At Rs16 crore, Bugatti Veyron costs four times more than the costliest luxury car in the country. But can such an expensive, exclusive car be a good investment, asks Veeresh Malik
The big news of the last fortnight had to be the ‘launch’, in India, of Volkswagen’s (VW) new Bugatti Veyron, the wonder car that reportedly costs all of Rs16 crore and more and is said to have received inquiries from three or four Indians worldwide.
It was not reported if the special truck that is used to cart it around is included in the sticker price. Of course, the real story that has not been reported is that Bugatti took all of six years to ‘launch’ this car in India—after actually starting to show and sell this car to the rest of the world long ago. This is a bit disappointing, since we Indians are now getting used to seeing everything, from bottom-of-the-line cars, computers and cell phones to top-of-the-line-cars, computers and cell phones (and everything else in between) at the same time as the rest of the world.
But now, with global sales dipping, it’s time to bring out the expensive baubles and beads for the natives. Especially if you are VW, and have ignored India for a long, long time, having betted on China. History repeats itself. After all, almost 25% of all motor cars manufactured during the Great Depression, after the First World War, were sold in and around the Indian subcontinent. Not in China. Even if much of what comes under a VW product’s skin now, increasingly, is Chinese.
But, we get ahead of ourselves, as we look at the market for expensive motor cars, private airplanes and luxury yachts. The simple question is: Is a Bugatti Veyron a good investment?
The answer, as far as modern cars are concerned, is there in the ‘cars for resale’ websites around the world, as well as sales figures for this car (new Bugattis) worldwide. However, for the long-term, assuming that you—like billionaire investor Warren Buffett—can pick a new or a slightly used car abroad for a decent price, means discount after the hype with confidentiality and non-disclosure agreements (NDAs), then you may have a business proposition. Having manufactured just about 500 of them so far in the last few years, anybody buying one and holding on to it for a couple of generations would probably see the value beat other investments and provide ample opportunities for some generation of income too.
Just think about it: A consortium of car traders from Karol Bagh and Opera House buy a four- or five-year old Bugatti Veyron on the cheap from, say, the Persian Gulf states. It may also be slightly, er, damaged, which may make it cheaper. Then, they somehow manage to bring it into India on a ‘transfer of residence’, may be in the name of a poor labourer from anywhere, or in one of those ‘via Nepal or Bangladesh’ options that are becoming so popular, and, in the first instance, park it in Mumbai. They repair it and restore it to as good as new, say some enthusiastic friends, from the Cheera Bazaar area. After this, the income starts.
• In quick order, a cricketer, a film star and a builder, as well as a few others whose professions are not to be discussed here, will be on page 3 for having acquired this car. Other people will pay good money to be photographed with them and the car, or be coy about owning the car.
• It will appear in movies. It would be parked in the portico at high-end weddings. Not to forget the world of advertisements. Toothpaste and soap companies, for example, would pay; so may cement and coal clients. Indian Premier League bosses may want the car to be shipped to Bastar for the next round of one-day matches.
• During general and state elections, perhaps even in municipal polls, this car will draw more crowds than helicopters. There may be a risk involved here of slight damage or even worse, but it would draw in more people than, say, Sophia Loren, or Rekha, or the Mumbai bar dancers.
• By the 10th or 15th year, the car has probably reached its lowest value in real rupee terms. After that, the value of the car moves in only one direction, upwards. Some early investors could book some profits and exit, especially as the list of potential investors grows. The car becomes a ‘classic’ very soon, because the manufacturers will probably launch a new model by then.
• Once the car is about 25 years old, the value will really start rising, by which time most of the car dealers’ syndicates will also have grown-up grandchildren of marriageable age. Shares will be made and given as part of the dowry. The car, of course, will be shown during the ceremonies, for a price.
The options are limitless. Expense is only towards annual insurance. A basic third-party plan will do, as the car will be guarded anyways. Annual road tax may be exempted, in ‘national interest’, as it happens with entertainment tax for some movies. The holding cost of money spent is a risk but, as explained, the appreciation in 10-20 years will be amazing.
