Classic car ''bubble'' and china crisis/stock market jitters
Discussion
DonkeyApple said:
Of course but what we are meaning here by fakes are the cars with new chassis, new shells and a V5 that should never have been granted.
The classic car market has no regulator and is worth billions ergo it is bent as any such market always has been and always will be.
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True, but I gave my case as it is pretty typical I think of most folk with a vintage or veteran. No intent to defraud anyone, but as you know, the rules are often a obstacle for the honest, the crooks just carry on.The classic car market has no regulator and is worth billions ergo it is bent as any such market always has been and always will be.
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I don't know nearly enough about the classic car market to be able to predict when/ if/ how the bubble wil burst, but I am constantly on the lookout for one thing.
Twice in my life I have sat and watched a local news TV programme do a piece on property price rises where they have used the phrase " house prices are increasing by £xxx PER DAY".
Two totally different areas of the UK 350 miles apart and 25 plus years apart. In both cases the property market collapsed within months.
So if you see or hear anyone talking about the value of classic cars going up by so much per day, then my guess is that a catastrophic collapse is imminent.
History has a very nasty habit of repeating itself.
Twice in my life I have sat and watched a local news TV programme do a piece on property price rises where they have used the phrase " house prices are increasing by £xxx PER DAY".
Two totally different areas of the UK 350 miles apart and 25 plus years apart. In both cases the property market collapsed within months.
So if you see or hear anyone talking about the value of classic cars going up by so much per day, then my guess is that a catastrophic collapse is imminent.
History has a very nasty habit of repeating itself.
It's a bit like parents with kids at school in denial that exams are easier - people holding a classic car paper gain cannot talk down the market.
The denial is massive with cars. It's only a question of when the market corrects, and by how much, not if it will.
My indicators that it's not far off are laughing out loud at fs ads, the proliferation of spiv dealers and restorers and nearly as many POA ads as ones with a price.
The denial is massive with cars. It's only a question of when the market corrects, and by how much, not if it will.
My indicators that it's not far off are laughing out loud at fs ads, the proliferation of spiv dealers and restorers and nearly as many POA ads as ones with a price.
Some good points made lads thanks.
In response to george500 i agree with you mate, I didnt say personally that i thought the BRICS was having an effect but rather that seemed to be the reasoning of persons proclaiming that this bubble is different
I actually sit more on donkeyapples' side of the fence, im not that old at 26 but i can still remember thumbing through copies of C&SC in my teens and seeing sub £100k miuras £40k dinos etc.
Wholeheartedly agree about the shoddy examples/fakes a certain london based vendor has a ''group b'' audi qauttro up for rather a large amount of £ , I dont know its provenance but it looks fishy as a whole package to me... Triggers broom springs to mind
Regards.
In response to george500 i agree with you mate, I didnt say personally that i thought the BRICS was having an effect but rather that seemed to be the reasoning of persons proclaiming that this bubble is different
I actually sit more on donkeyapples' side of the fence, im not that old at 26 but i can still remember thumbing through copies of C&SC in my teens and seeing sub £100k miuras £40k dinos etc.
Wholeheartedly agree about the shoddy examples/fakes a certain london based vendor has a ''group b'' audi qauttro up for rather a large amount of £ , I dont know its provenance but it looks fishy as a whole package to me... Triggers broom springs to mind
Regards.
Degsy- I think that's probably the main point, the Chinese consumer is not driving up the price of cars and the "experts" who seem to be post-rationalising the boom by suggesting the Asia is eating up classic cars would appear to be spouting. This might be because a number of markets in Asia (particularly Singapore) drive on the left so we see more exports leaving the UK
Forget the stuff up the top though- I couldn't care less about the value of Ferrari 250s or even Lightweight E-Types but I am interested in the semi-affordable stuff
What I am curious about is the age demographic of people buying Carrera 3.2s, E-Types etc. If they are car enthusiast Baby Boomers tucking into pension funds are they really that sensitive to a credit crunch? Or is it more a case of "sod it- I've got the cash I'll enjoy it"
I'm 34 and simply love cars. I am not married and am an ex-pat so have a little bit of liquid funding to go and buy stuff I enjoy. I have justified some of it to myself as an "investment" but frankly that's just man maths. The initial thought was simply that leaving it in the bank was dull, buying property is not really my thing, the stock market looked flat (dumb- it went up) and cars have no capital gains tax (meaning stocks and shares have to outperform)
Underneath it all I look at it as something that might go up or might go down but probably not that materially in either direction, it is simply a tangible asset that is a store of value. Given I bought them with cash I will just suck it when I come to sell it. The running costs I look at as rental fees for objects that give me great pleasure. Does that make me unusual or usual- I would have thought this fits a lot of us?
