Classic car bubble?
Discussion
Welshbeef said:
pablo said:
If you look under the bonnet of a fast road/race prep'd 60's Ferrari though, you will see a lot of non OEM parts such as aeroquip hoses and shiny anodised Goodrich fittings.
The only people who will scorn the fitment of such parts are the concours enthusiasts (with their replica period decals!)
But from a Classiche Certification perspective,which no question adds notable value over a like for like car without, would require OEM only. The only people who will scorn the fitment of such parts are the concours enthusiasts (with their replica period decals!)
As we're talking about classic car bubble then those with all the ticks in boxes (be they better or worse for it is irrelevant) will be the safest place to put the £ and most likely to inflate to the highest prices.
IMHO Classiche certification is Ferrari's way of ensuring their offical parts supply business remains profitable. Manufacturer creates their own certification which can only be achieved through the procurement of spares through them. Fundamentally, its a gamble, the owner pays a fortune for specific parts to attain certification which may not be realised on the sale of the car. Its only good value for the current owner to invest in Classiche certification if its something that the next owner considers to be worth the extra cost compared to a non-certified car.
Originality counts for a lot but it only goes so far. Personally cars with interesting race history or owners will attract considerable interest regardless of whether the its been maintained with OEM parts and is as per it left the factory.
As an example, I doubt Nick Mason's 250 GTO has Classiche Certifiaction but were it ever to be offered for sale, it would undoubtedly go for more than any other 250 GTO previously sold even discounting the registration
Welshbeef said:
Bebee said:
The scrappage scheme must have helped in terms of making a high volume production car rare.
I never thought the MK1 Escort would be a residual riser, crazy prices now!
My thoughts on this are that your dad had one as you grew up the first car you remember with all those fun family days out. As such pick one up now for sentimental reasons. I never thought the MK1 Escort would be a residual riser, crazy prices now!
But yep bonkers money.
Are we in a bubble? I'm not so sure!
pablo said:
As an example, I doubt Nick Mason's 250 GTO has Classiche Certifiaction but were it ever to be offered for sale, it would undoubtedly go for more than any other 250 GTO previously sold even discounting the registration
It wouldn't surprise me if it was. I recall reading that he has two engines (at least) but the original one is either not used or only for gentle road use as the value of a non matching numbers 250gto is significantly lower. That engine isn't raced.To me the base rate is a red herring that was just the spark to set it going (in the last classic-bust base rate was falling), the whole point is that people are looking for a return on their money (something current governments find abhorrent) so people end up speculating, at the moment selected classics are experiencing rising prices so people are speculating - and hence price rises become self-perpetuating while people are still entering the market, however we are already reaching the point where large numbers of people are saying "it isn't worth that" about a lot of cars, at some point sentiment will turn, the speculators leave (and in the process increase supply by selling their speculative asset)and the market prices fall. It is a market, it isn't different this time.
The 80s and 90s stuff might be the people who were young at the time buying something they remember with rose tinted glasses. Many will buy one for a year or two then sell it on as the novelty has worn off, and their "investment" has been garaged for 2 months while they find a drive shaft or something else critical.
So who knows, this is the thing about speculative markets, it might go on for decades, every Austin Maxi will be worth a £1,000,000, or the market might bust next week.
The 80s and 90s stuff might be the people who were young at the time buying something they remember with rose tinted glasses. Many will buy one for a year or two then sell it on as the novelty has worn off, and their "investment" has been garaged for 2 months while they find a drive shaft or something else critical.
So who knows, this is the thing about speculative markets, it might go on for decades, every Austin Maxi will be worth a £1,000,000, or the market might bust next week.
I almost daily get a heart attack reading about the price hikes. When I grew up in the 90s I dreamt about NSX, GT-R R32s (they are going to go up in value now due to US being able to import them now), Porsche 964, Ferrari 550 Maranello etc. Almost all of them have gone up and/or are rising. I hate it. HATE it. I want to buy them to drive them, but the collectors and money makers are picking everything tidy and nice up.