It makes as much sense to buy a new or slightly used, expensive, exclusive car like this one in a syndicate, to spread the risks, as well as cover all possible external threats, as it does to invest in huge multi-storey buildings in cities like Mumbai (as long as they were not on defence land). And if you think this was tongue-in-cheek, well, for the investment appreciation part it is not. Just take a look at this: http://www.topgear.com/uk/car-news/bugatti-veyron-2009-06-22
The first Bugatti Veyron gained an astonishing 50% on resale, just four years on. Of course, it had done only about 400 miles. The actual sale price and buyer may never be known. There goes that weekend to Lonavala.
Odd One Out The Tata Nano makes news all the time. A perfectly decent car at its price, and like other cars, every now and then, one of them catches fire. When other cars catch fire, you never hear about it but, believe me, they do. And now, while everybody else is quietly raising prices, a small Rs9,000 increase in the price of a new Nano sets off more sniggers. As if it is the only yardstick for increasing inflation on consumer goods sweeping a retail market near you.
So how much more do people want from a car that is, actually, great value for money? Having seriously considered buying one, and then shelving the idea only because of the amazing improvement in all forms of public transport in and around Delhi, I can confidently state that the Tata Nano is most certainly a fantastic value-for-money car. In addition, it is comfortable to enter, drive and exit. The warranty, after-sales service, as well as maintenance is brilliant and low-cost—whether it is the tyres, battery or other bits and pieces that require to be changed every few years.
Most of all, a used Tata Nano has a residual value as well as ease of resale that is matched only by the Maruti Omni and similar vehicles which go on to become private taxis.
As for the car that caught fire, it apparently has to do with electrical issues which have been resolved. In my circle of friends as well as acquaintances, and random conversations with private taxi operators, I have not yet come across somebody who is dissatisfied. Simply put, the price is so low, that for those who feel they made a wrong decision, the loss of value in resale is simply not an issue. And nobody has ever complained that they are not reliable. This is what it is all about.
Classic Chevvies Chevrolet celebrates a hundred years, and one of the events it organised was a car rally for vintage and classic Chevrolets in Delhi. I took part, driving the third oldest car that competed in the event. If luxury means big and opulent, then the older generation of American Chevrolets are not doing too badly, think huge six-cylinder and bigger cars, like Impalas and similar others. Plush, with rear seats as big, perhaps bigger, than drawing room sofas, and engines with cubic capacities larger than the sum total capacities of all motorcycles standing in typical parking lots. And that’s without taking out other vintage and classic cars from other General Motors brands.
The new generation of smaller Chevrolets now available in India, starting with Spark and Beat, are fairly brilliant machines, too. But it is the bigger ones, the Captiva and the Cruze, which reflect some of the glory of the older Chevvies. They also give other luxury cars in India a run for their money in terms of actual creature comforts as well as technologies used. But it is also a fact, they are not enough—the perception of luxury in cars sold in India is skewed towards German vehicles—and all the while General Motors has so much more in its armoury.
Chevrolet has been toying with the idea of bringing some of General Motors’ luxury brands—like the Cadillac range—into India for a long time now. The current upsurge in demand for luxury cars may just about help them to seize the day, if they move fast—because they do have a fantastic range. I’ve driven a lot of cars all over the world, but few can hold a candle to the Cadillac range of SUVs and cars. Take a look at the GM ‘Cadillac Escalade’, for example, and another ‘The Beast’, which is the GM car in which the President of the USA will be ferried around.
They certainly give the current rage of German luxury cars a run for their money and without all the hype. Plus, within the Indian context they are plush and opulent and have the best rear seats in the world. I would love to see a sticker on the Sparks and Beats that says: When I grow up, I’m going to become a Cadillac.
Incidentally, this is not a public relations (PR) puff piece for GM Chevrolet. The fact is that their PR people are among the rudest and most inept I have ever come across. But facts are facts.— Veeresh Malik
.jpg "MoneyLife")
