If you’re looking to get into your first supercar, there is no better time than now.
The supercar is exploding and there are new offerings coming to market every year. By far the most outrageous ones are scheduled for release in 2021 – the Aston Martin Valkyrie line, Mercedes AMG One, the new Roadster and more outrageous vehicles.
This means the current generation of supercars should be available for cheap…well..cheaper than before…within half a year or so.
The same thing happened with the old generation of supercars, which can now be found in the low 100 thousands. Indeed, many enthusiast drivers are drawn to low-price supercars, which have gone out of fashion and have put some years and miles on the clock.
But as you’re about to learn, buying a supercar and owning one are two entirely different things, which also come with a different price tag.
In this article, we’ll talk about everything you need to pay for if you want to have an exotic vehicle in your own driveway.
Capitalised Cost, Residual Value, Depreciation, Interest
In financial terms, the capitalized cost is the initial investment to obtain the vehicle – the $100,000 – $200,000 – $500,000 dollars it costs to buy the car from the factory, dealership or private seller.
This can be lower than MSRP due to various rebates and incentive programmes. However, in the case of supercars it’s usually substantially higher, since more are loaded with options and highly personalized out of the factory. It’s not uncommon for new buyers to spend six figure sums on options and equipment.
The residual value is the actual market value of the vehicle at the moment you decide to sell it. If you lease your supercar, this value is agreed upon entering the lease contract, depending on the lease term, mileage and assuming good working condition of the vehicle.
If you’re buying and reselling at a later stage, the residual value will be the price similar vehicles are going for in your local market.
Finally, the depreciation is merely the difference between the capitalized cost and the residual value. This is the actual sum you’re losing during your ownership of the vehicle and it becomes the single biggest expense throughout your tenure.
Ooops.. We forgot about the interest. We’ll go out on a limb here and assume you’re not buying your supercar the cash.
Cars (under $1 million) are typically very poor investments, so the people who have hundreds of thousands of dollars to burn on cars either finance or lease their supercars, leaving their money available for other ventures and investments.
If you finance your supercar, the bank will apply interest on the purchase price. The exact interest is unique to each individual person calculated through long algorithms that assess risk using dozens of variables.
The APR – annual percentage rate – can be as low as 1% or as high as 10%. It depends on who you are and whether there are middle parties in the mix.
If you lease your supercar, the leasing company will apply interest to the total depreciation value in the form of a money factor. All the money factor is the APR – annual percentage rate – divided by 2400.
And finally, there are taxes. Depending on where you live, you’ll see different taxes being applied by the local and state authorities. In California, the state gets 7.5% on every purchase you make, while the local authorities can add up to 2.5% on top.
If you finance a supercar, tax is applicable on the entire purchase price of the vehicle. If you lease a supercar, tax is applicable only on the cost of the lease, which is the cost for depreciation + the interest applied on that depreciation.
To help you put that in perspective, we’ve looked up a bunch of Aston Martin, Ferrari and Lamborghini supercars online to get an idea how much they cost and depreciate over time.
For our examples, we’ve used the Auto Tempest search engine for post code 90001 in a 500-mile radius. True market prices are always dependent on the time and location of your search so don’t take any of the following values to heart.
Aston Martin cost and depreciation
An entry-level Aston Martin, otherwise said the least luxurious offering, is the Vantage.
A brand new 2019 Aston Martin Vantage has an MSRP of $152,820. This particular used 2019 Aston Martin Vantage with 5k miles goes for $128,800. That’s a depreciation of $24,020 for one year – 15.7% or $4,804 per 1,000 miles on the clock.
On the higher end of the Aston portfolio is the Vanquish V12. A brand new 2019 example has an MSRP of $296,475, with most of them rolling well about $300k from the factory.
We found this 2016 Aston Martin Vanquish V12 for $152,900 with 2.6k miles. That’s $143,575 or 51.6% of depreciation over four years – $35,894 or 12.1% per year on average -a massive hit for the first owner.
Aston Martins typically depreciate faster than the average supercar. There are lots of factors that play here, which we’ll leave for another article.
Ferrari cost and depreciation
Moving on to the most famous supercar brand in the world – Ferrari.
The last generation of entry-level Ferraris – the 2017 California T had an MSRP of $202,723. After four years, this 2016 Ferrari California T is in the market for $159,800 with 6.4k miles. That’s a depreciation of $42,923 or 21.8% for four years, or $10,730 or 5.3% per year on average.
As you see the Portofino retains its value extremely well, actually appreciating through its first year, despite being the starter Ferrari in the product line.
Moving on to the faster and more expensive Ferraris, we see more of the same.