Hell, even 968 Clubsports are going for insane amounts now. Nothing cool left cheap.
Hell, even 968 Clubsports are going for insane amounts now. Nothing cool left cheap.
Studio117 said:
I think its generally a waste of time for most 'classics', unless your buying vintage ferraris or speculating on new limited editions the money needed to keep the cars in decent condition will be roughly the same as their increase in value over the same period imo.
How much does a engine rebuild on an F40 cost for example?
Had my 911 for 7 years now, costs about £500 a year in servicing and minor parts, value have gone from 10k to around 40kHow much does a engine rebuild on an F40 cost for example?
Only problem is, draining it will reduce its value (on 23k miles, fpsh) so you end up keeping it in the garage too much and not driving it, which is why I bought it !
Really need two of the same model, one to appreciate and one to be appreciated.
http://www.pistonheads.com/gassing/topic.asp?h=0&a...
Above is a link to a topic I started suggesting that the party will end this year. Two main reasons
(1) Increased supply. We've had 38 consecutive months of growth in the new car market
(2) Exchange rates. The pound has strengthened considerably against the Euro over the past year. This means European car makers will make handsome Forex gains on cars sold here. Thus every incentive to flood the UK market. Also, the LHD v RHD price differential is the biggest it has been for a decade.
Above is a link to a topic I started suggesting that the party will end this year. Two main reasons
(1) Increased supply. We've had 38 consecutive months of growth in the new car market
(2) Exchange rates. The pound has strengthened considerably against the Euro over the past year. This means European car makers will make handsome Forex gains on cars sold here. Thus every incentive to flood the UK market. Also, the LHD v RHD price differential is the biggest it has been for a decade.
Look at the prices some of the stuff made at Anglia Car Auctions on Saturday:
The biggest one for me is a 3 door Cosworth (not RS500) made £47,000. OK it was a low mileage 2 owner standard car but it sold for way more than any 3 door Cossie has before (I sold my 3 door Cossie for £5,500 in 2006 and it was immaculate).
http://www.angliacarauctions.co.uk/en/classic-auct...
The biggest one for me is a 3 door Cosworth (not RS500) made £47,000. OK it was a low mileage 2 owner standard car but it sold for way more than any 3 door Cossie has before (I sold my 3 door Cossie for £5,500 in 2006 and it was immaculate).
http://www.angliacarauctions.co.uk/en/classic-auct...
rallycross said:
Look at the prices some of the stuff made at Anglia Car Auctions on Saturday:
The biggest one for me is a 3 door Cosworth (not RS500) made £47,000. OK it was a low mileage 2 owner standard car but it sold for way more than any 3 door Cossie has before (I sold my 3 door Cossie for £5,500 in 2006 and it was immaculate).
http://www.angliacarauctions.co.uk/en/classic-auct...
That mileage isn't that low The biggest one for me is a 3 door Cosworth (not RS500) made £47,000. OK it was a low mileage 2 owner standard car but it sold for way more than any 3 door Cossie has before (I sold my 3 door Cossie for £5,500 in 2006 and it was immaculate).
http://www.angliacarauctions.co.uk/en/classic-auct...
rallycross said:
Look at the prices some of the stuff made at Anglia Car Auctions on Saturday:
The biggest one for me is a 3 door Cosworth (not RS500) made £47,000. OK it was a low mileage 2 owner standard car but it sold for way more than any 3 door Cossie has before (I sold my 3 door Cossie for £5,500 in 2006 and it was immaculate).
http://www.angliacarauctions.co.uk/en/classic-auct...
Did they decide to leave the 'barn find' dust on for originality?The biggest one for me is a 3 door Cosworth (not RS500) made £47,000. OK it was a low mileage 2 owner standard car but it sold for way more than any 3 door Cossie has before (I sold my 3 door Cossie for £5,500 in 2006 and it was immaculate).
http://www.angliacarauctions.co.uk/en/classic-auct...
