makers available for investors on a public stock exchange. Although their shares won't be available to the public until the initial public offering is finalized sometime in 2016, there are still ways to invest in companies that produce precision-made sports cars, a luxury product that has proven desirable both in bull markets as well as recessions. (For more, see: 4 Most Anticipated IPOs in 2015.)
Here are some ways that even the small investor can gain exposure to the fast world of sports cars.Own Ferrari's Parent Company: Fiat Chrysler
Currently, the Ferrari family owns around 10% of its equity, with the other 90% of its ownership retained by Fiat Chrysler Automobiles. Shares of this Italian parent company can be purchased on American stock exchanges via its ADR, which have increased in value by nearly 35% so far year to date. This sports brand is doing brisk business. Forbes has reported that Ferrari's revenues for 2013 were €2.335 billion (US$2.12 billion), which represents a 5% increase over the previous year, and revenues in the first nine months of 2014 were up 17.5% from the same period in the 2013. Ferrari sales are still dominated by the European market, with the U.S. accounting for just 29% of the company's overall revenue.
Fiat Chrysler also owns a stake in another Italian competitor of Ferrari: Maserati. Maserati has been breaking sales records lately with a large push to expand its presence in the U.S. market. It's U.S. marketing efforts, however, have resulted in lower profit margins for Fiat as it tried to entice more Americans to take ownership of this previously very exclusive brand.
While Fiat may be best known for its economical, compact family cars such as the Fiat 500, owning shares of this global auto maker can give investors exposure to two very prominent sports car brands. (See also: The Complete Guide to Buying a Car.)Own The Largest Car Maker in the World: Volkswagen Group
Volkswagen, the German car maker, just became the world's largest automobile manufacturer, besting Japanese Toyota Motors (TM) which had held that title for many years. Aside from its flagship brand, Volkswagen owns a majority stake in some high performance sports car lines. Most notably, perhaps, is Porsche, of which VW took nearly 50% ownership in 2013. A new Porsche can run from upwards of $50,000 to nearly $1 million for its 918 Spyder.
In addition to Porsche, VW has 100% ownership of sports car brands Bugatti, Lamborghini, Audi and luxury brand Bentley. Bugatti is a French maker of high performance vehicles, with its Veyron 16.4 Grand Sport Vitesse model costing nearly $2.5 million. The more "modestly" priced Lamborghinis run around $500,000 per car. Audi, well known for its sedans, also makes the high performance sports model, the R8, with an MSRP of around $167,000.
Like Fiat, investing in Volkswagen is not a pure play for sports cars, but given its impressive portfolio of sports brands it can potentially turbocharge a portfolio. (For more, see: What is a Pure Play?)Buy American
American car makers also produce sports cars. Perhaps not as refined (nor as pricey) as their European counterparts, their performance can be comparable. For example, General Motors Co. (GM) makes the impressive Chevrolet Corvette Z06, which starts at $80,000. As an alternative to the sports car, GM also has a history of producing "muscle cars", today offering the Chevrolet Camaro ZL1 for around $55,000. Once again, General Motors is a diversified automobile manufacturer producing a wide range of vehicles from luxury down to economy cars, and investing in its shares is not a pure play on sports cars. (See also: How the US Automobile Industry Has Changed.)
Perhaps the most interesting investment in performance vehicles is with relative newcomer Tesla Motors Inc. (TSLA), the maker of all electric vehicles. Produced between 2008-2012, the Tesla Roadster, with a base price of $109,000, it is able to achieve zero to 60 mph in 3.7 seconds, rivaling many traditional sports cars. Not be outdone, Tesla CEO Elon Musk has announced that the Roadster will be re-introduced in 2019 and will boast a zero-to-60 time of just 2.8 seconds, rivaling the very fastest sports cars on the planet.
Being all-electric, Tesla's vehicles are largely silent and do not have the typical loud engine roar that accompanies other sports cars. While some purists may be put off by this lack of engine noise on the road, all-electric vehicles are becoming more popular each month, with Tesla consistently breaking its own sales records. Tesla is not a pure play for sports cars either, as it has focused on its Model S sedan and Model X crossover SUV recently in order to cater more towards families and the electric vehicle as an everyday car. (For more, see: The Economics of Owning a Tesla Car.)The Bottom Line
Sports cars are expensive and exclusive, high performance machines that seem to be in high demand during good times and bad. Although there are no pure play investments in sports car makers currently, Fiat Chrysler has announced it will spin off Ferrari as an IPO some time in 2016, making it the only such investment available for investors in public markets. Investors today can still gain exposure to sports car makers by investing in the parent companies of the world's most prominent brands. Fiat Chrysler (which still owns Ferrari) also owns Maserati. Volkswagen, now the world's largest auto maker, is the parent for Porsche, Lamborghini and Bugatti; General Motors makes the Corvette; and Tesla Motors is re-introducing a supercharged all electric Roadster in 2019.
Is it worth buying an actual sports car as an investment? According to the Kelley Blue Book, the following vehicles (which comprises all cars and trucks on the road) have the greatest chance of getting at least half of their money back when it's time to sell:
- Dodge Challenger
- Chevrolet Silverado
- Honda CR-V
- Chevrolet Camaro
- Toyota Tundra
- Chevrolet Corvette
- Toyota 4Runner
- Jeep Wrangler
As for sports cars, only the Corvette makes the list.