A 2019 Ferrari 488 GTB has an MSRP of $266,550. This 2018 model goes for $239,000 with 4.3k miles. That’s $27,550 or 10.3% for a single year, or $6,400 per 1,000 miles driven. Considering cars depreciate the most in their first year, the 488 GTB holds its value fairly well.
This 2016 Ferrari 488 Spider for $209,950 with 18.6k miles has depreciated only $56,600 or 27% for four years. Interestingly, only $3,043 per 1,000 miles of driving – half of the previous example.
Looking at it’s replacement, the 2020 Ferrari F8 Tributo has an MSRP of $279,450. We have two examples going for $350,000 and $405,037 brand new. They have a fair deal of options and it’s too early to talk about depreciation on this brand new model.
Ferraris tend to retain their value incredibly well, often appreciating right out of the factory due to the complexity of dealing with the company and jumping the many hoops they place in front of their buyers..
Lamborghini cost and depreciation
Just for control, let’s also look at Lamborghini numbers.
2020 Lamborghini Huracan MSRP – $261,274. This used 2016 model is selling for $219,999 with 9k miles. That’s $41,275 or 15.8% depreciation over four years.
2014 Lamborghini Gallardo MSRP – $202,000. This almost decade old 2011 model goes for $129,999 with 19k miles. That’s $72,001 or 35.6% depreciation over 9 years, or $8,000 or 4% depreciation per year on average.
2018 Lamborghini Aventador LP 740-4 S MSRP is $417,650. This two year old model sells for $339,998 with 5.9k miles. That’s $77,652 or 18.6% depreciation over two years.
The older gen V12 Lambo – the 2010 Murcielago LP 640 had an MSRP of $354,000. A 2008 Lamborghini Murcielago LP 640 can be found for $192,888 with 17k miles. That’s $161,112 or 45.5% depreciation over 12 years, which comes out to $13,426 or 3.8% depreciation per year.
It seems that older Lambos retain their value amazingly well and even though the newer ones seem to take a great hit, remember that depreciation is always the fastest immediately after purchase and during the first two years.
Depreciation is your biggest expense when owning a supercar. It’s also one of the more predictable costs, as you’ll see in a little bit.
These were just some quick and dirty examples of how to look up and calculate depreciation for the models you’re interested in. It’s advisable to spend some time and acquire multiple data points and put them in an Excel table to chart out how well a particular model and it’s different configurations do in the market.
Exotic Car Insurance
We have an entire article dedicated to exotic car insurance, so we’ll keep this section brief.
There are three main things you need to remember about supercar insurance:
- You absolutely need it and unless you like to burn money, we’re talking about comprehensive coverage.
- Just like interest, Insurance is highly individual. Companies use complex algorithms that stack up dozens of factors like your age, driving record, the price of the car, insurance history, ownership history, other high-value assets, gender, education, marital status, profession, location and even the local market. There’s probably a dozen more.
- There’s very little you can do to affect your insurance pricing, other than shopping around and comparing quotes.
The typical cost to insure a supercar is between $1,500 and $6,000 per year. It doesn’t go a lot lower, but can go a lot higher than that with some examples reaching up to $30,000 and more every single year.
Read our article Exotic & Supercar Insurance for more information on this topic.
Exotic Car Service and Maintenance
The second biggest expense to supercar owners is service and maintenance.
Most supercars come with 3 years, unlimited miles of bumper to bumper warranty, which covers everything big and the majority of the small stuff as well. These manufacturer-issued warranty are very good, since the company wants whoever is paying them hundreds of thousands of dollars to feel good about their investment.
After that, begin the real worries. Owning a supercar out of warranty can be one of the most excruciating experiences ever – especially with older models, which put reliability and ease of service low on the priority list. Ask anyone who owns an exotic rocket from the past (Diablo, Testarossa, Jaguar XJ220) if they have nightmares about their car breaking.
Supercars in the last 10 or so years are engineered incredibly well, so in addition to going blindingly fast, they’re also designed to be repaired, serviced and kept on the road.
Still, servicing your supercar is many times more expensive than servicing a daily driver. These are precise and sensitive machines – they required delicate touch from an experienced hand and expensive, sometimes proprietary, parts and consumables.
Okay, we won’t torture you any longer. Here are the numbers.
Aston Martin Vantage maintenance costs
An annual service to change the oil and filters, look at the software and give it a once over will cost you $1,500 to $2,000.
Brake pad replacement costs $1,500 – $2,000 for all corners. Clutch replacement will cost the good part of $5,000 – $2,300 for the part and however much for labor.
