Baby boomers and classic cars
Discussion
peatmoor said:
Let me share a theory of mine.
Classic car prices have maintained a trajectory, normally associated with economic boom and wealth creation since 2008. A trend of course, that has surprised me and I'm sure a number of you, given the state of the economy and especially considering rising costs associated to running older cars.
My theory is this:
Baby boomers (those born between 1943 and 1960ish) are retiring, or nearing retirement.
They own something in the region of 80% of this countries wealth (unsubstantiated but its a significant chunk)
As the retire, these people are liquidating assets (perhaps a company they owned, or withdrawing from their pension). As they do so they are looking for something to give them enjoyment in their (not quite old age) perhaps sparking a passion they had when they were younger and now have the time to enjoy and work on classic cars.
So what I ask is this: are baby boomers driving the classic car market upwards? Does anyone have first hand evidence of this?
I realise that markets, like any other, have many drivers but this stood out as a reason. Another being quantitative easing which seems to be supporting all luxury end assets (wine, lux property, art etc).
Thoughts welcome,
PM
I think a reason prices are increasing is that most people that have a hankering for an older car can ( if they have the money)enjoy the pleasures of there dreams, sell it when they get bored and probably make a few pounds by selling it to another with the same dreams. Also, I'm sure there are people that buy a particular model because it's "on the up" price wise simply for that reason, just to turn a profit.Classic car prices have maintained a trajectory, normally associated with economic boom and wealth creation since 2008. A trend of course, that has surprised me and I'm sure a number of you, given the state of the economy and especially considering rising costs associated to running older cars.
My theory is this:
Baby boomers (those born between 1943 and 1960ish) are retiring, or nearing retirement.
They own something in the region of 80% of this countries wealth (unsubstantiated but its a significant chunk)
As the retire, these people are liquidating assets (perhaps a company they owned, or withdrawing from their pension). As they do so they are looking for something to give them enjoyment in their (not quite old age) perhaps sparking a passion they had when they were younger and now have the time to enjoy and work on classic cars.
So what I ask is this: are baby boomers driving the classic car market upwards? Does anyone have first hand evidence of this?
I realise that markets, like any other, have many drivers but this stood out as a reason. Another being quantitative easing which seems to be supporting all luxury end assets (wine, lux property, art etc).
Thoughts welcome,
PM
The over 50's have disposable income and are probably fuelling this trend, much better than getting maybe 2.75 % return before tax on your money. I am of this generation and have owned many of the cheaper collectible cars of today and don't hanker after another, but I do have a classic that hasn't been bought as an investment. My old 68 rover p5b coupe is enough for me to push out of the garage look at and put away with out driving it. The styling of it is enough for me, and driving it is a bonus. I'm not too bothered with originality, service history, or a big book full of receipts from day one, and suggest those that are, are mostly concerned with the re-sale price, cars with a full portfolio are worth more as a result, as they become rarer the price goes up.
I think my point is buy the car of your dreams and enjoy it for what it is.
I've just received a flyer for the Bonham's Veteran Car sale next month
and the estimates are mostly six figure sums
.
I'm sure that there's nobody alive (or who still has any mental capacity
)
that dreamed of owning one in their youth when they must have been the most desireable objects,
now has the money to do so and can realise that dream
.
and the estimates are mostly six figure sums
.I'm sure that there's nobody alive (or who still has any mental capacity
) that dreamed of owning one in their youth when they must have been the most desireable objects,
now has the money to do so and can realise that dream
.Edited by Elderly on Tuesday 9th October 09:06
Some good points raised all round. I don't think we'll ever solve the eternal question (what makes a classic car classic?). Classics are just classics, but there certainly is a disconnect between the Triumph Spitfires and the Aston DB4s price movements in the last few years.
I don't think I expected a clear answer, but I am glad to see some first hand evidence of people from the baby boomer era having spare cash and enjoying it, rather than investing it, and getting a return on their capital at the same time.
I did wonder what I would do if I retired (ok I'm looking at another 30 years I guess) and it really shocked me that my Dad (semi-petrol head and early baby-boomer) when he "retired" didn't go out and buy the Austin Healey he lusted after as a young man and tinker with it in the garage. He looked at one in his 50s but then went straight off and bought a new TVR. When he reached 60 and "retired" he SOLD the TVR
and just has his expensive barge to float around in. 7 years on he seems to be working harder than ever now and has lost all interest in anything petrol related. Even a modern DB9 he waves away 
. I can't understand it. Is he just a freak, or do you start to lose interest with age....it scares me and probably why I spend more money (that I should be saving for my old age) on cars now.
