Many of you have emailed asking what is happening with the Lamborghini Huracan I got and why I would buy a car that is new and still depreciating.
Well, if you watched my Youtube video on the review of the Huracan, then you know that I really don’t appreciate this car one bit other than its incredible performance (which recently cost me a nice $300 ticket as a I whopped an Aventador).
The reality is that I have lost all respect for Lamborghini as a brand of quality, but still cannot argue that there is a no substitute for the aggressive design and its street recognition which makes the Huracan a great car, just not for the original MSRP of $300,000.
So why did I buy a Huracan?
To simply prove that I could drive a $300,000 MSRP car that was the latest model on the road using our strategies with minimal loss.
That said, I knew then that the Lamborghini wouldn’t make me money, but I was hoping for a very minimal loss.
After 90 days and 2,000 miles, the car is now gone without a hitch, problem, or issue of any kind.
In fact, it’s even more reliable than any previous Lamborghini and better performing than many cars on the road period (even those costing twice as much).
So what was the damage?
I bought the Huracan for $220,000 including all modifications, taxes, and fees, and enjoyed it for a total of 3 months.
While I planned to enjoy it for over 6 months, an opportunity to buy an unique Aston Martin came up, which I took (more on that here).
So even on trade, I was able to leave with $217,625 which meant that I lost a total of $2,500 in 90 days. (Insider Members will get the detailed breakdown in the coming weeks).
This made my projected loss of $1,000 per month pretty accurate even though I couldn’t keep it as long as intended.
So is the Huracan the right car to buy today?
No.
Partly because of the high level of inventory and the fact that warranty expiration is right around the corner for the 2015 cars which will drop values to $170-190K (based on miles) for cars without warranty.
This is actually great news as the Huracan will probably be one of the greatest sub $200,000 supercars of the century due to its performance, design, and street appeal.
How did I come to the conclusion that these cars would be wholesaling for $170-190K in the next coming years?
This industry secret: Residual values based on corporate leases.
Since Lamborghini leases cars, they can predict what the market will do and the volume that will enter the market based on lease returns and more.
They forecast nationwide inventory to help understand values at various times for the life of their product.
The Huracan has aggressive lease deals based on high production volume and the fact that the car is obviously not worth anything near its MSRP due to awful craftsmanship and quality of build.
You can gauge where the market will be by looking at residual values manufacturers put on their cars.
Let’s assume a manufacturer says that their lease residual is 65% with 2K miles per year allowance for 36 months.
You can estimate a very safe number by taking 65% of the MSRP, so in our case $300,000 and assume that if mileage is below the allowed 2K per year, then a 6K miles car in 36 months will not cost less than $195,000 and will probably retail 10-15% above that on that same day.
Knowing this allows you to understand the cost of ownership, especially on higher end cars.
All you have to do to understand this is by simply reading the fine print in most lease ads that share this info.
So there you have it, how to predict new to used market data with or without warranty.
You can use the same concept for 12 or 24 month leases.