Harbingers of doom rejoice, classic car prices chat thread

[aeropilot]

theadman said:

The Mustang 390GT was another fine example - I don't understand the importance of an 'S Code' but it seemed to be a pretty significant part of the car's provenance.

S code was the top of the range big block 390FE engine option (as per the 390GT in Bullitt) and as a documented genuine car are quite rare now.....and correspondingly expensive.

[Hugh Jarse]

N Dentressangle said:

I'm not sure this one's undervalued:
http://www.ebay.co.uk/itm/Series-One-Diesel-86-CHA...
Looking at the text, it seems he really does want £200k for it

indeed, good spot BTW.
Typical early production car, has electrical fault with the headlamps.
Is this the first diesel LR or first ever land rover? If the latter can imagine its worth a few bob, despite needing attention.

Edited by Hugh Jarse on Monday 1st February 12:04

[DonkeyApple]

northo said:

DonkeyApple said:

The biggest impact on the market this year will be the recent implementation of money controls by the Chinese govt. Overnight it has removed much of the new demand growth that was anticipated.

In addition, the LTV rates on classics has been being pulled back by the specialist lenders and really importantly, the number of lenders that will accept cars as collateral has declined over winter and rates gone up on those that remain.

There could be some real bargains to be had this year for real enthusiasts because there are catagorically going to be some distressed and forced sellers in the market and fewer buyers.

I'd love to know where you got this information.

From our perspective LTV & rates are better than they have ever been in the last 5 years and lenders are looking for more classic car business with new lenders trying to get into the market place. That said you are partially correct as some brokers have their burned bridges with lenders for a number of reasons and they will be struggling to place deals.

We are busier coming into January 2016 than at any point in the last 10 years (no - we aren't talking up the market) and we have been seeing plenty of well-heeled enthusiasts buying good cars at good prices for many months - forget the silly asking prices.

Will there be distressed sellers in the market? Who knows but given the voluntarily low LTVs on most classic car finance agreements we think it is unlikely that owners will be bailing out of cars.

As for basing values on auction results, auction sales only make up c.10% of the UK market.....

Down from reaching up to 90% a couple of years ago and as far as I am aware, clients of specialist lends have been getting margin calls since Autumn. The deals using cars as assets to back offshore tax structures has all but disappeared and so have many of the other clever debt structures.

There are an awful lot of pinnacle cars owned via debt structures and the recent commodity rout and global market uncertainty has already led to margin increases and more than one soft default for some UK oil industry chaps.

The conventional end is probably hanging at present awaiting confirmation as to what is happening in April to pensions and property. But the simple fact that there is so much debt in this market now just highlights the risk.

It doesn't really matter what the base market is doing, if enough pinnacle cars are forced into the market at a time when there are few buyers then a tippy market that has already got people concerned is at considerable risk of a sell off.

And just because retail debt is growing it can't really be taken as a sign of a healthy market. There is probably a stronger argument for the exact opposite.

Out of interest, what sort of levels are you typically lending at in the general market?

Edited by DonkeyApple on Monday 1st February 14:10

[DonkeyApple]

355Chris355 said:

Interesting points. I can see a lot of the anticipated emerging market demand evaporating as stock markets fall, commodity wealth declines and emerging market currencies weaken.

Grateful if you could expand on the impact of money controls?
Also, grateful if you could add more detail around the LTV rates. How have these changed?

Thanks

Funnily enough, after spending much of 2015 reading about how the Chinese were to relax controls over 2016, I hadn't noted that they had recently done a complete about turn and increased controls: http://www.ft.com/cms/s/0/9e25a772-b5df-11e5-aad2-...

As you say the current global crisis is removing not just a lot of potential buyers but eroding buying power at the moment. Personally I think the market at the top is at its highest risk for some years and that it's not in a position to absorb an increase in supply. And that increase could easily come from collectors being forced to deleverage.

[Lowtimer]

I dunno, I feel very old fashioned now. When I'm buying old cars I just buy things I can afford to put down the cash for.

[DonkeyApple]

Lowtimer said:

I dunno, I feel very old fashioned now. When I'm buying old cars I just buy things I can afford to put down the cash for.

