Bank Failures and the Car World Impact
Predictions for yet another economic reboot
HAPPY RACE DAY, especially to the newly-formed 43 Institute which is dedicated to honoring the legacy of the late Ken Block, racing driver and possibly *the* modern car culture icon. A worthy cause. Click here to follow on IG.
As many of you know, I’m hard at work planning my trip to Japan in a few weeks to research my upcoming book. As a result the newsletter is a little short this week — I promise to make it up to you. Let’s start with this week’s top article:
Silicon Valley Scaries
THE TERM “Move fast and break things” is generally regarded as good advice in the tech arena. But there are times that it backfires. For one thing, there’s Uber. WeWork. Theranos. And more literally, the time Elon Musk flipped a McLaren F1.
And then there’s the events of last week, when Silicon Valley Bank made a series of desperation moves that ultimately spooked investors into pulling nearly all their money out at once — effectively crashing the entire 40-year old bank.
What does one bank have to do with cars? Not a lot, just yet. But plenty of experts worry that SVB is one domino in a row of them. Tech has been roiled by layoffs lately — Alphabet, Meta and Microsoft have laid off 10,000 each just in 2023 so far.
That signals a more far-reaching effect than just one bank of Bay Area Elites. And it hits folks that were doing quite well, managers and engineers with disposable income to spend on cars and aftermarket parts (which has ballooned into a $50B industry).
Silicon Valley has an outsized relationship with car culture. There’s a vibrant collector scene, if a bit poser-ish. A WhatsApp co-founder once famously quit his job to spend more time collecting “rare air-cooled Porsches.” The television show Silicon Valley had several running car-related gags. Luftgekühlt, the painstakingly-curated celebration of all things Porsche, is headed to San Fran next month.
So things are precarious. Auto reposessions were already rising to alarming heights, and rumors of Crypto bros unloading their McLarens and Mercedes SUVs started circulating wildly after the FTX collapse in November 2022.
Tech troubles and cars are colliding across the pond, too. The bankruptcy of Britishvolt brought to light that the battery startup still owes nearly $300,000 to the world-renowned Goodwood Festival of Speed from last June.
Not to be a downer, but this ain’t my first terrible economy. (It’s at least my third since graduating college in 2008.) So I’ve learned a little about how these things work, and here’s what typically happens: trends accelerate. Drastically.
I expect the collector car market will be impacted in several ways. As we enter the pullback phase, expect tentative buyers to stick to what they know. They’ll double down on proven quantities (Porsches) while avoiding potential diamonds (??).
But the real ramifications won’t be felt until the rebuilding phase begins, when the winners of the recession are stamped and their gangs of newly-minted employees are flush with cash and ready to establish a “new normal” in car collecting.
If it’s true we’re headed for a correction, here are three predictions for the aftermath:
80s-90s cars emerge as dominant force: No need to overthink this one. They’re big now, they’ll be bigger soon — likely drawing millions, regularly.
EV swaps gain steam: Young collectors can and will throw a salvaged Tesla powertrain into nearly anything, especially having grown up with EVs in their lives. The sheer horsepower potential will outweigh any skittishness.
Nothing is sacred: Following cultural icons like Travis Scott or widebody master RWB, new enthusiasts will permanently modify our hero cars in ways we never imagined. And possibly hate. Can’t blame ‘em — they won’t be the first:
#Yikes.
Will these come true? We’ll have to wait and see. I personally would prefer to avoid an economic calamity in the first place! But I also recognize that it’s the fate of my generation to withstand one of these every 18-36 months. C’est la vie.
Let’s revisit in a year or two and see if I was right. If not, I guess I just wasn’t going fast and breaking stuff enough. There’s always the next collapse!
Did you hear the news? I’m heading to Japan soon to research my second book. Can’t wait to tell you more, but in the meantime, see our current selection of books and e-books on car culture and motorsports below. Grab a copy! Grab two!
Culture
CONTINUING THE CELEBRATION of Women’s History Month, the rally school Dirtfish held a Women in Motorsport summit over the weekend — more than 300 people attended. Here’s a great recap on the impact of this event.
When I talk about ‘80s and ‘90s racing royalty, this latest group of weird Lancias, Renaults and Citroens on offer — dubbed “Homologation Heroes” — is a perfect example. Read the article from Road & Track to take a test drive.
And here they are in glorious 4K:
Looking for more awesome newsletters? Check out our friend Michael Banovsky with May I Drive Your Car?, writing recently on the importance of driver training.
Bloomberg’s Hannah Elliott researched the auction scene and found that the best way to command high prices is to own a car in a weird color [subscription required].
Video Reel
AUTOMOTIVE MEDIA GIANT Donut tested every version of the Nissan GT-R and ranked them. Obviously this set off a firestorm of arguing and the video quickly topped 1 million views. Fun watch!
I had never heard this, but apparently Solid Snake from the iconic ‘90s video game Metal Gear Solid once did a commercial for the Ford Focus.
Tyrannosaurus racecar? Tyrannosaurus racecar.
Also in WEC, Racer insider Marshall Pruett takes a deep dive into the new Porsche 963 hypercar engine. All kinds of cool nerdy stuff in there!
On Your Radar
THIS WEEKEND the WEC series kicks off with its Sebring 1000. Yes, I said 1000. Here’s a great introduction to the exciting new hypercar class featuring Porsche, Ferrari, Toyota and more.
Update on the NASCAR-style stock car that will race at Le Mans this summer.
The Daytona 500 is this weekend. One intrepid USA Today reporter dared to ask NASCAR drivers whether the moon landing is real. It did not go well.
Women’s History Month continues with a Women of Motorsport event at the Hagerty Garage and Social space this Saturday. I’ll be there, daughter in tow.
And Finally…
I’LL SEND YOU OUT with this Porsche family tree. Enjoy your weekend, friends.
Drive hard and be safe. Black Lives Matter.
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