06/23/08

Can You Afford to Own A Ferrari?

Like a private jet that requires three to four hours maintenance for every hour of flight time, Ferraris are not cheap to own or operate.

Ferrari 550

This author chronicled the history following the purchase of a new $225,000 Ferrari F550 for six years and the tab was staggering:

Total Maintenance: $65,760.50

Total Depreciation: $135,000

Total Maintenance Per Mile: $1.82

Total Depreciation Per Mile: $3.72

Total Cost Per Mile: $5.55

By Michael Sheehan

I recently sold an unusually well-documented 1998 550 Maranello, S/N 111317, with 36,200 miles to a client in the jet aircraft industry, and comparisons between Ferrari and jet costs inspired this column. Like a private jet that requires three to four hours of maintenance for every hour of flight time, Ferraris are not cheap to own.

FIRST TWO YEARS ALMOST FREE

550 Ferrari S/N 111317 was sold new on March 19, 1998, at $225,000, to a wealthy Santa Monica real estate investor and used for weekend retreats to his ranch in Ojai, a 150-plus-mile round trip. Thanks to an unlimited mileage warranty, the first two years were relatively expense free.

The first bite came in August 2000, five months after the warranty expired. At 13,637 miles, the owner brought the car in for a 15,000-mile service, two rear tires, and an oil, filter, and coolant change for $2,665.70. Two months later, in October, at 17,220 miles, noisy cam belts and bearings were replaced at no cost (thanks to a warranty extension by Ferrari). The windshield washer reservoir was also replaced for $529.25. A month later, in November, at 17,618 miles, the front spoiler and three wheels were refinished because of road-rash, at $1,285. Total for the first year out of warranty, and about 4,000 miles: $4,479.95, or $1.12 per mile.

As 2001 rolled around, in January, at 18,124 miles, two ball joints and sway bar bushings were replaced at $253.47, a standard procedure for a heavy, high performance, front-engined car with power steering. Three months later, in April, at 18,998 miles, a coolant leak, new front tires, another repaint of the wheels, and a detail added $2,718 to the ongoing maintenance bill.

A few days later, at 19,002 miles, the check engine light came on and an O2 sensor was replaced at $261.31. A month later, in late May, at 19,329 miles, the dash pod had to come out for an instrument panel repair, at $1,290.18. Five months and 1,289 miles later, in early October, at 20,618 miles, an annual oil and filter service and new rear tires added $2,386.60 to the expense column.

$8,988 FOR SECOND YEAR OUT OF WARRANTY

In December 2001, a service at 21,358 miles for dash lights, rattles, and a radiator R & R for coolant leaks closed the year out at $2,078.82. Total for the second year out of warranty, and another 3,740 miles: $8,988.38, or $2.40 a mile.

In January 2002, at 21,966 miles, the owner had the battery replaced, new suspension bushings installed, and a wheel alignment for $1,228.35. In March, at 22,956 miles, the license plate frame was replaced for $124.99, and in May, at 23,802 miles, the power steering pump was replaced and the fluids serviced, at $500.95.

Four months and 2,657 miles later, in September, at 25,607 miles, the steering box, power steering rack, and rear shocks were replaced, and the wheels were aligned for $8,641.69. The year ended at 26,236 miles, with a compression and leakdown problem discovered in late December at the 30,000-mile service. New cam belts, engine mounts, and a valve job followed, with all 24 valves and valve guides replaced at $7,954.66. Fortunately for the owner, Ferrari supplied the valves and guides under an extended warranty. Another year, another 4,878 miles, adding up to $18,450.64, or $3.78 a mile.

TOYOTA MONEY: 37 CENTS PER MILE

The Ferrari gods were smiling in 2003, with only 672 miles added and one service for hood shocks, in March, at 26,908 miles. Cost of ownership was only $249.38. Little use means no visits to ever-vigilant Ferrari mechanics, who point out problems that need to be resolved. This year cost Toyota money—just 37 cents per mile. Of course, there weren’t many miles driven either.

In 2004, 550 S/N 111317 saw little use, but frequent visits to the service center, beginning in January, at 31,688 miles, for a seat control switch and wiper blades at $1,366.43. A week later, in early February, at 31,860 miles, sway bar bushings were replaced at $208.63. In late February, at 32,035 miles, the handbrake shoes and rear brake rotors were replaced and four new tires were fitted, at $3,365.79. In early March, at 32,122 miles, a coolant leak added $903.21 to the annual cost. Another year, another 5,214 miles, another $5,844.06. The cost per mile, $1.12.

In late December 2004, Ferrari 550 S/N 111317 moved on to her second owner, for $90,000, and no service bills were added to the year. A real estate investor and self-confessed “Porsche guy,” the second owner had always wanted a Ferrari and bought the 550 simply because he knew the car through the original owner. Only weeks into Ferrari ownership, in January 2005, at 32,945 miles, a 30,000-mile service was again done, under the “while-you’re-at-it” theory, because of oil leaks. The front shocks were also replaced, at $6,196.57. Only weeks later, the second owner also had the nose repainted, and his 550 “personalized” with the front fenders modified for fender shields and the calipers redone in yellow, at $7,759.70. NOT FOR THE TIMID: $10.27 PER MILE

A month later, in March, the steering wheel was recovered for $450, and in April the windows were tinted and a “clear bra” installed for $935. Only weeks later, the owner continued to personalize his 550 with a Tubi Exhaust for $3,155.94. In August, at 34,235 miles, the oil hoses and other minor items were replaced, at $3,194.44. Total mileage for the second owner: 2,113 miles and $21,691.65. Most of this work was pure pride-of-ownership personalization, but the financially timid need not apply, as the cost per mile, at $10.27 per mile, was approaching that of an M1 tank.

As 2006 rolled in, our second owner next had a new clutch installed, in January, at 35,625 miles, for $4,852.59. After sitting for six months, the second owner decided that he really was a “Porsche guy” at heart. The 550 was too big for his tastes and so, in August, 550 Ferrari S/N 111317 was picked up from his home and dropped off for an a/c service, at 36,196 miles, for $519.40. Cost of ownership for the second owner, for 2006: 1,961 miles at $5,371.99, or $2.73 per mile.

In August 2006, our subject 550 was again sold for $90,000, with 36,196 miles, to the third owner, the president of a corporate jet maintenance and sales company. During the pre-purchase, an oil leak was found, and while the estimate was $3,000, the final bill was $1,582.58. The third owner appreciated the subtle lines and wanted a user-friendly Ferrari that could be driven daily in New York weather and traffic.

A long-time Ferrari owner, he appreciated that virtually all of the depreciation was reflected in the purchase price and that at 36,000 miles, adding mileage wouldn’t kill the value. His last toy was a new Porsche Turbo at $160,000, and while it had been nice to order a car exactly as he wanted, the depreciation wasn’t worth the thrill when he sold it after three years for $95,000.

The warranty on 550 S/N 111317 ran out in March, 2000, at about 13,500 miles. Our subject 550 went to the third owner in September 2006 at 36,200 miles, so the total miles out of warranty was 22,700 miles, with a total spent of $65,760.50, or $2.90 a mile, right at $11,000 a year.

Ferrari ownership is both a lifestyle and a socio-economic statement, just as owning a polo pony is a different venture than keeping a draught horse. As one former owner of S/N 111317 put it, “I spend more than that on crap on eBay every year.” No other statement quite sums up the difference between those who lust for a Ferrari from those who can pay the price of ownership.

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