Rather than just look at the UK / Europe as an individual market we need to factor in the rising purchasing power of the middle east, far east, what were developing nations 20 years ago.
Having worked with and in the far east there is a tendency there (as most people know) to show how well you are doing through the purchase of luxury brands / goods, especially Western goods.
When the last crash happened, the purchasing power of the East and India and to a certain extent Russia / South America was not where it is today, there is quite simply a larger global market for classics.
The 'lower' value classics I believe are being driven by the high end market which is where the real wealth has always purchased.
Very brief;
http://time.com/2852740/china-millionaires/ this in 2014.
Numerous articles available on India etc.
Having worked with and in the far east there is a tendency there (as most people know) to show how well you are doing through the purchase of luxury brands / goods, especially Western goods.
When the last crash happened, the purchasing power of the East and India and to a certain extent Russia / South America was not where it is today, there is quite simply a larger global market for classics.
The 'lower' value classics I believe are being driven by the high end market which is where the real wealth has always purchased.
Very brief;
http://time.com/2852740/china-millionaires/ this in 2014.
Numerous articles available on India etc.
I'm never going to be in the market to knock on Nick Mason's door for a try-before-you-buy in his 250 GTO, however I despair in the price rises of more modest cars.
I don't think that the people driving that end of the market are doing so to speculate, nor that the hikes are driven by demand from emerging markets.
The price hikes that mean that I can't buy a good 205 GTi for £1500, or an XR3i cabriolet for the summer for a few hundred, are driven by the cars becoming scarcer and because of the whole "retro cool" factor.
Likewise, the fact that people like myself have reached the age where these cars of their youths are being snapped up as weekend toys, and reminders of their early motoring days ..... dare I say mid-life crisis? Demand is high for them, and good ones are very very rare.
I WILL find the 205 GTi for me, however gave up looking for a Renault 5 GT Turbo a long long time ago.
I don't think that the people driving that end of the market are doing so to speculate, nor that the hikes are driven by demand from emerging markets.
The price hikes that mean that I can't buy a good 205 GTi for £1500, or an XR3i cabriolet for the summer for a few hundred, are driven by the cars becoming scarcer and because of the whole "retro cool" factor.
Likewise, the fact that people like myself have reached the age where these cars of their youths are being snapped up as weekend toys, and reminders of their early motoring days ..... dare I say mid-life crisis? Demand is high for them, and good ones are very very rare.
I WILL find the 205 GTi for me, however gave up looking for a Renault 5 GT Turbo a long long time ago.
Mat,
I still think prices rises are being pulled from the top, the low interest rates of the past few years and those you were old enough t purchase property in the 90's / 00's and subsequently make a decent return on their investment now have the spare capital to invest in nostalgic / weekend toys which in my opinion are being portrayed as a fun / easy way to make money.
By this I mean all motoring journalism has reported with sensationalism the meteoric rise in classic car values which for me has fuelled the fire from the super rich to the general public.
Yes its may well be a hobby and nostalgic fun but, is it underwritten by peoples sub-conscious belief that they will make money?
Take 996(T)'s for an example, ugly, modern, over produced, known engine issues yet are rising in value? Due to the demand of older, rarer Porsches people then believe this will be the next 'thing'.
All in my opinion of course, if we all had the same view wouldn't the world be droll!!!
I still think prices rises are being pulled from the top, the low interest rates of the past few years and those you were old enough t purchase property in the 90's / 00's and subsequently make a decent return on their investment now have the spare capital to invest in nostalgic / weekend toys which in my opinion are being portrayed as a fun / easy way to make money.
By this I mean all motoring journalism has reported with sensationalism the meteoric rise in classic car values which for me has fuelled the fire from the super rich to the general public.
Yes its may well be a hobby and nostalgic fun but, is it underwritten by peoples sub-conscious belief that they will make money?