That's a remarkably Victorian attitude. It's the 21st century now and if you want something you just borrow and have it.

The real issue is that UK banks ended up hugely overweight in debt linked to primary residential housing and so since 2008 have been trying to balance their debt books a little better. One way is to slowly reduce the amount you lend to primary home buyers but the quickest way is to also massively increase your retail lending in other markets such as BTL and fine art or classic cars.

The absolutely brilliant thing about debt on classic cars is that no Govt is going to step in and stop you seizing your asset unlike with primary domiciles. And if instead of lending direct you finance small lending houses who then do the retail lending you can classify that debt even better on your balance sheet.

But the big wheezes like using super yachts, premium art and top cars as the assets to back inshore lending for offshore tax exiles has slowed down dramatically. Primarily because these are the exact people who won't be settling their debts if it all goes wrong. But I think the biggest risk at the moment is from the collectors who have borrowed against their equity holdings in their business to set up their car collections. For some the value of that equity is plummeting and the lender is demanding pronto cash payments to cover the margin calls and some can't do it as they never had the cash. For those people they risk having to dump their cars by hook or by crook.

[Lowtimer]

Well, if that comes to pass perhaps I'll swoop in at some point with my cash and buy a nice little something extra.

[DonkeyApple]

Lowtimer said:

Well, if that comes to pass perhaps I'll swoop in at some point with my cash and buy a nice little something extra.

My gut feeling is that it won't but we are certainly at the highest risk that we've been at during this up cycle.

[Lowtimer]

Hugh Jarse said:

Is this the first diesel LR or first ever land rover? If the latter can imagine its worth a few bob, despite needing attention.

It's nowhere remotely near being the first Landy, or even the first production Landy. As the advert implies, the diesels started in 1957, but the Series One entered production with petrol power in 1948

[Hugh Jarse]

Blimey 200k for the first D! If you dont ask.....
http://www.morrisleslie.com/results-21-11-2015.htm...
Recent results. New auction coming soon apparently end of Feb.

[Hugh Jarse]

One day to go here.
Accessible prices:
http://auction.catawiki.com/modern-classic-car-auc...
nice pug 405 Mi16

[RichB]

Hugh Jarse said:

Blimey 200k for the first D! If you dont ask.....
http://www.morrisleslie.com/results-21-11-2015.htm...
Recent results. New auction coming soon apparently end of Feb.

Que?

[aeropilot]

iSore said:

But here's the thing: If I were seriously minted, I wouldn't be paying £25k for a 'solid'; Cooper S, but £40k+ for a really perfect one. Same with Escorts - I'd pay 50 or 60 grand for a proper RS1600. They would join a host of other stuff - a 512BB, a Bora, the best sixties Mercedes SE Coupe money could buy, as Gullwing.

"How much is that. I like it and want it"

"It's 50 grand"

"I'll have it".


I have long since stopped saying 'HOW fkING MUCH' and instead, lament on the fact I just can't afford it.

Indeed...especially the bit about the RS1600

On the subject of Escort RS's, one of the 109 RS1800's made is currently up on evilbay, and with 5 days to go is already at £52k.....

[Hugh Jarse]

RichB said:

Hugh Jarse said:

Blimey 200k for the first D! If you dont ask.....
http://www.morrisleslie.com/results-21-11-2015.htm...
Recent results. New auction coming soon apparently end of Feb.

Que?

do elaborate old chap, then i can help you

[northo]

DonkeyApple said:

northo said:

DonkeyApple said:

The biggest impact on the market this year will be the recent implementation of money controls by the Chinese govt. Overnight it has removed much of the new demand growth that was anticipated.

In addition, the LTV rates on classics has been being pulled back by the specialist lenders and really importantly, the number of lenders that will accept cars as collateral has declined over winter and rates gone up on those that remain.

There could be some real bargains to be had this year for real enthusiasts because there are catagorically going to be some distressed and forced sellers in the market and fewer buyers.

I'd love to know where you got this information.

From our perspective LTV & rates are better than they have ever been in the last 5 years and lenders are looking for more classic car business with new lenders trying to get into the market place. That said you are partially correct as some brokers have their burned bridges with lenders for a number of reasons and they will be struggling to place deals.