Will it crash? Depends what car I suppose- for me I think you have to look at relativity. I was lucky/stupid enough to go and buy a Lamborghini Diablo last year for an amount that wouldn't have got me a three year old 911 convertible. Now I grant you this is apples and pears for a lot of people but if you were buying a weekend fun car then you might (like I did) go "blimey- I could have a Lambo for that". There aren't that many of them (4 from 1993 to be precise) so it doesn't take a lot of people to come to the same conclusion. A similar argument could be applied to a Carrera 3.2 or 993 when a Porsche Boxster S will crest £60k with the right options
Testarossas though? Well when a market sees a dramatic increase in supply and price for something that is really rather common you have to start wondering...
Forget the stuff up the top though- I couldn't care less about the value of Ferrari 250s or even Lightweight E-Types but I am interested in the semi-affordable stuff
What I am curious about is the age demographic of people buying Carrera 3.2s, E-Types etc. If they are car enthusiast Baby Boomers tucking into pension funds are they really that sensitive to a credit crunch? Or is it more a case of "sod it- I've got the cash I'll enjoy it"
I'm 34 and simply love cars. I am not married and am an ex-pat so have a little bit of liquid funding to go and buy stuff I enjoy. I have justified some of it to myself as an "investment" but frankly that's just man maths. The initial thought was simply that leaving it in the bank was dull, buying property is not really my thing, the stock market looked flat (dumb- it went up) and cars have no capital gains tax (meaning stocks and shares have to outperform)
Underneath it all I look at it as something that might go up or might go down but probably not that materially in either direction, it is simply a tangible asset that is a store of value. Given I bought them with cash I will just suck it when I come to sell it. The running costs I look at as rental fees for objects that give me great pleasure. Does that make me unusual or usual- I would have thought this fits a lot of us?
Will it crash? Depends what car I suppose- for me I think you have to look at relativity. I was lucky/stupid enough to go and buy a Lamborghini Diablo last year for an amount that wouldn't have got me a three year old 911 convertible. Now I grant you this is apples and pears for a lot of people but if you were buying a weekend fun car then you might (like I did) go "blimey- I could have a Lambo for that". There aren't that many of them (4 from 1993 to be precise) so it doesn't take a lot of people to come to the same conclusion. A similar argument could be applied to a Carrera 3.2 or 993 when a Porsche Boxster S will crest £60k with the right options
Testarossas though? Well when a market sees a dramatic increase in supply and price for something that is really rather common you have to start wondering...
I think there is a bit of confusion as to the relevance of the Chinese economy and its impact on Western classic car values.
I don't think anyone is saying that the Chinese people are suddenly collecting Allegros etc. Of course the meteoric rise of the number of Chinese multi millionaires has added some buyers at the top end but the relevance of the Chinese economy is that they have driven both the economic boom in resources (which has been ending since Q3 2012) but more importantly, their currency has financed the whole of the U.S., UK and EU currency devaluation programs since 2008, the whole reason for the massive acceleration in the booming values of non yielding assets such cars and art.
But not only is China's economy now declining in strength but they have also just initiated their own QE program. At the same time there is very clear information of a major slowdown in job growth as can be seen by the number of Chinese middle classes suddenly losing their monthly income and having to sell assets to finance their debt obligations.
This isn't about individual Chinese sitting in the buy side of the classic car market but about the Chinese economy underwriting the Western bubbles and that this effect is very clearly ending.
Combine this with US rates about to start rising, followed by UK and the debt behind much of the classic car market is about to start getting more expensive (in fact structured products around classic cars have already risen 50bp on average this year) and that will not just weaken demand but increase supply as areas look to deleverage.
In short, the current global economic events of 2015 to date see us currently at the most risky point in these asset bubbles for a very long time and as such the loss of market robustness clearly means the chances of a catalyst coming out of the blue and triggering a sell off is higher today than ever before.
There might be no catalyst or what the media now likes to call a Black Swan event but we are catagorically at risk of reacting strongly and negatively to one at the moment as the shift of global economic strength shifts back from the East to the West.
I don't think anyone is saying that the Chinese people are suddenly collecting Allegros etc. Of course the meteoric rise of the number of Chinese multi millionaires has added some buyers at the top end but the relevance of the Chinese economy is that they have driven both the economic boom in resources (which has been ending since Q3 2012) but more importantly, their currency has financed the whole of the U.S., UK and EU currency devaluation programs since 2008, the whole reason for the massive acceleration in the booming values of non yielding assets such cars and art.
