TEN YEARS AGO, a quick survey of the garages in Highland Park and North Dallas would have revealed a bevy of
Cadillacs and Lincolns. Maybe a Volvo or a Mercedes-Benz or two. Possibly a BMW. But for years, the long,
wide-bodied American cars signified worldly success for affluent Dallasites.
But during the early Seventies, American car-buying began to shift. Slowly, Dallas realized what the East and West
coasts had already known for years: Investing in sleek, fast, exotic cars could be fun-not to mention profitable.
When the caravans of Mercedes-Benzes and BMWs began rolling into Dallas, a few not-so-common European imports also
began to show up. And many Dallasites whose pockets were stuffed full with money to burn turned their attentions
away from traditional investments and toward the world of fast, sleek, exotic cars.
It’s a world filled with many names heretofore confined to the realm of racing: Maserati, Ferrari, Aston Martin and
Lamborghini. And it’s a world in which the admission price is steep (new exotics generally start at $50,000). But
investing in racing cars is not like plunging money into stocks and bonds. (Where else can you drive your
Basically, it’s a matter of high-dollar semantics and fickle supply-and-demand equations. Exotic cars are
limited-production, European products that make speculators’ mouths water. Since the demand for them has exceeded
the supply, their values have skyrocketed over the past decade.
Cars currently riding the crest as hot exotics are Italian-made; Lamborghini and Ferrari head the list. But the
Germans are not far behind with certain models of Mercedeses and BMWs, most notably the Mercedes 500 series sports
coupe and the rare BMW M-l, perhaps the most sought-after car because of its extremely limited production (only 480
were produced) and its exotic nature (it is the only race car ever built by BMW. See the photograph on page 124).
And then there are the classic exotics: older models (20 years or more) that have been restored to their former
glory; antiques (those more than SO years old); and those cars lumped into the speculation category (the De Lorean,
for example, may be worth something in the future because only a few were made). No American cars however (except
the prewar D垻senberg, which can currently bring $250,000) enjoy the status that the European cars do.
A brisk business in the exotic-car trade has emerged in cities with large degrees of concentrated wealth such as
Beverly Hills, New York and Houston. During the past few years, more and more Dallas investors have followed their
lead. A red Ferrari 512 Boxer racing down Central Expressway is no longer an unfamiliar sight.
But the road to Dallas from the factories in Italy and Germany is not as smooth as one may think. Many exotic cars,
including the European customized Mercedes and BMW, are not brought to the United States like most traditional
imports. Since all cars imported to the United States through regular channels must be federalized to meet the
stringent California EPA standards, hot European sports cars lose something in the translation. Unique European
modifications (individual seat warmers, antiskid brakes, air bags and aerodynamic spoilers) get left at home.
That’s where the gray market comes in. Getting around that roadblock has created an entire industry within the
importing business. Despite its somewhat dubious-sounding title, the gray market is a growing industry filled with
brokers who do a big business in importing exotic and customized cars. They import the cars directly to Texas (where
the federaliz-ing process isn’t so tough), and European modifications come intact. Gray-market dealers are not
competing with established dealerships; they are bringing in European cars that are not available on the local
“We sell models that the U.S. dealers don’t sell. [We sell] only European conversions,” says Pat Brown of Brown
Motor Works, a Dallas dealership that imports European models and does the legalization, as well as offering service
Originally, Brown, a former architect, opened his service shop in 1976 strictly to work on the many BMWs that were
rolling into Dallas. But during the past five years, Brown has sensed an increasing awareness in Dallas about the
more exotic models.
Brown shifted gears four years ago and opened a trade in the gray market, while keeping his service department going
strong. Business has been so good lately that he’s preparing to open a second shop in North Dallas.
Ferrari specialist Bob Norwood came to Dallas five years ago. Back then, he says, “there wasn’t a Ferrari to be seen
in this town.” Now, he says, there are thousands, and he works on most of them. His service department has grown
tremendously, and he has a sales office and deals in the gray market, as well as Aston Martin and Lamborghini
Eurosport, a two-person company that operates out of Rockwall, is another newcomer to the gray market. Like the
services of Brown and Norwood, Eurosport procures European cars for interested clients and provides warranties, but
does not offer servicing. Started in late 1982, Eurosport is the full-time project of B. Ross Morris, an investment
banker, formerly with InterFirst. His part-time partner is Dr. Scott Ross, a general practitioner in Rockwall. In
relation to Eurosport, the two prefer to be called investment brokers.
