Parking in the Leica Garage

[bobtowery]

Nick's article on the S2 and the ensuing discussion about spending that kind of money on a camera got me thinking.  Yes, I would love to own an S2 kit. But it is an awful lot of money, isn't it?

Or is it?

I am a Canon shooter. As each new body in a series comes out, the one it is replacing generally halves in value. I.e. I paid $4,500 for my 1D3, sold it for $2,200 after the 1D4 came out.  So it cost me about $800 per year to own the 1D3. The Canon L lenses seem to hold at least 80% of their value. I have bought several used, that remain worth what I paid for them.

Do we have enough information on digital Leica's to know how they will hold their value?

Say a person has enough funds "parked safely" that he could purchase an S2 kit (or an M9 kit for that matter). Could I park this money in the Leica Garage, and get the use of the S2 as well? I would feel okay doing this with the S2 losing a few grand (2-4k?) over time. But not halving in value - i.e. 11 or 12k.

What happens if they come out with an S3? Or quit making the S2 altogether? (Realizing their are no guarantees, but looking for thoughts from people with Leica experience.)

Looking at M8's on ebay is not pretty. Surely there will be an M10 at some point. Do the used M9's go to $4,000 then? Does the fact that there are relatively few of these cameras/lenses made alter the formula as compared to Canon/Nikon? Or the Japanese collector phenomenon?

What about the lenses? I have a friend that buys and sells lenses fairly regularly for his M9 and it seems they hold their value well.

I realize there are other intrinsic reasons to own a particular camera, but I'm primarily interested in the financial discussion at this point.  Thoughts?

[bobtowery]

Re: considering an M9, maybe I shoulda read Michael's article about the new sony nex-7 first! That looks like a sweet camera.

[Alistair]

Re: considering an M9, maybe I shoulda read Michael's article about the new sony nex-7 first! That looks like a sweet camera.

Agreed. Buy Leica lenses and use on an NEX (or Ricoh). But there of course issues on the wide side as these are both crop sensor bodies so hope for a full frame NEX!

[telyt]

Do we have enough information on digital Leica's to know how they will hold their value?

We don't know until it happens, and it's going to be model-specific.  The DMR is still worth what I paid for it (used) five years ago, so the annual cost has been the time value of money.  If resale value is critical then a digital camera, or an electronic anything, isn't a good bet.

Buy a camera as a tool.  The return on the investment is the photos you get from it, not the resale value.

[bobtowery]

We don't know until it happens, and it's going to be model-specific.  The DMR is still worth what I paid for it (used) five years ago, so the annual cost has been the time value of money.  If resale value is critical then a digital camera, or an electronic anything, isn't a good bet.

Buy a camera as a tool.  The return on the investment is the photos you get from it, not the resale value.

Good points, and thanks for that.  Since I have a nice collection on L lenses and a 5D2, additional gear is kind of luxury for me.

Maybe my post was too obtuse. Anyone care to comment on Leica lenses specifically, as far as holding their value?

[telyt]

Maybe my post was too obtuse. Anyone care to comment on Leica lenses specifically, as far as holding their value?

As far as the R lenses go (which I'm guessing you're referring to, since you have a Canon) I think the market bottomed out a few months after the R system was discontinued.  I don't know if it's just due to devaluation of the US$ but R lens pricing seems to be going up, particularly on the later model lenses.  Six years ago I paid about half of what the 280mm f/4 APO is going for now.  It's hard to say if this trend will continue but it's a moot point for me, I'm not selling the lens    It's worth more to me for the pictures I make with it than the cash in my pocket.

[bobtowery]

As far as the R lenses go (which I'm guessing you're referring to, since you have a Canon) I think the market bottomed out a few months after the R system was discontinued.  I don't know if it's just due to devaluation of the US$ but R lens pricing seems to be going up, particularly on the later model lenses.  Six years ago I paid about half of what the 280mm f/4 APO is going for now.  It's hard to say if this trend will continue but it's a moot point for me, I'm not selling the lens    It's worth more to me for the pictures I make with it than the cash in my pocket.

Thank you Doug, actually I was talking about the Leica M lenses since they can be used on the M9 as well as MFT's, the Sony NEX and so on.

[telyt]

... actually I was talking about the Leica M lenses since they can be used on the M9 as well as MFT's, the Sony NEX and so on.

M lenses, new or used, may be over-priced right now due to unexpectedly high demand and limited production capacity.  Leica is working on additional production capacity but for the next few months there will be more demand than supply.

[dfarkas]

Bob,

I was actually having this exact discussion with someone today.

Most M lenses are selling for more used than new because of the combined high demand and continued low supply. Leica is indeed making and shipping lenses (otherwise they wouldn't be posting record quarterly/yearly results), but the demand is just far outstripping the supply. More than half of all M9s sold have gone to first-time Leica owners and the demand for the M9 was almost double than what was projected, so all of these new users need all the lenses (or at least the basics). In the past, most owners of new camera models already had a collection of lenses.

