Any one want to know why collector cars prices are soaring again?

"Joyrider" (joegoulet) 02/05/2014 at 17:20 • Filed to: Worth It

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I am putting together a piece for you guys but I want to gauge interest so I know how indepth to take this. I have been going down this rabbit hole for a few days after !!!error: Indecipherable SUB-paragraph formatting!!! in a series of posts I want to do I call 'Worth it'.

Let me know what you guys want!

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Chatham Harrison dba SPANFELLER DELENDUS EST > Joyrider 02/05/2014 at 17:22

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Rich people are benefiting most from the current recovery, and as such luxury markets are seeing the most growth. That's my current understanding, but I'd love to see what you can add to it.

Textured Soy Protein > Joyrider 02/05/2014 at 17:23

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Um let's see...

Modern cars keep getting heavier, more complicated, and more computerized. So older cars that are lighter, simpler and less computerized become more appealing.

The economy is better so people have more money to spend on old cars.

The end?

LuczOr > Joyrider 02/05/2014 at 17:24

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I'm down for all the nitty gritty details. For those with no attention span, too bad for them.

Joyrider > Chatham Harrison dba SPANFELLER DELENDUS EST 02/05/2014 at 17:25

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Its definitely rich people driving this but little known fact is specific Ferrari's are outperforming stocks on an avg growth basis the last few years.

SaabStutz > Joyrider 02/05/2014 at 17:28

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Go for it! I've been thinking Oppo needed some more long pieces lately...

Chatham Harrison dba SPANFELLER DELENDUS EST > Joyrider 02/05/2014 at 17:30

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They're the striped poppy bulbs of the automotive world. Once it becomes clear that possessing a certain car is an ultimate status symbol, that car becomes ridiculously valuable. I think the vintage Ferrari market in particular, and the vintage car market in general, is much more usefully comparable to the art market than the stock market at this point.

RotaryLover > Joyrider 02/05/2014 at 17:35

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I always thought it was our fault. Showing all the great classics on this site that many people forgot or never seen that added interest points on them. Some people like me would never consider some classic cars until I see a readers classic car or his views about one. For exemple, the Porsche 914 were dirt cheap in my area 3-4 yrs ago. Then the car got mentionned a few times here and bam, they are over 10000 now...but hey, that's my crackpot opinion.

Simplify, then add beer > Textured Soy Protein 02/05/2014 at 17:35

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Not at all.

The point is that classic cars are being bought not for the enjoyment of motoring, but because of their financial value. They are not being driven.

Joyrider > Textured Soy Protein 02/05/2014 at 17:35

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Way more awesome than that I promise. The forces here may seem obvious at first glance but the forces we don't see move this market more than I ever would have guessed a few days ago.

crowmolly > Joyrider 02/05/2014 at 17:36

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Easy.

As somebody else stated, the recovery is putting disposable dollars back into people's pockets. Also, other methods of investment can be/are more risky with little return. Housing is still pretty dead, as an example.

Simplify, then add beer > Joyrider 02/05/2014 at 17:37

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Good to see you're tackling this.

Joyrider > Chatham Harrison dba SPANFELLER DELENDUS EST 02/05/2014 at 17:39

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I agree its a better comparison. Its actually part of the piece I am working on. I was intrigued that top classic Ferrari's have risen in value 70% as of last year and another 30% this years. Its not the average of the last few decade where it was about 15% every year.

Joyrider > crowmolly 02/05/2014 at 17:41

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Yea those are the obvious forces. What about the forces you didn't mention?

crowmolly > Joyrider 02/05/2014 at 17:42

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Which would that be?

Joyrider > RotaryLover 02/05/2014 at 17:44

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Thats a good perspective I hadn't considered the influence of places like Jalopnik shining light on the dark spots like the E30 that people froth at the mouth for now. Or the El Camino that I appreciate more now than when I drove one with a big block when I 17 for my job one lucky day.

Joyrider > crowmolly 02/05/2014 at 17:46

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When I post the piece soon I will let you know ;)

crowmolly > Joyrider 02/05/2014 at 17:47

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Cool.

In the meantime, if you aren't poking over there already, check out Hagerty's blue chip cars and value estimators. Fun stuff to watch and play around with.

Manuél Ferrari > Joyrider 02/05/2014 at 17:48

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These are my guesses:

1. The distribution of wealth has gotten really skewed across the globe in the last 20 years or so. The top 1-5% of the richest people in each country are making ungodly amounts of money. There are a ton of billionaires out there. And billionaires want to make investments and enjoy themselves.

2. Some classic cars have changed from being cars to being seen as works of art. So the values are rising just like rare paintings by famous artists. Once a certain car is seen as a work of art there is no limit to how much it can appreciate. This causes non car people to get into collecting cars because they see them as art/investments.

3. While the economy has been recovering slowly but surely many asset classes are still growing at slow paces. The ultra rich are running out of places to park their money. They want to see better returns than they get on stocks, real estate, bonds, etc. Speculating on cars is one way to try to get bigger returns.