All these dealers warn interested exotic-car buyers of fly-by-night brokers who operate by advertising their phone
numbers in the newspaper. The potential consequences of dealing with such a broker are not encouraging. Often, a car
will be promised and a down payment will be made, but the car will never materialize and the 10 percent will
disappear along with the broker. Or more commonly, Norwood says, people will put down their down payments and never
see their cars. When they demand their money back, they usually get it; but in the meantime, the “broker” has
floated the money and collected the ensuing interest. “It’s a real scam,” Norwood says. “There are a lot of crooks
Brown agrees; he says that he hears most of the horror stories coming from Houston, where the gray market has really
But gray-market importing laws are getting tougher, and that makes Brown happy. “There are so many people who do
this unscrupulously. It’s going to weed out those types. People who do it right are going to stay in business.
People who don’t do it right won’t be in business. We’re the gray market, but we do it within the law.”
Brown says that the legality of unauthorized dealers is debatable. “They [customers] have no guarantee that their
legalization is actually valid, and the conversion to U.S. specs can be questionable. Almost always there are no
warranties on the cars. People find out too late.”
But despite such reports, these brokers say that the exotic-car market-both gray and factory-authorized-is currently
riding a crest, especially in Dallas. The market’s never been better, and the future looks healthy.
“While the California exotic-car market is much better, [the market in] Dallas is growing,” Brown says. “It’s
starting to appreciate something different now. Four years ago, it seemed to really start happening around Dallas. A
lot of it is influx of people moving from other parts of the country.”
Morris pinpoints the beginning of the Dallas trade at three years ago, with the combination of a leveling in energy
costs and the strengthening of the U.S. dollar and economy (the strengthening of the economy simply as a result of
reduced inflation, not because we didn’t experience a severe recession).
“A recession, unfortunately, always hits the mid-income earner,” Morris says. “The guy up here just delays his
decision on his next Porsche for three months. It’s a trend that will last until things change with the dollar
exchange rate, the U.S. economy and the gray-market legislation. I can assure you that egos won’t diminish. The
desire to own these cars will always be there whether or not the ability to buy them is.
“For people with a great deal of money, these cars can still be impulse items. Serious owners-people who covet them
for their motors and their handling-will go halfway across the country to buy them.”
Brown likens a top-line exotic to a plaything for the wealthy: “They trade it in and get another toy.” This is a
common practice, he says, of the affordable exotics (such as used Maseratis and Ferraris).
Morris says that Mercedeses and BMWs are the bread and butter of the gray market. “For every Ferrari you’ll sell,
you’ll sell 10 Mercedes-Benzes.” The market, he says, is tied to the strength of the dollar: “There are a lot of
people who get into the business with the idea that it’s going to be a long-lasting situation. But you can get hurt
if you’re not careful. Two years ago, the DM mark was 1.8 to the dollar. Most of these cars are bought in Germany
with DM marks. The DM mark and the Swiss franc are pillar currencies. Today, the DM mark is 2.6 to the dollar. My
dollar price on a car depends on what the DM mark is vis-á-vis the dollar that minute. Today, at 2.6 DM marks to
the dollar, a Mercedes 500 SEL will cost 85,000 DM with all the equipment on it in Germany. Two years ago, using 1.8
to the dollar, that same DM 85,000 car would have cost DM 47,222.”
“We have two markets,” Morris says. “We have the people who want to own exotic cars but heretofore have not had the
opportunity to rationalize buying one for that price; then we have the people who pay for them with cash, and they
drive them because they like them. The former market is the one in which people drive their cars for six months or
so and then sell them, paying only the interest on their note.”
Theoretically, a person can buy a new car every six months and pay relatively little for driving it. But this
process can’t go on indefinitely (because, eventually, someone’s going to have to pay for the cars), but in the
meantime it can be great fun.
Norwood believes that certain cars, like the Ferrari, hold an alluring mystique: “When I first took one apart, I
just fell in love with it. It’s like a piece of art.”
“If you buy a Ferrari, you’re buying it for the fun, the machinery. The investment angle is the rationalization,”
says Scott Ross of Eurosport. Ross has driven his black Ferrari daily for the past three months. It gets about 18 to
20 miles per gallon.
