McLaren's Q3 Results & 2021 Outlook

[SSO]

I just did an analysis of McLaren's Q3 results and 2021 outlook.

https://karenable.com/mclarens-q3-2020-results/


Comments? Do you think they will make it?

[ThePenIsMightier]

I haven't read your link, but I've always thought of these types of "craft car companies" (or whatever the appropriate term is) as never actually being viable from a traditional business sense. They lose money eternally until they are sold for a price radically higher than the previous owner paid.
Like many pro sports teams. All signs indicate that they have consistent, extensive yearly losses and then some other insane billionaire buys the company for $100MM more than the last insane billionaire.
Circle of life.

*But I've never looked into it in any way, shape, or form. So this is truly an armchair opinion!

[SSO]

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I haven't read your link, but I've always thought of these types of "craft car companies" (or whatever the appropriate term is) as never actually being viable from a traditional business sense. They lose money eternally until they are sold for a price radically higher than the previous owner paid.
Like many pro sports teams. All signs indicate that they have consistent, extensive yearly losses and then some other insane billionaire buys the company for $100MM more than the last insane billionaire.
Circle of life.

*But I've never looked into it in any way, shape, or form. So this is truly an armchair opinion!

Not necessarily on the losses. Ferrari is, and has been for quite a while, very profitable. In fact Ferrari's market is higher than Fords https://karenable.com/ferraris-q3-2020-results/. Pagani is also very profitable and on an EBITDA basis, McLaren made a ton of money last year. Its Aston, Lamborghini, Maserati and a few others where historically fortunes have gone to die.

[ThePenIsMightier]

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Not necessarily on the losses. Ferrari is, and has been for quite a while, very profitable. In fact Ferrari's market is higher than Fords https://karenable.com/ferraris-q3-2020-results/. Pagani is also very profitable and on an EBITDA basis, McLaren made a ton of money last year. Its Aston, Lamborghini, Maserati and a few others where historically fortunes have gone to die.

I wouldn't lump Ferrari or Lamborghini in the definition of what I was trying to say. I meant to refer to the truly tiny niche ones like Bugatti, Pagani, Koenigsegg, Ruf etc.

Actually, McLaren is starting to feel too big for that category, so maybe my shitty argument is falling apart in my hands. Or, maybe that's their problem in that they have made a poor choice to expand too much and break out of their niche.

[Buster]

Interesting as always @SSO

McLaren is such an interesting company. So British - they have such a good fix on what people actually want in a car, and then they go and trip on their own shoes getting it to the customer.

I was looking at buying a 570S for a good two years, and even sold my last car in anticipation. As someone who is on the margins of their market, I lost faith in the company. Maybe I don't have a good idea of the venn diagram of the supercar-buyer market...but I wonder how important a customer like me is to the brand. That is, someone who can pull the trigger on one, but not someone who can do so with reckless abandon on an annual basis. Is McLaren most interested in the supercar buyer that considers them a luxury indulgence or are they interested in the higher NW individual that can buy cars in a more whimsical way? Pagani being an example of a company that focuses exclusively on the latter, and perhaps Maserati (ick) being a company that focuses exclusively on the former.

Whatever the case, McLaren can lose potential customers like me very rapidly if faith in the company is lost. At least with an Fcar, I know what I'm getting in to (I think).

[SSO]

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I wouldn't lump Ferrari or Lamborghini in the definition of what I was trying to say. I meant to refer to the truly tiny niche ones like Bugatti, Pagani, Koenigsegg, Ruf etc.

Actually, McLaren is starting to feel too big for that category, so maybe my shitty argument is falling apart in my hands. Or, maybe that's their problem in that they have made a poor choice to expand too much and break out of their niche.

