The vote to leave the EU and its seismic effects across UK politics continues to dominate the news. With so much still to play out in the process to disentangle the UK from the European Union, it will be a while before the immediate economic effects fade completely, but we have seen some UK buyers returning to the Porsche market this month.
Everyone has their own relationship with the Porsche brand, but most people regard their Porsches as a blend of transport, hobby and investment, with the percentage of each ingredient the main differentiating factor. This gives independent Porsche retailers a range of stock and marketing options, which can be fine tuned to suit economic conditions.
In the immediate aftermath of Brexit, we saw a distinct lift in investment buyers, especially from overseas, as the changes in exchange rates offered opportunities to save at least ten percent on collectible Porsches for pension fund purposes. Most of these buyers have a range of investment items in their pension portfolios and classic cars are just one of them, so they have a very long term view of the market.
The weakness in Sterling is not expected to last indefinitely, so investors are taking advantage of the current situation, buoyed by their own economic predictions. We expect this trend to continue, with interest in top condition, low mileage air-cooled, GT and special edition models, but only when they are priced to sell. Investment success depends entirely on buying well at the start and these long term buyers are under no pressure.
As a new Prime Minister moved in to Downing Street and the public became increasingly comfortable with the idea that life might continue as normal, those looking at Porsches from a hobby perspective also began to return to the market. Hobby buyers are concerned with investment potential but, unlike pure investment buyers, they intend to use their cars. Typical enquiries from hobby buyers revolve around the potential future stars of the Porsche world, such as Carrera S/GTS, and Turbo/Turbo S, particularly with manual transmissions, as these are set to become increasingly rare items on future Porsche models. Sensible mileage and top condition remain important, but price is always the key.
Finally we have those who buy Porsches primarily as daily transport. The most recent new car registration data shows a sharp downturn in UK sales versus previous months, which industry bodies ascribe mainly to Brexit. There is strong evidence suggesting that companies will be holding off on investment until the economic future becomes clearer, so new and nearly new car sales may well be expected to suffer.
This hands the advantage back to independent used car retailers, as slowing sales at franchised dealer level will lead to overstocking. Packed forecourts encourage dealer groups to send long-stayers to auction, which drives dealer stock down the supply chain. While Panamera and Cayenne tend to be harder work to sell used, we expect the eventual arrival of Macan into the independent retail channels to be very good news for JZM Porsche, as our retail margins are sensible and our cheaper servicing prices offer much better value for money. Watch this space!