Are exotic cars a good investment?

Exotic cars can appreciate in value, but they are not reliable investments. They're illiquid, costly to maintain, and returns are unpredictable. For most buyers, lifestyle ROI—not financial ROI—is the main benefit.

What are the tax implications of buying an exotic car?

If the car is for personal use, there is no depreciation or tax deduction. If it's part of a business or used as a promotional asset, limited deductions may apply—but this requires strong documentation and justification.

Can I write off a Ferrari or McLaren as a business expense?

It’s possible, but difficult. The IRS scrutinizes luxury vehicle deductions. You’d need to prove ordinary and necessary business use and maintain meticulous records.

Which exotic cars tend to appreciate the most?

Limited-production models like the Porsche 911 GT3 RS, Ferrari 812 Competizione, and McLaren 765LT have historically performed better. However, even these can lose value depending on market cycles.

Should I buy an exotic car before or after a liquidity event?

It’s generally smarter to wait until after a liquidity event. You’ll have better clarity on your long-term financial picture, and can plan for taxes, cash flow, and opportunity cost more strategically.

August 1, 2025 Mark Stancato, CFP®, EA, ECA, CRPS®

Exotic Cars as Investments: Smart Strategy or $500K Fantasy?

Taxes Psychology of Money Alternative Investments

Picture of Mark Stancato, CFP®, EA, ECA, CRPS®

🏁 What high-net-worth investors need to know before treating Ferraris, McLarens, and GT3s as alternative assets.

Introduction: The Dream, the Data, and the Decision

You've made it. The company exit closed. The equity plan hit. The liquidity is real, and so is the voice in your head saying:

“It’s time.”

Time for the Ferrari 812 Competizione. Or the McLaren 765LT. Or that Lamborghini STO you've had bookmarked for years. You’ve watched the YouTube reviews. You’ve followed the auction results. You’ve heard people say these aren’t just cars, they’re assets.

And maybe… an investment.

But are they?

At VIP Wealth Advisors, we work with entrepreneurs, tech executives, and business owners who've earned the right to enjoy what they've built but still want to make wise, intentional choices with their capital. So before you take delivery, let's look under the hood of the exotic car market and ask:

Is this a legitimate alternative investment? Or a lifestyle indulgence dressed in resale potential?

This isn't about saying no to the dream — it's about making sure you're driving it with your eyes wide open.

First Principles: Cars Are Usually Depreciating Assets

If you're buying a car, even a high-end one, chances are it will lose value over time. Most new cars shed 15–25% of their value within the first year, and standard luxury cars are no exception.

But there's a growing class of vehicles that break this rule: investment-grade exotic and hypercars.

We’re talking:

Ferrari LaFerrari, F40, 812 Competizione
Porsche Carrera GT, 911 GT3 Touring, 918 Spyder
McLaren P1, Senna, F1
Bugatti Veyron and Chiron
Pagani Huayra

These cars aren’t just expensive, they're rare, historic, and emotionally magnetic. And when handled correctly, they've historically appreciated more than gold, art, and even the S&P 500 in certain years.

📊 The Data: Are Exotic Cars Actually a Solid Investment?

Let's turn to the data.

Knight Frank’s 2024 Luxury Investment Index:

Asset Class	10-Year Growth	5-Year Growth	1-Year Growth
Rare Whiskey	+280%	+54%	+9%
Classic Cars	+118%	+25%	+5%
Watches	+138%	+32%	-2%
Art	+91%	+28%	+8%
Gold	+31%	+15%	+4%

So yes, select exotic cars have outperformed traditional inflation hedges and even public markets over multi-year timeframes. But these returns aren't available to everyone. And not every exotic qualifies.

🔍 What Makes an Exotic Car Investment-Grade?

1. Scarcity

Low production numbers are key. Cars like the Ferrari Monza SP2 or Porsche 911 S/T are made in batches of 499 to 1,000 units, creating long-term supply constraints.

2. Brand

Ferrari, Porsche, McLaren, Bugatti — these are blue-chip brands with collector loyalty and deep global demand.

3. Performance Pedigree

Motorsport ties or tech breakthroughs (hybrid hypercars like the 918 Spyder) tend to increase long-term desirability.

4. Analog Nostalgia

Analog, manual, and V12-powered exotics are being phased out, which boosts the value of "last of their kind" models like:

Porsche 911 997 GT3 RS 4.0
Ferrari 599 GTO
Lamborghini Aventador Ultimae

5. Provenance

Low miles, rare specs, original paint, full documentation, and no history of being “flipped” make a huge difference.

🚧 But There’s a Catch: You Can’t Just Buy These Cars

This is the part most YouTubers don’t tell you.

The cars that actually appreciate? They’re usually allocated, not sold.

🔐 Ferrari, Porsche, and the “Client Ladder”

If you want a Ferrari 812 Competizione, you can’t just wire in $700K. You need:

A documented history of buying and holding Ferraris
A relationship with a specific dealer
Proof you won’t immediately resell the car for a profit

Porsche is similar. Buyers are often told:

“Buy a Cayenne or Panamera first. Maybe a 911 GTS. Then we’ll consider you for a GT3 or RS allocation.”

❗️ The result? First-time buyers are often left with standard production cars that depreciate. Veteran clients get the appreciating assets.