But not only is China's economy now declining in strength but they have also just initiated their own QE program. At the same time there is very clear information of a major slowdown in job growth as can be seen by the number of Chinese middle classes suddenly losing their monthly income and having to sell assets to finance their debt obligations.
This isn't about individual Chinese sitting in the buy side of the classic car market but about the Chinese economy underwriting the Western bubbles and that this effect is very clearly ending.
Combine this with US rates about to start rising, followed by UK and the debt behind much of the classic car market is about to start getting more expensive (in fact structured products around classic cars have already risen 50bp on average this year) and that will not just weaken demand but increase supply as areas look to deleverage.
In short, the current global economic events of 2015 to date see us currently at the most risky point in these asset bubbles for a very long time and as such the loss of market robustness clearly means the chances of a catalyst coming out of the blue and triggering a sell off is higher today than ever before.
There might be no catalyst or what the media now likes to call a Black Swan event but we are catagorically at risk of reacting strongly and negatively to one at the moment as the shift of global economic strength shifts back from the East to the West.
DonkeyApple said:
I think there is a bit of confusion as to the relevance of the Chinese economy and its impact on Western classic car values.
I don't think anyone is saying that the Chinese people are suddenly collecting Allegros etc. Of course the meteoric rise of the number of Chinese multi millionaires has added some buyers at the top end but the relevance of the Chinese economy is that they have driven both the economic boom in resources (which has been ending since Q3 2012) but more importantly, their currency has financed the whole of the U.S., UK and EU currency devaluation programs since 2008, the whole reason for the massive acceleration in the booming values of non yielding assets such cars and art.
But not only is China's economy now declining in strength but they have also just initiated their own QE program. At the same time there is very clear information of a major slowdown in job growth as can be seen by the number of Chinese middle classes suddenly losing their monthly income and having to sell assets to finance their debt obligations.
This isn't about individual Chinese sitting in the buy side of the classic car market but about the Chinese economy underwriting the Western bubbles and that this effect is very clearly ending.
Combine this with US rates about to start rising, followed by UK and the debt behind much of the classic car market is about to start getting more expensive (in fact structured products around classic cars have already risen 50bp on average this year) and that will not just weaken demand but increase supply as areas look to deleverage.
In short, the current global economic events of 2015 to date see us currently at the most risky point in these asset bubbles for a very long time and as such the loss of market robustness clearly means the chances of a catalyst coming out of the blue and triggering a sell off is higher today than ever before.
There might be no catalyst or what the media now likes to call a Black Swan event but we are catagorically at risk of reacting strongly and negatively to one at the moment as the shift of global economic strength shifts back from the East to the West.
Well put and I agree 100%, for a while I have been wondering if a Black Swan event would be triggered or as I think we will just slide gently into the perfect sh*t storm.I don't think anyone is saying that the Chinese people are suddenly collecting Allegros etc. Of course the meteoric rise of the number of Chinese multi millionaires has added some buyers at the top end but the relevance of the Chinese economy is that they have driven both the economic boom in resources (which has been ending since Q3 2012) but more importantly, their currency has financed the whole of the U.S., UK and EU currency devaluation programs since 2008, the whole reason for the massive acceleration in the booming values of non yielding assets such cars and art.
But not only is China's economy now declining in strength but they have also just initiated their own QE program. At the same time there is very clear information of a major slowdown in job growth as can be seen by the number of Chinese middle classes suddenly losing their monthly income and having to sell assets to finance their debt obligations.
This isn't about individual Chinese sitting in the buy side of the classic car market but about the Chinese economy underwriting the Western bubbles and that this effect is very clearly ending.
Combine this with US rates about to start rising, followed by UK and the debt behind much of the classic car market is about to start getting more expensive (in fact structured products around classic cars have already risen 50bp on average this year) and that will not just weaken demand but increase supply as areas look to deleverage.
In short, the current global economic events of 2015 to date see us currently at the most risky point in these asset bubbles for a very long time and as such the loss of market robustness clearly means the chances of a catalyst coming out of the blue and triggering a sell off is higher today than ever before.
There might be no catalyst or what the media now likes to call a Black Swan event but we are catagorically at risk of reacting strongly and negatively to one at the moment as the shift of global economic strength shifts back from the East to the West.
BIRMA said:
Well put and I agree 100%, for a while I have been wondering if a Black Swan event would be triggered or as I think we will just slide gently into the perfect sh*t storm.
In a jittery/soft market like now it might only take one lawyer to file against a vendor over originality to spook some cars into the auctions, for the over supply to lead to failed auctions, then for margins to be whacked up on the leveraged holdings and some debt default forced selling and a rout could ensue. Or it could be that a very large but leveraged car collector just got wiped out in the markets and his assets are about to be dumped by his debtors etc.