“The reason I drive it (it’s not primarily an investment, although that’s what I use as an excuse) is because I love
it.” Ross says. “It turns me on to see it. It’s gorgeous to look at and thrilling to drive. When you’re driving,
everybody’s looking at you.”
Also sure to turn a few heads is the exquisite, state-of-the-art Lamborghini Countach (pictured on page 122), which,
as a new model, commands about $120,000. Motor Trend magazine calls this automobile “a rare, land-bound piece
of aircraft that is more exotic, more coveted and more elusive than even the Ferrari 512 Boxer” (known in investment
circles as one of the hottest investments going).
Brown drives his white Countach to work, but not on daily errands to the grocery store. “People just bother me too
much,” he says. “They continually come up and ask me what it is.” (At this writing, there are 15 Countaches in
TO UNDERSTAND the financial fervor associated with these fast machines, you need only look back to 1970, the year
the lid was blown off both the foreign and domestic automobile market. Exotic cars haven’t always been associated
with high-dollar wheeling and dealing. Before 1970, most sports cars depreciated right along with all other cars.
But in 1970, the climate changed dramatically and the prices for all cars soared (and they’re still going up).
Limited-production cars such as the Ferraris and Lamborghinis rode the crest. Their values have increased
exponentially ever since.
An investor who buys a brand-new exotic car today may not realize the investment potential for some time, but when
the well comes in, it’s likely to be a gusher. For example, a postwar Mercedes-Benz 300S Roadster and Cabriole’
(German for convertible) has increased in value 2,000 percent since 1970. A Ferrari 250GT convertible has increased
in value 1,120 percent since 1965. According to experts in this field, there is no indication that this upward trend
will stop anytime soon.
But Morris cautions against blind optimism: “If you think that a German car or a high-dollar value car is a good
investment, then what you believe is that the dollar will weaken in the future as opposed to getting stronger.
You’re not buying a car, you’re buying a proxy currency.”
The market narrows when you get to the top-of-the-line exotics because there’s a limited market and these cars are
harder to sell than Mercedeses and BMWs. Traditionally, to break even on a car, you have to sell it for 10 to 12
percent more than you paid for it. But if you buy the car cheap enough, there’s a possibility that you can sell the
car in six months (within the same model year) for more than you bought it. The best return on an investment, these
car experts agree, is the BMW M-l.
“It’s a very unique animal,” Morris says. “A person buying one is gauging the market very similarly to buying 100
shares of AT&T. He thinks that demands for the next year will rise for that particular item, and he’ll find someone
to pay him more for it a year from now. During that period of time, he gets the pleasure of ownership, unlike the
stock certificate. That’s where the real investment comes in.”
Currently, prices for M-ls are between $85,000 and $100,000. Generally, you can sell an M-l for more than you paid
Those investors who have a need for a motor vehicle in their business pursuits reap extra financial advantages
because these cars are all tax-deductible. If you’re in a 50 percent income-tax bracket, 100 percent of the car can
be depreciated over three years and the owner can receive an investment tax credit equal to almost 7 percent per
year. At the end of three years, your car has no value for tax purposes, and you’ve written against ordinary income
more than 50 percent of the car.
Automobile expert Rush predicts that the Ford and Shelby Mustangs, the Italian Lam-borghini and Maserati, the
British Austin-Healey and Aston-Martin and the German Porsche and BMW will all escalate in value. And both Brown and
Norwood predict that the day is near when a worthy Japanese exotic will roll off the production line. And, they say,
because of Japan’s sophisticated technological advances, it’s going to be a knockout.
A spinoff on the exotic-car trade is the booming “replicar” industry, which has roots as close as Fort Worth. Texas
Stallion, which closely resembles the early Shelby Cobra in form and design, is hand-tooled by seven craftsmen in
Fort Worth. One car is produced per month; the going price is $48,500. Most experts agree that although replicars
approximate their originals, it’s the originals that will make the most money in the long run.
Financial considerations aside, all exotic-car owners and dealers are somewhat fanatical about their cars. Some,
like Scott Ross, personify their treasures: His black Ferrari is named Guido; the red one, Mario. Others, like Pat
Brown, are decidedly low-key but intense: “I own four or five cars, but I’m into variety more than one particular
car.” Bob Norwood simply says that “they’re magic-almost.”