Take 996(T)'s for an example, ugly, modern, over produced, known engine issues yet are rising in value? Due to the demand of older, rarer Porsches people then believe this will be the next 'thing'.
All in my opinion of course, if we all had the same view wouldn't the world be droll!!!
mat205125 said:
I WILL find the 205 GTi for me, however gave up looking for a Renault 5 GT Turbo a long long time ago.
I had the pleasure of driving a 1 previous owner 205 GTI 1.9 with 21k on the clocks the other week. Granted it felt tighter and more precise than any other standard(ish) 205 I have driven and it was a real treat but I find it staggering that the owner has received offers over £10k. It only seems like a few years ago that £10k was Audi UR, E30 M3, Integrale or ropey 911 money and would buy at least a couple or three of the finest of 80s hot hatches.
I suspect that there will be some casualties in the next few years as some of those who paid over the odds prices on distinctly average examples look to offload which ought to bring the market back into line.
From the postings, it looks like most of you guys are from England? It's good to get a different perspective across the pond.
Here is my background and then a perspective on the bubble that I sent to a friend just starting to look for a weekend/collector car, he asked my opinion.
I restored a 190SL 30 years ago, had it for 8 years. I like all types of cars. After a long hiatus, I am back, my 17 year old son and I just bought a 240z with 70% original paint, OK condition, inexpensive in comparison to other collectibles now days, minimal rust, good car for him to tinker around with while learning about cars. I grew up and live in California.
"Tim,
Yep I think so, no guarantee but I think so. This bubble can take 12 to 24 months to deflate, it won't crash like the stock market, (actually a bear stock markets do not go straight down either).
If you want a Sunday driver that is not a collector car, like a S 2000 or a 3 year old Mercedes convertible, buy it now if you want, although the Mercedes may still have a lot of normal depreciation left on it.
If you want a "modern" collector car like a Porsche 993 or NSX, I would wait for the implosion.
1.) High production number like the 240Z (160,000), never went that high in price.
2.) The semi high production number cars, like the NSX (9000), Z8 (5,700), 190SL (25,000, estimate's are that half are left), 280SL (48,000) and several Porsche's shot up like crazy. These are the ones most vulnerable to a large % price drop.
3.) Low production numbers 300SL (1500), Ferrari GTO (30) may not drop as much % wise. They are in the purview of the super rich.
In the articles below you will read quite a few reasons why we are at a market top, and I agree with them for the most part, but I have a couple of my own ideas:
1.) Take for example the 190SL: Guys like me over the years would restore them, because they loved the car, it did not make economic sense, they just did.
Now, because the 300SL shot up in price out of reach to a lot of investors, they look for the next best thing, the 190SL or the 280SL, and because they don't know about cars, and because of the high price of restoring them, they want them already restored, and pay a big premium for them. At this point there are only a few #1 perfectly restored 190SL's out there, so the price shoots up, but now the price is so high ($250k to $300K), it makes economic sense for the restoration shops/ hack shops to start restoring them, and it takes time to restore them. Then all of a sudden these #1 cars start coming out of the woodwork and the ratio seller to buyer changes, at the same time the market is topping out. Boom! They start taking a dive, the 190SL currently is. The Corvette is, and soon the Porsche's.
2.) Investors buy stock. Art collectors buy a painting and hang it on the wall. Stamp and gun collectors, put them in a safe and that is it, not much else to do but admire them once and awhile.
It takes around $450k to have a 300SL restored to concourse condition, $150k to $200k? for a 190SL. Cars, if you enjoy them, drive them, you don't mind as much spending money on them, but investment #1 grade collector cars are another creature altogether.