So from my first hand evidence, baby boomers are not actually propping up the market, but please send more evidence to the contrary. We will solve this mystery yet.
Post Script: I think QE, as I understand it, could be doing more than we give it credit. The BoE buying gilts off us means than money has to go elsewhere. Broadly people that own gilts (that don't have to own gilts so not pension funds or insurance companies) are in the wealthy part of the spectrum and this money has to go into other assets, seeing as cash yields so little). Which is why, I suspect, that top end property, art, gold, wine and classic cars have been so buoyant. Is this just an illusion of wealth? Or is it natural asset appreciation that occurs when the money in your pocket devalues? So what happens when QE is unwound (if it is unwound)? These markets go pop? Or will we be in a flux of inflation that actually these assets continue to appreciate. Going a bit deep here, but something I think interesting.
I don't think I expected a clear answer, but I am glad to see some first hand evidence of people from the baby boomer era having spare cash and enjoying it, rather than investing it, and getting a return on their capital at the same time.
I did wonder what I would do if I retired (ok I'm looking at another 30 years I guess) and it really shocked me that my Dad (semi-petrol head and early baby-boomer) when he "retired" didn't go out and buy the Austin Healey he lusted after as a young man and tinker with it in the garage. He looked at one in his 50s but then went straight off and bought a new TVR. When he reached 60 and "retired" he SOLD the TVR
and just has his expensive barge to float around in. 7 years on he seems to be working harder than ever now and has lost all interest in anything petrol related. Even a modern DB9 he waves away . I can't understand it. Is he just a freak, or do you start to lose interest with age....it scares me and probably why I spend more money (that I should be saving for my old age) on cars now.So from my first hand evidence, baby boomers are not actually propping up the market, but please send more evidence to the contrary. We will solve this mystery yet.
Post Script: I think QE, as I understand it, could be doing more than we give it credit. The BoE buying gilts off us means than money has to go elsewhere. Broadly people that own gilts (that don't have to own gilts so not pension funds or insurance companies) are in the wealthy part of the spectrum and this money has to go into other assets, seeing as cash yields so little). Which is why, I suspect, that top end property, art, gold, wine and classic cars have been so buoyant. Is this just an illusion of wealth? Or is it natural asset appreciation that occurs when the money in your pocket devalues? So what happens when QE is unwound (if it is unwound)? These markets go pop? Or will we be in a flux of inflation that actually these assets continue to appreciate. Going a bit deep here, but something I think interesting.
deltashad said:
I don't think youngsters have the same interest in cars as us oldies.
Ha! My 6 year old son is totally obsessed with cars and so is his friend. He is on a trip to the airport today with his school and was wondering if they would let him go and look at the hire cars... all he wants to know every day is what cars I've seen.Edited by LuS1fer on Tuesday 9th October 13:19
peatmoor said:
Post Script: I think QE, as I understand it, could be doing more than we give it credit. The BoE buying gilts off us means than money has to go elsewhere. Broadly people that own gilts (that don't have to own gilts so not pension funds or insurance companies) are in the wealthy part of the spectrum and this money has to go into other assets, seeing as cash yields so little). Which is why, I suspect, that top end property, art, gold, wine and classic cars have been so buoyant. Is this just an illusion of wealth? Or is it natural asset appreciation that occurs when the money in your pocket devalues? So what happens when QE is unwound (if it is unwound)? These markets go pop? Or will we be in a flux of inflation that actually these assets continue to appreciate. Going a bit deep here, but something I think interesting.
I'm not sure we are in complete agreement, since IMHO it is silly to think of even buying gilts at the moment, even for the BoE - but then politicians are never in fron but behind the game. Why purchase an asset which has a negative redemption yield when you can (as a private investor) buy solid shares which have a positive yield (vis a vis inflation) such as BAT, Shell and many others? See here:-http://www.topyields.nl/Top-dividend-yields-of-FTS...
The division between the haves and the have-nots is growing, and the problem isn't simple to regulate. When the Iron Lady became Prime Minister income tax rates were at a maximum of 98% including investment income, and they were slashed to 40% over a few years. Similarly Corporation Tax was slashed, but this had a positive effect on the nett receipts for the Treasury, because so many companies moved their head offices here from abroad (especially Sweden I recall) to benefit from a lower taxation regime. Here in France many notables, including the boss of Louis Vuitton, are moving to Belgium for the same reason, because the socialist government is increasing taxation. A popular political move with probably negative results. I mean, the President is reputedly worth £40 million, but doesn't pay the wealth tax because he has taken adequate precautions.
