Value of GT40 replicas and company survival

I have been thinking about our GT40 mistress's and their value for some time. I am amazed at how so many owners and enthusiast's seem willing to perpetuate the down grading of the value of our GT40 replicas. I reckon that I have 800+ hours (1000 counting prep and paint) invested in my GTD. I don't blame anyone for looking for a bargin. We all want the best value we can get for our hard earned money. I don't understand people who, knowing that these cars can easily eat $70,000 to $100,000 to build register and legalize, continue to help newbies find $25,000 to #40,000 bargins. To bad more of us don't try to explain the facts to the buyers. i.e unbuilt kits with no engines,paint, registration, import fees etc.,sell for more than they are willing to pay. Maybe they aren't ready to make the plunge! When you follow a little history you begin to understand what cheap prices might cause.
1. GTD came close to bankruptcy trying to keep costs down and to respond to government regulations. They squeaked by and sold to Roger Marsh and made a licensing deal with CAV and then GTD folded.
2. CAV goes under after over expansion and a disasterous attempted deal with Shelby. Then it managed a resurrection under Auto Futura, spending needed time and money on needed upgrades.With an upgraded product and uprated pricing they look like survivors. However they live in a low cost building enviroment and could not survive for long without higher prices if they were in a higher build cost situation.
3. What happened to Saber/KVA, GT40 New Zealand, our own home grown mono to compete with ERA etc. etc.
4. Last but not least, what happened to RF? Having been to Roberts shop on 2 different trips; having met Robert and seeing his dedication and organization of the company and his love of the gt40, it is hard to believe he has not succeeded .
I think the lesson hrer is that you cannot survive without a reasonable profit, no matter how much you love what you are doing or how goood you are at what you do. All of this rant is my way of saying, I think that the more we continue to downgrade the value of our GT's the harder we make it for quality suppliers to survive. A business evaluation done in the early 90's told me that as a stand alone business with proper licensing, insurance etc.,you would have to sell turn key cars for $80,000 US to stay in business. So guys quit trying to help people steal our cars for 1/2 price. Instead try pushing what they are really worth - maybe then we will have a few more survivors. End of Lecture.
 
This is the most sensible post I have read on the Forum for several weeks. You have raised the issue of costs to produce these cars as a realistic commercial entity. Most of these early "manufacturers" started from a desire to have a car themselves and soon found that others wanted to share the dream. The dream soon shatters when you find that while it may be easy to gather the parts etc for a couple of cars, ten or so require a much different outlook. I followed the early attempt's of GT Replications and successors here in NZ and it had many similar traits to what some of you have had to go through. One thing that the manufacturer has very little control over is the ability of the owner/builder to finish the car to an acceptable standard and attempts by builders to cut corners to save money get the end product a bad name which seems to stick with the kit manufacturer rather than the builder. Fortunately this forum as well as others like it go along way to raising the bar in terms of build quality.
The GT40 will always be a desirable car and enthusiasts worldwide will continue to aspire to have one, even after there is no fuel to run it on!! One more thought, some members have suggested that they wont buy "offshore" in the future. I have dealt with many firms world wide over my years in the automotive trade and can assure you that "ripoffs" occur on a global scale. The BIG thing is do your homework before putting your $$$ down.

Cheers Jack.
 
The GT40 platform is extremely complex and features many expensive and hard to find (and duplicate) components. Unlike Cobra replicas, many using "donor" cars for suspension, drivetrain and brake systems, the average GT40 replica uses few items from a donor vehicle. In our attempt to produce a US-built kit we ran into many difficult obstacles to produce a safe, reliable and profitable product. Production costs, transport, liability insurance, material increases as well as vendor reliability were issues that eventually killed the CJE40. We advertised the kit as "in development" and kept out potential clients informed via e-mail, our website and telephone. We never considered accepting deposits, although we had offers from trusted clients, until the kit was completely developed and ready for manufacture. Sadly, due to the factors cited above (among others), we "pulled the plug" on the project.

It's puzzling to me when I see completed and partially completed kits selling for a fraction of their true worth. It's a free market, but one can't help but feel that nothing positive can come from these kits being under-valued, other than the occasional enthusiast being able to secure his/her dream car for an extremely low price.

Hopefully, the value drops we've seen are only temporary and part of a cycle. I also hope that those firms here in the US and abroad can survive the current market climate and continue to bring their products to market. Not only are these firms producing replicas, they are also a valuable asset for those of us on this forum that own and maintain GT40 replicas, as a source for replacement parts and potential upgrades.
 

Rob

Lifetime Supporter
Bud.. you have read my mind... /ubbthreads/images/graemlins/beerchug.gif
 
Sorry Gentlemen...time for a reality check.

Beyond the build quality and length of time we are willing to wait, we owners have no say in determining the market
re-sale value of our replicas. These are custom hot-rods....
not Kelly Blue Book vehicles.

If you're in it to make a profit, good luck....VERY VERY
few make a living bulding replicas for resale.

MikeD
 
Mike, exactly my point. We need some survivors as manufacturers. Individual builders are exactly what you said - Hot Rod builders and in the game for the pleasure and challenge.
 
