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I am looking at buying a 88' Z51 with the Targa top with 82k miles. I was told they only made 500 of these models. Is that correct?
The Corvette Black Book says that for 1988, there were 578 produced in Yellow and 1,309 with Z51. It's possible that 500 of the 578 Yellow had Z51, but I don't think that accurate data like that is readily available. I wouldn't recommend buying the car because of some perceived "rarity" - buy it if you like it and will be happy driving it.
Also, you may get more or better responses if you post again in the "C4 General" section, since I think it gets more visits than the page specific to ZR-1s.