Investment grade has to be perfectly restored to like original condition. Once it is done it starts to deteriorate. Once you take it to car shows, it has been seen,now not worth as much. You have to keep it in a climate controlled garage. You have to keep fixing things that go wrong. Good luck trying to find someone nearby that knows how to fix a very complex 300SL fuel injection system or the 190SL solex carburetors. (A friend was working on a 1934 Mercedes 540k, he needed a new starter spring, a couple inches long in size, he found one through the Mercedes Benz Classic car center, they wanted $1700! Choke!) (Another friend has a 1970 Jaguar E type coupe', finally he found this great mechanic... I will tell you the rest of the story next time I see you)
Suffice it to say these "Investors" are going to get tired of continually spending money and taking care of these things, (because they don't have the passion) at the same time the market starts softening up, so they start dumping them. Look out below!
Check the articles below. The warning signs are all there, Like "this time is different" or "investors" buying, but not knowing what they are buying".
See fourth article, everybody is getting into car collecting now. That is the time to cut and run. Warren Buffets paraphrased quote applies here: "Be greedy when others are fearful, be fearful when others are greedy."
or Philip Rothschild, "Buy when there is blood in the streets!".
Cheers,"
http://britishsportscars.com/blog/2015/04/market-r...
http://thegoodfellowperspective.com/the-dashboard-...
http://www.corvetted.com/weak-corvette-collector-m...
http://wolfstreet.com/2015/03/19/brett-eversole-cl...
http://www.safehaven.com/article/37710/great-cars-...
Here is my background and then a perspective on the bubble that I sent to a friend just starting to look for a weekend/collector car, he asked my opinion.
I restored a 190SL 30 years ago, had it for 8 years. I like all types of cars. After a long hiatus, I am back, my 17 year old son and I just bought a 240z with 70% original paint, OK condition, inexpensive in comparison to other collectibles now days, minimal rust, good car for him to tinker around with while learning about cars. I grew up and live in California.
"Tim,
Yep I think so, no guarantee but I think so. This bubble can take 12 to 24 months to deflate, it won't crash like the stock market, (actually a bear stock markets do not go straight down either).
If you want a Sunday driver that is not a collector car, like a S 2000 or a 3 year old Mercedes convertible, buy it now if you want, although the Mercedes may still have a lot of normal depreciation left on it.
If you want a "modern" collector car like a Porsche 993 or NSX, I would wait for the implosion.
1.) High production number like the 240Z (160,000), never went that high in price.
2.) The semi high production number cars, like the NSX (9000), Z8 (5,700), 190SL (25,000, estimate's are that half are left), 280SL (48,000) and several Porsche's shot up like crazy. These are the ones most vulnerable to a large % price drop.
3.) Low production numbers 300SL (1500), Ferrari GTO (30) may not drop as much % wise. They are in the purview of the super rich.
In the articles below you will read quite a few reasons why we are at a market top, and I agree with them for the most part, but I have a couple of my own ideas:
1.) Take for example the 190SL: Guys like me over the years would restore them, because they loved the car, it did not make economic sense, they just did.
Now, because the 300SL shot up in price out of reach to a lot of investors, they look for the next best thing, the 190SL or the 280SL, and because they don't know about cars, and because of the high price of restoring them, they want them already restored, and pay a big premium for them. At this point there are only a few #1 perfectly restored 190SL's out there, so the price shoots up, but now the price is so high ($250k to $300K), it makes economic sense for the restoration shops/ hack shops to start restoring them, and it takes time to restore them. Then all of a sudden these #1 cars start coming out of the woodwork and the ratio seller to buyer changes, at the same time the market is topping out. Boom! They start taking a dive, the 190SL currently is. The Corvette is, and soon the Porsche's.
2.) Investors buy stock. Art collectors buy a painting and hang it on the wall. Stamp and gun collectors, put them in a safe and that is it, not much else to do but admire them once and awhile.
It takes around $450k to have a 300SL restored to concourse condition, $150k to $200k? for a 190SL. Cars, if you enjoy them, drive them, you don't mind as much spending money on them, but investment #1 grade collector cars are another creature altogether.