We are busier coming into January 2016 than at any point in the last 10 years (no - we aren't talking up the market) and we have been seeing plenty of well-heeled enthusiasts buying good cars at good prices for many months - forget the silly asking prices.

Will there be distressed sellers in the market? Who knows but given the voluntarily low LTVs on most classic car finance agreements we think it is unlikely that owners will be bailing out of cars.

As for basing values on auction results, auction sales only make up c.10% of the UK market.....

Down from reaching up to 90% a couple of years ago and as far as I am aware, clients of specialist lends have been getting margin calls since Autumn. The deals using cars as assets to back offshore tax structures has all but disappeared and so have many of the other clever debt structures.

There are an awful lot of pinnacle cars owned via debt structures and the recent commodity rout and global market uncertainty has already led to margin increases and more than one soft default for some UK oil industry chaps.

The conventional end is probably hanging at present awaiting confirmation as to what is happening in April to pensions and property. But the simple fact that there is so much debt in this market now just highlights the risk.

It doesn't really matter what the base market is doing, if enough pinnacle cars are forced into the market at a time when there are few buyers then a tippy market that has already got people concerned is at considerable risk of a sell off.

And just because retail debt is growing it can't really be taken as a sign of a healthy market. There is probably a stronger argument for the exact opposite.

Out of interest, what sort of levels are you typically lending at in the general market?

Edited by DonkeyApple on Monday 1st February 14:10

With all due respect - you city boys sure know how to complicate things!

We are not aware of any lender who has offered 90% LTV although under exceptional circumstances it may have happened on occasion. 70% is normally the maximum and typical LTV 45%.

"Clever debt structures" sounds like mortgage backed securities....

"There are an awful lot of pinnacle cars owned via debt structures". There are also a lot that are on good old simple HP - and cash.

If a few speculators need to bail out is it going to affect the market - we think the answer is no. We already have a glut of cars on the market - has it really made a difference to prices? You could argue that Scottsdale and Paris have seen a drop in prices but the only people who are going to feel like they have lost out there are those that paid too much for their cars in the first place - and there are a number of those, mainly speculators.

In the main the classic and collector car market is pretty simple - are we in danger of reading too much into it? It sounds like the City already has although I dare say within that environment your observations may be right. Our typical customer isn't highly geared or working in that sector (but the latter is true for some of them!) which is where classic car finance differs from the modern stuff.

Has there been a massive increase in lending on classic cars? From our perspective no, it has been incremental. To give you an idea of volumes, if we were a classic car auction house we would be #3 in the UK in terms of sales. How many more out there are doing similar volumes on similar cars we just don't know. Lending on classics is a flash-in-the-pan for many lenders and brokers but the established classic car lenders continue as before.


2016 has started with a bang for classic car buyers - and we aren't seeing speculators any more, it's enthusiasts. Is the market at risk? I think the only thing that is at risk here in general are speculator profit margins. In case you are wondering we do monitor the market more closely than most.... Classic car market analysis

It's a great time to be buying.

[jdw1234]

Is Donkey's point not that values are set at the margin by people who need to sell for one reason or another (i.e. not just list at opportunistic asking prices).

It will be interesting to see what happens to "enthusiast" demand if values start to trend downwards.

[DonkeyApple]

northo said:

With all due respect - you city boys sure know how to complicate things!

We are not aware of any lender who has offered 90% LTV although under exceptional circumstances it may have happened on occasion. 70% is normally the maximum and typical LTV 45%.

"Clever debt structures" sounds like mortgage backed securities....

"There are an awful lot of pinnacle cars owned via debt structures". There are also a lot that are on good old simple HP - and cash.

If a few speculators need to bail out is it going to affect the market - we think the answer is no. We already have a glut of cars on the market - has it really made a difference to prices? You could argue that Scottsdale and Paris have seen a drop in prices but the only people who are going to feel like they have lost out there are those that paid too much for their cars in the first place - and there are a number of those, mainly speculators.