I believe that the rise in car prices is purely governed by people of my generation who lived the Golden Age, probably never to be repeated. I remember being interviewed on TV when the government introduced a top-up pension in the 80's, and I pointed out that too little too late would result in the return of the poor house by 2020 if unfunded pension liabilities and longevity weren't addressed. It created one hell of a furore at the time, but every government and council carried on gaily, giving (unfunded) final salary pensions to all and sundry, giving enhancements for early retirement, and in effect building up liabilities for the current generation, which now are coming home to roost.
So, when my generation is dead and gone, when petrol, a wasting resource, is at £5 per litre, who will want such a thing in their garage? Many kids today will never own a car nor even get a driving licence, and they rarely turn their head as I pass in my classic. Fashions come and go, and it is already said that the 20th century was that of the automobile - but not the 21st. We are perhaps dinosaurs awaiting the end.
Edited by lowdrag on Tuesday 9th October 12:50
lowdrag said:
I'm not sure we are in complete agreement, since IMHO it is silly to think of even buying gilts at the moment, even for the BoE - but then politicians are never in fron but behind the game. Why purchase an asset which has a negative redemption yield when you can (as a private investor) buy solid shares which have a positive yield (vis a vis inflation) such as BAT, Shell and many others?
I'm not suggesting buying gilts as an investment, I'm just pondering the impact of quantitative easing (in the form that the BoE take) on us as punters and if it really is driving up asset prices such as classic cars. The BoE is not buying gilts as an investment anyway (although they have made an unbelievable, unrealised, profit out of them). They are just using it as a conduit to put liquidity in the system.You raise some very sound points about pension issues that should have been sorted in the 80s are obviously coming home to roost. QE is indeed an extreme form of medicine (last time used after WW2, but accompanied with unprecedented population growth), but in my opinion a necessary one as the shrinkage in the money supply after 2008 would have been so great that we'd be looking at Japanese style deflation if it hadn't have been for QE. But nevermind the whys, it is happening and we have to deal with the consequences and plan for the future....
Elderly said:
I've just received a flyer for the Bonham's Veteran Car sale next month
and the estimates are mostly six figure sums.
I'm sure that there's nobody alive (or who still has any mental capacity)
that dreamed of owning one in their youth when they must have been the most desireable objects,
now has the money to do so and can realise that dream.
Yes I've received that too and I suspect the high estimates are due to the cars being eligible for the London to Brighton Veteran Car Run. Eligibility to certain classic car events is certainly a factor in the increase in values of certain cars, and would explain why the market is splitting to some extent (eg the disparity between the price rises of Triumph Spitfires versus the Aston DB4s mentioned by peatmoor). and the estimates are mostly six figure sums
.I'm sure that there's nobody alive (or who still has any mental capacity
) that dreamed of owning one in their youth when they must have been the most desireable objects,
now has the money to do so and can realise that dream
.As someone who has only recently taken an interest in competing in historic racing/rallying (although I've owned a classic since I was sixteen), I've become only too aware of how much its eligibility for MM, TA, VF etc affects the value of a car, - try getting a car that's truly eligible for MM (as opposed to just being a pre 1957 example of the right type
) without spending a small fortune, for example 
. Whilst its true that currently the majority of entrants tend to be the older generation (most in their sixties, seventies and some even in their eighties), with anyone younger usually involved in the business somehow (or they're the offspring of someone who is), this may well change. I've noticed others who are turning to historic racing as they get to have some competitive fun with their assets whilst meeting interesting people (and it's better than playing golf 
). Hence the resurgence and success of such events may well sustain the market in the future. Of course the converse would be true were these events to fail, so I'm trying to be careful about what I buy.deltashad said:
I don't think youngsters have the same interest in cars as us oldies.
When I was a kid, cars were something the majority of boys couldn't wait to buy and work on, add some twin webbers and a cherry bomb.
I think many are still very interested...right up until the point they get an insurance quote.When I was a kid, cars were something the majority of boys couldn't wait to buy and work on, add some twin webbers and a cherry bomb.
When it can cost thousands to insure a small hatchback a decent performance classic, or any performance car seems as unnattainable as a veyron..
It's possible that many smaller classics are cheaper to insure that a modern car but how many people actually know that?