Used M9s sell for about 10% less than new, even after almost 2 years on the market. You mentioned used M8s. These sold new in 2006 for $4800, now selling for about $2500. This is pretty good value retention in digital. A $7000 Canon 1Ds mk2 from the same time now sells for $2000. Since the introduction of the M9, M8 prices have actually risen a bit. Doug's DMR example is even better. The DMR is selling used for almost what it cost new in 2005. 1-year old S2s sell for about 15% off of new price. S lenses tend to sell for 90-100% of retail or a bit more for the 120.

One of my customers sold his M9 kit recently as rangefinder shooting wasn't for him. He ended up getting back just about what he paid 14 months earlier. The small amount he lost on the camera, he made up for in the lenses.

So, yeah, I'd say it's a pretty safe bet to park in the Leica garage. Your cost is actually pretty minimal if you can afford the opportunity cost. And, you get to shoot with some of the best cameras and lenses while parked.

David

[Sheldon N]

I'm going to go against the commentary here. I think the Leica S2 system will cost you a fair bit in depreciation if you buy new.

It's too high end and not widespread enough. Most buyers are going to be very well heeled amateur shooters who can really afford to buy a luxury item like this. There will be some pro photographers who use it too, but they won't make up the bulk of the market.  Once you cross into that price territory of $20-30k for a camera system, I'd be willing to bet that most buyers won't be price sensitive to a small discount for buying used. They'll gladly pay extra for a new body since they can afford it.  In order to sell the gear used you'll need to offer a decent discount.

You'd probably have to price a used Leica S2 body at around $15-17.5k to sell it, that's instant depreciation of almost $5-7500. A new model from Leica or newer/better competive models from other manufacturers will only push prices down too.

The secondary market for used S2 lenses is small right now. Most people who bought the body already bought the lenses. I'd guess that you'd be looking at 25-30% off the new price for clean used lenses.

So buying a new system with two or three lenses will cost you almost $10k in depreciation, I think. If you could find a used one yourself, the actually yearly rate of depreciation is probably much lower.

[telyt]

I'm going to go against the commentary here. I think the Leica S2 system will cost you a fair bit in depreciation if you buy new.

dfarkas is a Leica dealer.  I suspect he has a good idea what the market for used S2 equipment is like.  I've been reading his posts for several years now and I've never known him to BS anyone.

[glenerrolrd]

I wish i could find a used S2 at sheldon s prices..been looking now for almost  4 months.  Lenses for the s2 are now selling above list on ebay.

There will be a drop in prices when leica releases the CS lenses because of the guranteed trade in value of the existing S lenses and i expect to be walloped when the S3 is introduced. 

[Sheldon N]

dfarkas is a Leica dealer.  I suspect he has a good idea what the market for used S2 equipment is like.  I've been reading his posts for several years now and I've never known him to BS anyone.

Yes, but his commentary was about the M system, not the S2. The M system has over half a century behind it to build up a market.

I wish i could find a used S2 at sheldon s prices..been looking now for almost  4 months.  Lenses for the s2 are now selling above list on ebay.

There will be a drop in prices when leica releases the CS lenses because of the guranteed trade in value of the existing S lenses and i expect to be walloped when the S3 is introduced. 

Wasn't aware that there was a shortfall of supply on the S2/lenses, obviously that will do strange things to the used market until manufacturing has caught up with demand.

My general point is that it would be silly to expect that you could buy a MF digital camera body brand new and not take a serious hit on depreciation over a couple year period. Look generally at the trends of every other MF digital camera/back over the past 5 years. The cost of ownership per year is astronomical compared to other systems.  You've got competitive pressure from technological development and newer/better cameras being released regularly, an increasing supply generally on the used MFD market, and overall falling prices for the "mainstream" MF digital.

[dfarkas]

Sheldon,

I was talking about Leica in general terms, although I did say this about the S system in my post above:

1-year old S2s sell for about 15% off of new price. S lenses tend to sell for 90-100% of retail or a bit more for the 120.

David

[Sheldon N]

Sheldon,

I was talking about Leica in general terms, although I did say this about the S system in my post above:

David

Totally missed that line, my apologies.

[Sheldon N]

Saw a couple Leica S2 cameras posted for sale, and it reminded me of this old thread.  It's interesting to see how the reality of market prices played out after about 14 months, versus all the forecasts/guesses we made.

Here's an example for sale posting...

http://www.luminous-landscape.com/forum/index.php?topic=72432

[BrianVS]

Prices of lenses will go up, prices of digital bodies will always go down. Can't complain- selling off some lenses for 2x and 3x what they cost a couple of years ago has subsidized the M9 and M Monochrom to the point that I can tell my wife they cost $3K each, and be accurate.