Hard to say on Bugatti as they have been part of VW. Pagani, Koenigsegg, & Ruf are all profitable these days. Its the some of the other minor manufacturers that really struggle: https://karenable.com/views-on-the-micro-manufacturers/

[SSO]

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Interesting as always @SSO

McLaren is such an interesting company. So British - they have such a good fix on what people actually want in a car, and then they go and trip on their own shoes getting it to the customer.

I was looking at buying a 570S for a good two years, and even sold my last car in anticipation. As someone who is on the margins of their market, I lost faith in the company. Maybe I don't have a good idea of the venn diagram of the supercar-buyer market...but I wonder how important a customer like me is to the brand. That is, someone who can pull the trigger on one, but not someone who can do so with reckless abandon on an annual basis. Is McLaren most interested in the supercar buyer that considers them a luxury indulgence or are they interested in the higher NW individual that can buy cars in a more whimsical way? Pagani being an example of a company that focuses exclusively on the latter, and perhaps Maserati (ick) being a company that focuses exclusively on the former.

Whatever the case, McLaren can lose potential customers like me very rapidly if faith in the company is lost. At least with an Fcar, I know what I'm getting in to (I think).

A customer like yourself is very important to McLaren (per their management). The issue has been some of the dealers and poor PR the they haven't responded to quickly enough.

On FCar...............thats a whole other experience

[Buster]

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A customer like yourself is very important to McLaren (per their management). The issue has been some of the dealers and poor PR the they haven't responded to quickly enough.

On FCar...............thats a whole other experience

Yeah, their PR people are not so great. We only have one dealer in Canada, pfaff, which services the entire country through a few locations. That's not ideal. They also seem to try to really control prices - it's impossible to determine what the secondary market of McLarens actually looks like here. So I always feel like the dumb money at the table when I'm looking at McLarens, rather than making an expensive, but informed choice.

I remember looking at a 720s at the dealer a couple of years ago, brand new in the showroom, and the door panel where it meets the armrest was pulling apart. I was a bit embarrassed for the sales manager at the time.

I have no interest in spending any amount of money on a hybrid V6, so I'm out on the Altura no matter what. The Fcar market/community has its own weirdness, but I think there are far fewer unknowns.

[SSO]

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Yeah, their PR people are not so great. We only have one dealer in Canada, pfaff, which services the entire country through a few locations. That's not ideal. They also seem to try to really control prices - it's impossible to determine what the secondary market of McLarens actually looks like here. So I always feel like the dumb money at the table when I'm looking at McLarens, rather than making an expensive, but informed choice.

I remember looking at a 720s at the dealer a couple of years ago, brand new in the showroom, and the door panel where it meets the armrest was pulling apart. I was a bit embarrassed for the sales manager at the time.

I have no interest in spending any amount of money on a hybrid V6, so I'm out on the Altura no matter what. The Fcar market/community has its own weirdness, but I think there are far fewer unknowns.

I know the dealer principle at Pfaff in Toronto. Let me know if you want an introduction.

On Ferrari, in my experience no one is better at removing cash from your wallet than Ferrari.

[ThePenIsMightier]

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I know the dealer principle at Pfaff in Toronto. Let me know if you want an introduction.

On Ferrari, in my experience no one is better at removing cash from your wallet than Ferrari.

Ferrari has 7-year service, now. So they won't be telling you to replace all fluids annually and do that engine-out timing belt job (or equivalent) every 10k...
Their service intervals have likely quadrupled when the customer isn't the one paying for it "as part of the pedigree of ownership". LoL!

But is that worth it for a non-Pininfarina Ferrari?

[Buster]

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I know the dealer principle at Pfaff in Toronto. Let me know if you want an introduction.

On Ferrari, in my experience no one is better at removing cash from your wallet than Ferrari.

I might just take you up on that sometime...

As for Ferrari, I'd be looking at used, with miles so I can buy myself a driver rather than a Fcar garage queen.

[SSO]

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As for Ferrari, I'd be looking at used, with miles so I can buy myself a driver rather than a Fcar garage queen.