Technician rates in exotic car shops or official dealerships hover around $120 per hour, so any serious work will cost a small fortune in just the labor costs. Expect any serious engine problems outside of warranty to swallow some $4,000 – $5,000.
That’s not cheap by any standard, but also not wildly expensive.
Ferrari Portofino maintenance costs
One of the greatest moves Ferrari ever made was the release of their 7-year Service and Maintenance program. In addition to the manufacturer’s warranty, you get all of your service and maintenance for 7 years as part of the initial price of the vehicle.
Oil changes, filters, adjustments – all free for 7 years after buying.
Expect to spend around $2,000 on tires every 10 – 15,000 miles. Brakes should be good for 25k on the pads and 100k on the rotors, give or take. Around the 30k – 50k mile mark, you may need to do a clutch replacement, which costs $10 – $15 grand.
Outside of the warranty and maintenance program:
- $1k annual service – oil change, filters, inspection
- $3k spark plugs
- $4k belts – every 10 – 15k miles
Lamborghini Huracan maintenance costs
- $1k annual service – oil change, filters, inspection
- $2-4k major service – spark plugs, gearbox oil
- $1-3k tire set
Huracans are incredibly reliable, being closely related to the Audi R8 and taking the best of performance and durability. There’s not too many things that break on these cars. Of course a set of brake pads costs $2,500, but they last for 40k miles. Carbon ceramic rotors last 93k miles.
After all of this, you’re probably reconsidering getting the extended warranty while you still can. Extended warranties cost around $4,000 – $5,000 per year and are nowhere near as comprehensive with many exclusions to the contract.
Oftentimes, drivers set aside the money and self insure. So long as nothing truly major breaks, you’ll be fine with annual repairs. However, you better not be on the short end of the stick if you have to replace clutches on a DCT gearbox, rebuild an engine or chase down electrical gremlins.
In fact, out of warranty repairs on supercars are among the biggest reasons for regret among exotic vehicle owners. We have a detailed guide on Exotic and Supercar Warranties.
So, fuel prices might seem laughable if you can already afford a $200 – $400 thousand dollar vehicle. But these running costs stack up and at the end of the year, you’re looking at a considerable expenditure, which you may or may not have accounted for in your affordability research.
Here are some quick stats, representing each of the manufacturers mentioned in our previous examples. We’re basing this on an annual mileage of 2,500 and a fuel price at $3.475 per gallon of premium gas.
- Vanquish S – 16 mpg combined – $543 per year on fuel
- F8 Tributo – 16 mpg combined – $543 per year on fuel
- Aventador S – 12 mpg combined – $724 per year on fuel
Storage, Detailing and Miscellaneous expenses
These costs are subjective and may drastically differ in every individual case, but also very real parts of the ownership expense.
Supercars don’t live on the street. You need to keep them in a well-secured, climate-controlled garage to keep them in excellent condition all the time. You might have one in your home already. It still costs you money to get it built, so we can’t ignore that expense.
If you have to buy space at one of the purpose built exotic car storage facilities, like Monterey Motorsports Park, you should expect prices around $360 per square foot. That’s $250,000 for the garage alone.
Renting a place will cost you around $300 per month in Los Angeles, or $3,600 annually.
Then, we have cleaning and detailing. A full detailing service, including paint correction, paint protection film and ceramic coating on a supercar will probably cost the good part of $10,000. It’s wildly expensive, but so is the paint. If you want to get good residual value 2-3-5 years in time, you want to undergo such a procedure to seal and protect the paint of your supercar.
Then, cleaning will set you back a good $100 on each session and depending how much of a freak you are, it can easily end up as a $1,500 – $3,000 expense every year. Of course, you may also take the joy and pride to do your own detailing, which is perfectly fine and a great way to enjoy your supercar away from the road.
Owning exotic cars is expensive
If you haven’t guessed by now, supercars cost a lot of money. Let’s sum everything up and see where we got.
- Depreciation – $10,000 per year in your vehicle retains value well
- Service and maintenance – $3,000 per year, accounting for major services over time
- Insurance – $4,000 per year
- Fuel – $1,000 per year
- Storage – $3,000 per year
- Cleaning – $1,500 per year
These are just rough ballparks, but fairly realistic ones. As you see, running costs can be just as expensive as the capital investment to obtain the vehicle. Keep that in mind.
The grand total, expect a supercar to cost you $20,000 – $25,000 per year, assuming you’re doing things right and picking vehicles that retain a reasonable value and don’t break down every 2,000 miles.
Still think you can afford your dream supercar? Great, here at Below Invoice, we specialize in finding the best deals on all types of sports cars, luxury cars and even the most expensive supercars on the market. Give us a call to discuss your new vehicle!