In the main the classic and collector car market is pretty simple - are we in danger of reading too much into it? It sounds like the City already has although I dare say within that environment your observations may be right. Our typical customer isn't highly geared or working in that sector (but the latter is true for some of them!) which is where classic car finance differs from the modern stuff.

Has there been a massive increase in lending on classic cars? From our perspective no, it has been incremental. To give you an idea of volumes, if we were a classic car auction house we would be #3 in the UK in terms of sales. How many more out there are doing similar volumes on similar cars we just don't know. Lending on classics is a flash-in-the-pan for many lenders and brokers but the established classic car lenders continue as before.


2016 has started with a bang for classic car buyers - and we aren't seeing speculators any more, it's enthusiasts. Is the market at risk? I think the only thing that is at risk here in general are speculator profit margins. In case you are wondering we do monitor the market more closely than most.... Classic car market analysis

It's a great time to be buying.

Thanks. You're not wrong re clever debt structures. Once they appear in a market then it's a warning to me of excessive speculation. It's interesting that in the Coty this market is commonly referred to as an investment market and one that outperformed others in 2015.

But once it is seen as an investment then you get the leveraged speculation etc and all the instability that brings.

My outlook on this is very City centric and focused around looking at speculative bubbles and how close we get to trigger events for heavy sell offs. These sell offs are always triggered by a change in sentiment from bullish to negative so they cause a drop in demand and an increase in supply.

It's impossible to call trigger events really, all you can do is look at the probability of one coming sooner. Ie black swan events.

With the car market many of the multi million dollar cars have been secured by loans against company equity etc and in the last few months some of these companies have collapsed in value and as such the owners margin values have slumped so they must top up with cash or sell the asset. I know of two car collectors in the UK oil industry who are now forced sellers as a result of their oil businesses falling heavily in value and not having the free cash to make up the shortfall. And there will definitely be more in the US and elsewhere.

I also see the classic car investment funds as a big risk to price stability. If a few clients want to cash in they they must sell stock and so a change in market sentiment will trigger these being forced sellers.

So my view is that there is a significant risk of supply increasing and softening prices and that brings forward the risk of a trigger event that could change sentiment on this investment class overnight.

40% LTV is almost certainly fine but those on much higher deals could well struggle to find the gap on a 30% market correction etc. As with all markets it isn't usually the normal investors who are the trigger but the big, highly leveraged ones

My view is that we've started 2016 at the highest risk of a change in investment sentiment we've seen during the upwards leg of the cycle.

The last thing the market would need at the moment, for example, would be the media starting to talk about an end of the boom etc. .

[swisstoni]

I wonder how these 'pinnacle' classics are being stored.
Are they being pampered at some storage spa, lovingly tended to or are they under a sheet in an underground car park, never turning a wheel.
Perhaps it doesn't matter - they are destined to be just assets and will never be properly used again.

A bit sad. If I was in that market I'm sure I'd want the thing to be functional at least.

[DonkeyApple]

swisstoni said:

I wonder how these 'pinnacle' classics are being stored.
Are they being pampered at some storage spa, lovingly tended to or are they under a sheet in an underground car park, never turning a wheel.
Perhaps it doesn't matter - they are destined to be just assets and will never be properly used again.

A bit sad. If I was in that market I'm sure I'd want the thing to be functional at least.

Luckily, people like March have made it important for them to be seen at events.

But where I keep my cars there are other cars which have never been seen by their beneficial owners. Their family wealth fund has bought them as part of portfolio diversification and the storage company looks after them until such a time as the asset class is deemed overweight and they will be sold.

There's a 70s pop star who's cars are collected each year from storage by Richard Williams, serviced and returned and the only miles that have been put on them are from RSW!

[dartissimus]

Maybe the Stanley Mann saga, which featured in these threads should serve as a warning to those speculators who pile into the latest craze with a little learning and too much dodgy money.

Bad money always drives out good

There's an essential difference between enthusiasts and speculators, in what and why they buy and how they pay for it.

I truly hope the speculators come a cropper, not because I wish them ill in their money making schemes, but because they are interfering with my hobby.

The phrase "the price of everything but the value of nothing"

Am I really such a gom ?