Trust me, you never escape Ferraris cash claws. Im having the F40s engine rebuilt by a specialist right now but a lot of the parts still come at a huge premium from Ferrari.

- - - Updated - - -

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Ferrari has 7-year service, now. So they won't be telling you to replace all fluids annually and do that engine-out timing belt job (or equivalent) every 10k...
Their service intervals have likely quadrupled when the customer isn't the one paying for it "as part of the pedigree of ownership". LoL!

But is that worth it for a non-Pininfarina Ferrari?

I do hope Ferrari kisses and makes up with Pininfaria, their latest designs just aren't inspired.

On the 7 years free service, you do pay for it, its just all upfront.

[ThePenIsMightier]

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....

On the 7 years free service, you do pay for it, its just all upfront.

I disagree. There was previously an expectation of roughly $10k/year in predominantly unnecessary "servicing" costs. Let's call it only $5k for the sake of this argument.
Their vehicles have not factored in a $35k to $70k increase in price. Instead they have stopped lying about annual fluid changes on things like coolant, ATF and brakes along with the other insane engine teardown bullshit.

[Buster]

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Trust me, you never escape Ferraris cash claws. Im having the F40s engine rebuilt by a specialist right now but a lot of the parts still come at a huge premium from Ferrari.

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I do hope Ferrari kisses and makes up with Pininfaria, their latest designs just aren't inspired.

On the 7 years free service, you do pay for it, its just all upfront.

Fair enough. They aren't profitable by accident. Although I think you can choose more or less expensive options.

I agree on the pininfarina thing. I'm looking at pininfarina generation cars only right now. I thought it was the new pininfarina owners that pulled the plug rather than the other way around?

[SSO]

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Fair enough. They aren't profitable by accident. Although I think you can choose more or less expensive options.

I agree on the pininfarina thing. I'm looking at pininfarina generation cars only right now. I thought it was the new pininfarina owners that pulled the plug rather than the other way around?

No, I believe it was Ferrari who walked.

Which models are you looks at?

[Buster]

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No, I believe it was Ferrari who walked.

Which models are you looks at?

Good to know... That's disappointing then. The quality of their designs has gone south since they went internal.

I'm looking at ff or f12. I don't mind the 812 but it's out of my budget either way. Canada's market on anything like this is pretty illiquid compared to the US.

I had been looking at 570 spiders with maybe a stretch too a 720... But I'm just nervous about the long term.

[SSO]

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Good to know... That's disappointing then. The quality of their designs has gone south since they went internal.

I'm looking at ff or f12. I don't mind the 812 but it's out of my budget either way. Canada's market on anything like this is pretty illiquid compared to the US.

I had been looking at 570 spiders with maybe a stretch too a 720... But I'm just nervous about the long term.

FFs & F12s are a pretty hard sell in the US as well. Neither is at the bottom of the depreciation curve yet. F12s are tempting though, great engine.

Of the McLaren's, have you looked at a 675LT? Think it is the best car McLaren has built to date.

[Buster]

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FFs & F12s are a pretty hard sell in the US as well. Neither is at the bottom of the depreciation curve yet. F12s are tempting though, great engine.

Of the McLaren's, have you looked at a 675LT? Think it is the best car McLaren has built to date.

I'm not in a rush right now to fill the hole in my garage...not getting much in the way of driving done during covid. I'm going to keep an eye on the F12 market for the next while and maybe the 675 market as well (only a couple for sale in the entire country). 675 values seem to bounce around a lot, but right now in Canada they seem to be a $30k USD premium or so.

[rage2]

I spent a lot of time with the 650S, such a well rounded car. I could daily that thing. Wasn’t much more that I wanted from the 650S, maybe a little sharper turn in response. Had to dig deep to find something more I wanted out of that car haha. Would love to spend some time with a 675LT at some point. Would be hilarious to see what more they improved on.

[Buster]

other than maybe some QC issues, isn't the 720 all round better? I haven't driven either.