Investment grade has to be perfectly restored to like original condition. Once it is done it starts to deteriorate. Once you take it to car shows, it has been seen,now not worth as much. You have to keep it in a climate controlled garage. You have to keep fixing things that go wrong. Good luck trying to find someone nearby that knows how to fix a very complex 300SL fuel injection system or the 190SL solex carburetors. (A friend was working on a 1934 Mercedes 540k, he needed a new starter spring, a couple inches long in size, he found one through the Mercedes Benz Classic car center, they wanted $1700! Choke!) (Another friend has a 1970 Jaguar E type coupe', finally he found this great mechanic... I will tell you the rest of the story next time I see you)
Suffice it to say these "Investors" are going to get tired of continually spending money and taking care of these things, (because they don't have the passion) at the same time the market starts softening up, so they start dumping them. Look out below!
Check the articles below. The warning signs are all there, Like "this time is different" or "investors" buying, but not knowing what they are buying".
See fourth article, everybody is getting into car collecting now. That is the time to cut and run. Warren Buffets paraphrased quote applies here: "Be greedy when others are fearful, be fearful when others are greedy."
or Philip Rothschild, "Buy when there is blood in the streets!".
Cheers,"
http://britishsportscars.com/blog/2015/04/market-r...
http://thegoodfellowperspective.com/the-dashboard-...
http://www.corvetted.com/weak-corvette-collector-m...
http://wolfstreet.com/2015/03/19/brett-eversole-cl...
http://www.safehaven.com/article/37710/great-cars-...
The thing that really skewed values over the last year was the changes to the pension rules, April 2015 4.5 million people approaching retirement age all got access to sums of cash, many of them fairly large sums.
Now for some approaching retirement a genuinely appreciating car might be a very smart buy, particularly if it was to be paired with a cheap run around.
They could take a lump sum of £50-100k to get the car they always dreamed of, and only reduce thier income by a few hundred £ a month. Then when they're hip are too shot to get in it any more, they can sell it for more than they paid for it and buy all the honda jazz's they'll ever need.
The slight problem is, the market was already high when these plans were announced, and the delay between the plans being announced and people actually getting access to the money, meant there was plenty of time for speculators to get in on the action, so chances of any of the 'appreciating classics' appreciating much in the next few years is quite slim, and if they do there i a very high risk of it sending the market into a crash.
Now for some approaching retirement a genuinely appreciating car might be a very smart buy, particularly if it was to be paired with a cheap run around.
They could take a lump sum of £50-100k to get the car they always dreamed of, and only reduce thier income by a few hundred £ a month. Then when they're hip are too shot to get in it any more, they can sell it for more than they paid for it and buy all the honda jazz's they'll ever need.
The slight problem is, the market was already high when these plans were announced, and the delay between the plans being announced and people actually getting access to the money, meant there was plenty of time for speculators to get in on the action, so chances of any of the 'appreciating classics' appreciating much in the next few years is quite slim, and if they do there i a very high risk of it sending the market into a crash.
ging84 said:
The thing that really skewed values over the last year was the changes to the pension rules, April 2015 4.5 million people approaching retirement age all got access to sums of cash, many of them fairly large sums.
Nope.The take up so far has been very small and where it has many have used the funds to pay of mortgages.
ridgetop said:
http://britishsportscars.com/blog/2015/04/market-r...
http://thegoodfellowperspective.com/the-dashboard-...
http://www.corvetted.com/weak-corvette-collector-m...
http://wolfstreet.com/2015/03/19/brett-eversole-cl...
http://www.safehaven.com/article/37710/great-cars-...
Thanks for the links, makes interesting reading, particularly the Winston Goodfellow piece. Once prominent renowned experts start to question the market it must start to send jitters through the investor community. http://thegoodfellowperspective.com/the-dashboard-...
http://www.corvetted.com/weak-corvette-collector-m...
http://wolfstreet.com/2015/03/19/brett-eversole-cl...
http://www.safehaven.com/article/37710/great-cars-...
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