The key is that the market currently doesn't look good for absorbing anomalous events.
I've no idea what the trigger will be or when it will occur but the current market is more at risk of such an event than ever before.
DonkeyApple said:
BIRMA said:
Well put and I agree 100%, for a while I have been wondering if a Black Swan event would be triggered or as I think we will just slide gently into the perfect sh*t storm.
In a jittery/soft market like now it might only take one lawyer to file against a vendor over originality to spook some cars into the auctions, for the over supply to lead to failed auctions, then for margins to be whacked up on the leveraged holdings and some debt default forced selling and a rout could ensue. Or it could be that a very large but leveraged car collector just got wiped out in the markets and his assets are about to be dumped by his debtors etc.
The key is that the market currently doesn't look good for absorbing anomalous events.
I've no idea what the trigger will be or when it will occur but the current market is more at risk of such an event than ever before.
swisstoni said:
Do markets always have to crash eventually or can they just gently back off, for want of a better phrase?
To stop a crash you need a financial intervention that is truly enormous so only ever comes from the State. Such as the zero rate policy and QE etc. With unregulated markets there is no such support. For example, how would an electorate feel about the Govt buying classic cars to support the market to protect a few mansion dwelling, baby eaters?
The classic car market isn't big enough for the debt involve to cause stability issues on a mass default so banks won't care either.
So, there is no real mechanism or actual desire or need to interfere in a sell off of such a market.
swisstoni said:
Do markets always have to crash eventually or can they just gently back off, for want of a better phrase?
I don't honestly know about cars but can remember the last big crash in classic cars and if you had the money spare last time you would have made a killing a while ago if not now.I buy and sell FTSE 100 shares as a pastime I would also hasten to add I am a big risk taker and if you look at the value of shares for say RR Holdings over say a 10 year period you can see how it's peaks and troughs and on some you can see dramatic falls like around 2008-9 I suppose it's all about guessing/knowing when to buy and when to bail out.
I have been of the opinion the market in general has been overheating for a while now but as I say I'm no expert.
swisstoni said:
What I meant was, it always the fate of the classic car market to eventually crash OR can it just cool down a bit?
Good question.Typically the classic market is driven by wealthy middle-aged buyers who hanker after some sportscar they lusted after in their childhood. Hence the interest in DeLoreans and insane froth around air-cooled 911s at the moment. As the generation gets too old so the price of "their" cars subsides. And there is the rare exception of very low volume stuff from Bugatti and Ferrari which sells more like artwork than vehicles.
So the question becomes: "What cars have the kids of c.2000 lusted after?"
DonkeyApple said:
Slidingpillar said:
DonkeyApple said:
If the DVLA does go down the route of enforcing its 8 point system then that could have a very serious impact on many cars.
Perhaps, but it's not really fit for the purpose as you could argue my vintage car gets 13 points, or anywhere between there and zero. Reason being, although much of it is original, all of it has been repaired at some time with new bits, and it does not really have axles anyway (independently sprung at front, and a three wheeler to boot).The classic car market has no regulator and is worth billions ergo it is bent as any such market always has been and always will be.
And just like all those rubbish gold products or fine wines that everyone bought in a frenzy when prices were climbing people always discover the hard way that when prices are falling no one wants to touch their junk.
The next few years of classic car speculation will continue, just like the last few, to be the most magnificent game of pass the parcel. Except, when the music finally stops no one wants to be unwrapping the enormous, god almighty dog pooh.
I guess im on the vulture side of the fence, Im still in that mid 20's skint phase and trying to be prudent.
I dont really like Anything post 2010 so i guess im holding out till i can afford an e92 m3/ e60 m5 now as opposed to e36/e39/e30 etc. Im even suprised at stuff like e34 540i's and 535i's with the big six... Even prices of vehicles in this bracket seems especially strong ATM , maybe the tops pulling it up. My e39's still worth about as much as a packet of mini cheddars sadly...
Im inclined to agree with one poster saying that its not the classic car market more the state of other markets affecting the ability of city types/hedge fund managers having the money to maintain or even keep hold of a portfolio of classics.
Regards.
I dont really like Anything post 2010 so i guess im holding out till i can afford an e92 m3/ e60 m5 now as opposed to e36/e39/e30 etc. Im even suprised at stuff like e34 540i's and 535i's with the big six... Even prices of vehicles in this bracket seems especially strong ATM , maybe the tops pulling it up. My e39's still worth about as much as a packet of mini cheddars sadly...
Im inclined to agree with one poster saying that its not the classic car market more the state of other markets affecting the ability of city types/hedge fund managers having the money to maintain or even keep hold of a portfolio of classics.
Regards.
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