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Chris DeMuth Jr.
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"It's not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it - who look and sift the world for a misplaced bet - that they can occasionally find one." - Charlie Munger I look... More
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  • Fun Cars For Free Care Of NHTSA 0 comments
    Jan 4, 2013 6:57 PM

    The 1997 Land Rover Defender 90 actually is a sport-utility vehicle - this is a beastly tank of a vehicle intended for sport or utility. The D90 has reached every corner of the Earth and Land Rover means it when they say it is for "off road". Demand for such strange vehicles is limited to a strange group of several hundred people per year who like how it drives and looks. This can't even be described as an "acquired taste", because if you don't have it, you won't acquire it. The ride is harsh and in a wind tunnel, the D90 will send the wind right back where it came from. I love it.

    But what is most interesting about the D90 is that it was a wonderful opportunity to purchase at a bargain price of $34,000 in 1997. The opportunity arose because Land Rover refused to be pushed around by the joyless pests at the National Highway Traffic Safety Administration (NHTSA). At the time, half of the NHTSA bureaucracy was working assiduously to require airbags. In unrelated news, the other half of NHTSA was working to demand that the use of these airbags would be optional. For under a thousand sales per year in the US, the good people at Land Rover decided that NHTSA wouldn't push them around. By the end of the year, the company pulled the D90 from the US market. If you've driven yours hard since then, the price would have stayed about flat in the intervening years for a depreciation of zero. Driven lightly, it would be worth somewhere north of $50,000. Low mileage models now go for $75-80,000.

    But after fifteen years of teeth rattling fun in the D90, where could you find the next similar opportunity? Well, to find the next auto arb, I searched the NHTSA site. I was not looking for the best data, but the worst. I was in search of bureaucratic quibbling most likely to drive an import to give up and stunt the available supply. Interestingly enough, the answer is another British import: the Aston Martin DB9. NHTSA has the vapors over 1.) the proximity of the windshield to the driver and 2.) the proximity of the engine to the hood, which is a problem if you hit a passenger and he bounces up in the air and lands on said hood. NHTSA wants a bit more cushioning to the blow and they appear unmoved by the disincentive that one would naturally have against performing this maneuver in this vehicle.

    510 BHP. 620 NM torque. Sprint time of 4.6 seconds. AM11 V12 engine. The most powerful DB9 ever produced.

    I continue my search for additional candidates, but for now, my favorite prospect for regulatory-driven supply constraint: the Aston Martin DB9. Drive it for free for the next fifteen years.

    If you want to learn more about Land Rovers, I would think about reading Land Rover: 60 Years of the 4x4 Workhorse. If Aston Martins are more your style, think about Aston Martin: Power, Beauty and Soul.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: Chris DeMuth Jr is a portfolio manager at Rangeley Capital, a partnership that invests with a margin of safety by buying securities at deep discounts to their intrinsic value and unlocking that value through corporate events. In order to maximize total returns for our partners, we reserve the right to make investment decisions regarding any security without further notification except where such notification is required by law.

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