I agree with Mike Dozier on this topic. Sorry guys with nice cars, but the value is driven by the rationality of the market. Cars in general go down in value unless there is some collectibility and/or rarity involved. GT40 replicas continue to be built by a number of manufacturers and are therefore not limited in supply at this time. You will occasionally find a buyer willing to pay top $ for a particular car at a particular time, but this should not be considered the general rule.

The notion that anyone is helping people to "steal" these cars from you is just not true. If there's a 40 replica out there for <$10K, $25K, $50K, 100K or whatever, there's always a reason(s) why the price is so - condition, accessories, desperation of buyer, etc.

As for 40Bud's original question #4 - what happened to RF? Well, it isn't all out there yet, but it seems pretty obvious. RF did have a good product at a reasonable price. But then it appears, Robert made a decision to lower his price in effort to get more orders. Based on this, he made more business decisions to build these cars/have them built in such manner as to still make a profit. He was afterall endeavoring to run a business to make profit, not a charity to give GT40's to the needy. The business model failed and nothing including his reputation or dedication could do anything to save the sinking ship. Simple story, sad ending, and it happens everyday around the world in virtually every industry. Insufficient capital, bad decisions, and any number of other reasons.

MD
 

Howard Jones

Supporter
I would add that before anyone starts shopping for $20,000 GT40s they have a very close look at several 50-70K GT40's. I suppose on occasion someone with a quality built GT40 will get into a hurry and need to sell it. That coupled with being in the right place at the right time might get you a very good deal. But beware that if its too cheap to believe then it probably is...too cheap.

These cars are difficult to sort out even when put together correctly and with quality parts. They can be a nightmare to fix if they aren't. A "budget" built car in the hands of someone who "just wants to drive it and not work on it " won't end pretty.

Beware Cheap GT40's
 
I think this is a reality check. Deciding to embark on a GT40 is a serious financial step in money and time, whichever way you look at it.
GT40's that are built by companies like CAV are a valuable asset for all enthusiasts.
They build on years of research and testing so we can own a quality vehicle.
Prices well over $100,000 for completed GT40's relate well to the prices of 40-50 year old cars seen at Barrett-Jackson auctions. Most are clean and shiny but have questionable performance even as daily drivers. B-J are attracting thousands of buyers, and if you have noted B-J scorned "replicas" previously, but now endorse and justify restomods/replicas/continuation etc.

Latest is a Coupe, built by Superformance, endorsed by Shelby with a fancy name tag and sold as a desired collector car.

John
 
I'm also into Cobra Replicas, and this type of tread comes up every once and a while.The only differance is these are about twice the price of everyday Cobras.But the same rules pertain,that is there will always divorces,layoffs,business failures,new business ventures, new baby.new house,lost interest,sickness,etc.As much as you want but there will always be deals out there.There are a few guys over in the Cobra world that make a good living buying distressed Cobras ,and reselling them.I know this, as when I had ads out on a couple of Cobras I had built ,I always got a few low ball offers,who knows how many they buy that way.Then you see the same guys selling Cobras ,on the same Web sites.So don't hold your breath getting everybody to keep the price up.
 
Gents, I am only partially in agreement with this argument. Factory Five Racing are a commercial success because of the extremely low profit margins that they run. In the real world, the only way to make money is to move enough stock to generate the cash flow that pays the overheads, material costs and wages.

The GT40 is a different niche of the market and will never be a single donor vehicle kit (the other factor in FFR's success). However, if you look at the success stories in the kit car or kit aircraft market, they are the ones that operate at minimum margins and generate quality and volume sales.

Making the best car on the market and 100% profit will do you no good if you sell 5 cars a year and that 5x100% only makes 2/3 of your overheads, material costs and wages.

As for custom building, the only way to make money in that is to build to order and have the reputation to ensure enough volume. Also, if you've got the engineering capability, you need to diversify.

An example is Rotary Air Force in Canada. I have one of their gyroplanes (under construction) and their factory is very well set up. However, their CNC lathes, milling machines etc don't rest when orders are light. They sub-contract out just as any engineering company does and make components for other companies etc etc.

I'm considering getting into the kit car/aircraft industry when I leave the military. However, I'll be relying on my aeronautical engineering abilities and a diversified engineering shop to pay the bills. If that means that I'm machining 4000 elevator pulley carriers and 3000 photocopier Part No. XXX's to justify the CNC milling machine that also produces my 30 rear hubs a year, then that's how I'll do it.

As for the value of used GT40's, if you don't like the price that buyers are offering, don't sell. Put in another tank of gas and go for a drive. If you need to sell, then you'll have to price the car to sell in the time you've got allotted. If that hurts, well, that's life.

I love GT40s but I'll never make a living with them. When it goes beyond a hobby, then disappointment is likely to hit sooner rather than later.

Stew
 
Another thing that you need to remember is you may think that your car is a well sorted perfect GT40. To someone else is is a second hand, driven hard, put up wet, wrong color, wrong engine, wrong wheel car, etc in unknow condition. That means they will never pay near what it would cost to build.