💡 Planning Insight: Exotic Cars Are a Long-Term Alternative Asset Strategy

So, what do we tell clients?

Here's how I frame it in real financial planning terms:

Characteristic	Investment-Grade Exotic Cars
Time Horizon	7–15 years (to realize real appreciation)
Liquidity	Low — expect a multi-month sale process
Correlation	Low to traditional equities
Volatility	Moderate — tied to HNW discretionary wealth
Tax Efficiency	Poor — subject to collectibles tax rules
Enjoyment Yield	Very high (if you're passionate)

Tax Implications: Can You Write Off an Exotic?

🚫 Typically No:

Unless the car is legitimately used in a business, there's no depreciation or write-off. Most HNW clients buying a Ferrari SF90 can't claim it on their taxes.

✅ Exceptions:

Luxury car rental businesses
Automotive YouTubers or influencers
Exotic car dealerships or brokers
Branding/advertising expense (must pass IRS scrutiny)

❗️ Even then, Section 179 and bonus depreciation have vehicle limits, and the car must exceed 6,000 pounds GVWR even to qualify (think G-Wagon or Urus — not a McLaren 720S).

🔄 Strategy: The “Car Ladder” Approach

Just like accumulating real estate or private equity, think in stages.

The 4-Step Wealth Strategy for Exotic Car Enthusiasts:

Step	Description
1. Entry Car	Start with a lightly used exotic (Ferrari 458, Porsche 911 GTS, McLaren 570S). Build credibility with the brand.
2. Maintain & Hold	Don’t flip. Document service. Join events. Build a dealership relationship.
3. Mid-Tier Loyalty Buys	Add volume with less exotic models (Cayenne, Roma) to show loyalty.
4. Allocation Access	Earn your way into a GT3 RS or Ferrari Icona allocation — the real investment-grade vehicles.

This is a 10+ year game — not a quick flip.

💰 Economics of Holding an Investment-Grade Exotic

Model: Ferrari 812 Competizione

Timeframe: 5 Years

Category	Value / Cost	Notes
Purchase Price	$550,000	MSRP or initial cost
5-Year Value	$750,000	Estimated resale (appreciation of ~$200K / +36%)
Gross Gain	$200,000	$750K - $550K

Now let's deduct the holding costs:

🧾 Annual Carrying Costs:

Cost Category	Annual	5-Year Total	Notes
Insurance	$8,000	$40,000	Varies by age, location, policy
Storage	$6,000	$30,000	Assuming $500/month garage or storage
Maintenance	$3,000	$15,000	Routine care, fluids, tires (excluding repairs)

👀 Total Holding Costs over 5 Years: $85,000

✅ Final Net Gain Calculation:

Metric	Value
Gross Gain	$200,000
Less: Total Costs	-$85,000
Net Gain (Pre-Tax)	$115,000

Post-Tax Adjustment (If Treated as Collectible):

If the IRS deems the gain from the sale of a personal-use collectible:

You could face 28% long-term capital gains tax
On a $200K gain, that's $56,000 in taxes

Then your after-tax net gain would be:

📉 $115,000 – $56,000 = $59,000

🚩 Important Note:

The IRS views gain as gross sale price minus adjusted basis, and carrying costs like insurance and storage do not adjust basis unless the car is a business-use capital asset.

But what if you bought a Ferrari Roma instead? That $275K car might be worth $200K or less in 5 years. And that's before insurance and storage.

Behavioral Finance: Is This Really About Returns?

Sometimes, clients just want a car they love. And that’s okay as long as we frame it honestly.

When I ask:

“Is this a passion purchase or an investment?”

The honest answer is usually:

“Both... but really, I just want to drive something incredible.”

That’s fair. It’s your money. But don’t confuse yield on joy with investment yield.

In planning, we often:

Segment these as passion assets
Allocate 5–10% of net worth to “real assets” (cars, art, watches)
Track value over time, but with lifestyle ROI in mind

🧭 Should You Buy One?

If you're a high-income professional, tech executive, or business owner with excess capital, the right exotic car can be a viable piece of an alternative investment strategy.

But only if:

You play the long game
You develop a relationship with the brand
You understand the illiquidity
You treat it like art, not equities

And if it turns out it doesn’t appreciate? At least you got to live out a dream on the road to "enough."

🎯 The VIP Takeaway

At VIP Wealth Advisors, we believe wealth is about more than just numbers. It’s about aligning your capital with your passions and purpose.

So yes, we’ll run the numbers. But we’ll also help you decide:

Whether this fits your real plan
If the “investment” case holds water
And how to do it smartly, with eyes wide open

Whether you’re aiming for a GT3 RS or a Bugatti Bolide, we’ll help you stay grounded even at 200 mph.

🚗 Ready to Put a Ferrari in Your Financial Plan?

Want to discuss your dream garage and how it fits into your financial life?

At VIP Wealth Advisors, we help high-net-worth clients make big-ticket decisions with clarity—balancing lifestyle goals with long-term strategy. Whether it’s a GT3, an STO, or something even rarer, we’ll help you plan like an investor, not just a car enthusiast.

📅 Book Your VIP Planning Call

Exotic Cars as Investments: Smart Strategy or $500K Fantasy?

Introduction: The Dream, the Data, and the Decision

First Principles: Cars Are Usually Depreciating Assets

📊 The Data: Are Exotic Cars Actually a Solid Investment?