4. Car culture is growing. The Internet has made it super easy to research cars to buy, talk about cars with other people that like cars, and do research on where to find good priced parts and how to fix car issues. And it's easier to find the cars you want to buy because of sites like CL, eBay, Auto Trader, etc. The more people get into cars the more they influence other people who end up getting into cars too. And as more people of all income levels get into cars the demand for classic cars goes up. I'm sure some of the uber rich who initially bought cars just as investments actually got into cars. Cars are awesome and more and more people are getting into them. Sure there might be some millennials that don't like cars but a lot of that is due to them not having money. I think car culture in general is growing.

5. It's common for people who get into cars to eventually end up liking classics even if they started out only liking modern cars. Once you really get the bug you start appreciating the light and analogue cars from the past. Classics are badass.

Joyrider > Manuél Ferrari 02/05/2014 at 17:55

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Dayummm son you have hit a few of those forces for sure. I hadn't really factored in the power of the internet. Your right about it being a place to park your money but why its fast becoming a better place to park it is some of the story here.

Joyrider > crowmolly 02/05/2014 at 17:58

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Thanks for the tip, I have been checking them and out its part of what really made me go why the heck are the top Ferraris up 100% in 4 years? I said to myself there has to be a story here.

Manuél Ferrari > Joyrider 02/05/2014 at 18:01

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Thanks I think about this topic all day long, haha.

I'll be interested to learn why it's a better place to park your money.

My Dad is semi retired and cars are his main investments right now. He still has income and doesn't put much into his 401K and none into individual stocks. He finds good deals on classic cars and restores them himself. The values have gone up way more than any individual stocks he ever speculated on.

Joyrider > Manuél Ferrari 02/05/2014 at 18:05

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Yea I am kind of a nerd for this stuff so I am excited so many have already shown an interest. Your dad sounds like a genius to me. If you have the means and time to do the hard work the payoff can be huge monetarily and make you feel damn good to.

Manuél Ferrari > Joyrider 02/05/2014 at 18:20

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He's gotten pretty good at finding deals and fixing up cars. And he has the time to do it. I work too much to restore cars so my outlet is Oppo :)

My old man found a great way to get classic cars for cheap. Find shops that are going out of business and talk to the owners. There is a Porsche mechanic shop near us that is closing their doors. They have customer cars that they own because the customers ran out of money and couldn't pay for the work that was already done. And they don't have time to sell each car for max value so they'll cut deals.

It's sad that these shops are going out of business but nothing we can do about it. My dad actually gave them business in the past so he did his part. He picked up a 1969 911 roller for about $6K recently. And then they sold him a fully restored engine for about $2500. What a deal! The car needs a new interior and paint. But that cost will be worth it as the body is straight and has almost no rust

Joyrider > Manuél Ferrari 02/05/2014 at 19:05

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Damn depending on year and model that could be a big score when he gets it all done! That deal is awesome. Can you post some pics when he finishes ?

Manuél Ferrari > Joyrider 02/05/2014 at 19:12

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will do! i'll post some before and after pics

GRawesome > Joyrider 02/05/2014 at 19:52

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More and more people are talking about how an investment in classic cars has given a 20%, 30%, even 50% return. It's starting to look like a sound investment for the people who can afford them. So now wealthy people aren't only collecting cars as a status symbol, they are also using them as investments. With the market just going up and up, more people are jumping in trying to make some bucks. I'm hoping it's a bubble like we saw in real estate and gold, and prices crash so I can scoop up some nice collector cars to drive and enjoy. Not lock away in a safe for resale value.

Joyrider > GRawesome 02/05/2014 at 20:51

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Your onto most of it the speculators are into the extremely high end of the markets but its what they do with the profits after they sell the car thats interesting and sneaky as shit.

crowmolly > Joyrider 02/05/2014 at 20:58

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Could be the quality of cars that are now considered classics. 70's-early 80's cars may have been good looking but they were shit cars. Now late 80's-early 90s stuff is getting older and they are both desired and fun to drive.

GRawesome > Joyrider 02/05/2014 at 21:00

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Looking forward to reading your article and finding out what they are doing.
I've been wondering what the deal is with the market lately too.

awe46m3zcp > Joyrider 02/05/2014 at 21:07

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I see a couple factors. First you have Barrett Jackson which is a collection of rare, mint, low mileage cars for the most part that sell for incredible prices. Every Joe Shmoe suddenly thinks their classic car is worth a fortune even though its been sitting outside for 20 years, doesn't run, and doesn't have the original drivetrain. All it takes is for a few people to list the same car at high asking prices, and then the next guy that lists his car thinks thats the market price. Eventually they are all inflated. Secondly, there's not many places to safely grow your money anymore. Savings accounts, and CDs pay virtually nothing in interest. Higher dividend paying stocks come with greater risk. Why not put the money into a classic that will apprecitate 2-3% a year. It's a lot more fun than looking at your balance on a computer every couple weeks.

Joyrider > awe46m3zcp 02/06/2014 at 18:24

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Your right its possibly safer than a volatile stock and appreciating much faster than inflation. It definitely more fun for the collector that actually drives.