These are custom vehicles just like hot rods. It is not uncommon to see hot rods that have only been on a trailer sell for less then half what it cost to build.

I have heard a simple rule. Nobody losses money on a kit car except for the first owner.

Here is the good news. You buy a new car and a couple years later it is worth half what you paid for it and 7 or 8 years later it is worth nearly nothing. Kit cars loose a lot of value right off the bat compared to what they cost to build but they hold that value fairly well afterwards.
 
Bud

I may have missed your point...looked like you were correlating re-sale value with manufacturer survivability,
which of course there is little correlation.
Completed replicas will sell for whatever they sell for...and the fact that the OEM is no longer in business doesn't matter to 95% of the buyers.

Whether a manufacturer remains in business over the long haul will depend on how well they run their business....meaning provide service and maintain fiscal responsibility. Whether they sell 20 cars a year (ERA) or 1,000 a year (FFR) doesn't matter if they neglect either of these two.

MikeD
 

Mark Charlton

GT40s Supporter
Lifetime Supporter
Another huge factor in resale values is the accuracy of the replica. I keep hearing that the ERA cars are very accurate and command the highest resale values. I think we can all agree that an Avenger GT with a VW engine is way lower on the spectrum, with RF, GTD and others on the higher side of the middle. Clearly, Superformance is making great efforts (and with huge investment) to ensure a very accurate replica. Why? Because they know that higher potential resale will help lubricate initial sales. Look at the values of the “recreation” versions of the Ferrari GTO and the Jag XJ13 and others. They are not low, and nobody call them “kits”.

I think that another big factor affecting values, is that for many of us, the motivation to have a GT40 is to have a unique car that is configured exactly the way we want it. All you need to do is look at how many GT40 variations are out there to see that. The chances of finding that “ideal match” are slim, and so the desirability (and thus resale) is lower. I bet that the value of an accurate 1075 clone is a lot higher than most—regardless of kit manufacturer, if for no other reason than that car is what many of us see as the “high water mark” of the GT40 lineage.
 
Dear Bud40

I understand what you are saying.

But i just bought my first GT40 a KVA 1989 for 22.000,- pound (about 39000,- US dollar)
a bargain!!!!

I think that it i normal that a car will go down i price over a range of 17 years
all other cars do!

So what is the point, should a KVA GT40 build in 1989 cost the same as a 2006 with all
the new upgrades and things you get buying a new car?

No way, they will go down in price so people like me that dont have time or money to build a
GT40 from the ground, still can enjoy this wonderfull car

Regards

Per Clausen (a newbie and a very happy owner of a GT40)
 
I think another factor in this is the actual amount of GT40 replicas being made and hitting the streets. I cant think of an instance where more of something appearing on the resale market actually drives its price up, I may be wrong. In the UK I think good Cobra's replicas now struggle to get a decent price due to the sheer volume of other for sale, even if they are inferior.

Despite the complexity of a GT40 build I think the same will apply, the only exception will be factory built (Turnkey Minus) as I think that will always add a residual value.

Part builds will always be a "Drive By" purchase as the sale is normally related to an urgent need to sell something you wouldnt normally part with.
 

Howard Jones

Supporter
A important consideration is the definition of "cost to build" If the labor is your own and you are engaging in a hobby then it is in effect of no monetary value in that a round of golf is of no monetary value once you are in the club house.

But if the labor hours are somehow accounted for then the cost to build will surely go beyond what the car is worth. I have at least 2000 hours into my car over the course of 6 years or so. Even at as little as $15 per hour you can see that it would be as much as $35,000 in labor.

On the other hand I have about $50,000 dollars in parts in my car and I believe that is much closer to its "value" than $85,000 would be.

Now here is a lesson for anyone thinking about doing one of these cars. I firmly believe that a running car with current LEGAL registration and license plates on it in the state (location) in which the buyer lives is worth $10,000 more that anything else period.

I think if you begin adding up shipping costs and time/effort involved in getting it there and making it legal you will agree.

So build it yourself IF you looking for a hobby. Just don't think your time will be worth much upon resale.
 
The reason ERA GT40 cars sell for more at resale is that they cost more to begin with. Also the fact that there is a long wait to get one has a bit to do with it too. As others have stated there are parallels between the used finished Cobra kit car market and hot rod market as it is to the used GT40 market. Five years from now how much will a 40,000 mile 2005 Ford GT be worth? When I see a finished Cobra kit car come up for sale in the local paper for over $50,000 I think to myself that the person will never get that price. I haven't even seen the car, I don't know what kit it is, and I don't know what engine is in it but I know in the back of my mind that I should be able to build one for around $25,000. Finished GT40 kits are along the same lines. The GT40 kits have been around for a long time. There is no doubt that the cream will rise to te top but there are a lot of used, abused and unfinished projects out there too. I wonder how the used new Ford GT market will affect the market of new GT40 kits in the long run? At some point the market for used 2005 Ford GTs will make it more attractive to buy a used 2005 Ford GT than a new GT40 kit with some assembly required. GT40 replica companies may not survive but there finished and unfinished kits will.

Jim
 
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