Edited by motorizer on Wednesday 10th October 17:14
I'm wondering if kids today look upon cars as I did when I was their age. My parents didn't even have a car. Cars were something expensive and aspirational and a major part of your life if you had one.
These days a car is just another appliance, with about as much soul as a Beko tumble dryer and half as involving.
I hope I'm wrong.
These days a car is just another appliance, with about as much soul as a Beko tumble dryer and half as involving.
I hope I'm wrong.
This is an interesting topic, and one my brother and I discuss quite a bit. We're both massively into old motorbikes, which isn't that unusual in itself, but the fact that we're both in our early thirties and ride 1920s motorbikes does set us apart from many.
We've both been brought up with them though, so we've been going to old bike events for all our lives, and I'd say that if anything the average age of the riders on vintage events (pre-31 for bikes) is well down on what it was 15-20 years ago.
Obviously this is in part because those that remember these bikes from being new are now too old to ride them, but I remember as a kid the death knell being rung, with statements about "the youth not being interested". Exactly the opposite has happened, and vintage bike prices and interest has increased hugely. Interest in early machines will always be there, one interesting point that I hadb't really thought about until reading this thread though is whether the 'second tier' stuff will be as desirable. I suppose anything from the 1920s will always be desirable as there's so few machines survived (relatively) but once what are now 50s-60s bikes become of the age to interest those who just like old things, there will obviously be far more choice as far more were made, and have survived.
Interesting thread
We've both been brought up with them though, so we've been going to old bike events for all our lives, and I'd say that if anything the average age of the riders on vintage events (pre-31 for bikes) is well down on what it was 15-20 years ago.
Obviously this is in part because those that remember these bikes from being new are now too old to ride them, but I remember as a kid the death knell being rung, with statements about "the youth not being interested". Exactly the opposite has happened, and vintage bike prices and interest has increased hugely. Interest in early machines will always be there, one interesting point that I hadb't really thought about until reading this thread though is whether the 'second tier' stuff will be as desirable. I suppose anything from the 1920s will always be desirable as there's so few machines survived (relatively) but once what are now 50s-60s bikes become of the age to interest those who just like old things, there will obviously be far more choice as far more were made, and have survived.
Interesting thread
srob said:
I suppose anything from the 1920s will always be desirable as there's so few machines survived (relatively) but once what are now 50s-60s bikes become of the age to interest those who just like old things, there will obviously be far more choice as far more were made, and have survived.
Interesting thread
Maybe I can extend this thread then to "Baby boomers and classic bikes" Interesting thread
RichB said:
crankedup said:
Used to drive TVR up until about nine years ago.
I had you down as a Griffith driver just by looking at the pic on your profile. Didn't realise it had gone ages ago. This is an extract from an email I received this morning promoting a Fine Wine Fund. It references a new book called SWAG (silver, wine, art, gold) written by the former chief economist of one of the world's most successful hedge funds. Yet..everything that is mentioned is also applicable to classic cars. I was taken, again, by original mustangs and lotus élan at goodwood. Have a look at bill shepherd and Paul Matty stock. I have recently bought a mint condition Renault 5 gt turbo and tomorrow pick up a 1968 Austin cooper mk2. Next will be a 205gti and perhaps a delta integrale.
They are investments, but, some of the yield may be emotional.
I think there is also a strong argument to be made for analogue vs digital. Modern cars are effective, reliable but sterile. For validity, check out how much audiophiles spend on record players and valves!
Read on....
"Joe Roseman (head Economist at Moore Captital from 1998 to 2010) has just published a book called SWAG, an acronym for Silver, Wine, Art and Gold. He argues that the current era of financial repression, when governments keep interest rates below inflation, and money printing through quantitative easing (QE) is likely to last longer than investors realise. QE is the only option for governments looking to stimulate nominal GDP and pay down debt because national indebtedness is too high for real GDP growth to occur fast enough. In such an environment, capital preservation should be the main investment strategy for the decade ahead, by seeking stores of value, assets which are characterised by scarcity, longevity, physicality, internationality, uniformity, no income stream, no inherent debt and of no currency denomination. These are the assets that should benefit, due to their scarcity in relation to the increased supply of fiat currencies. Those who benefit from money printing the most are in turn those that do the printing, borrowers and the rich i.e. governments and those that own inflation hedging assets"
They are investments, but, some of the yield may be emotional.
I think there is also a strong argument to be made for analogue vs digital. Modern cars are effective, reliable but sterile. For validity, check out how much audiophiles spend on record players and valves!
Read on....
"Joe Roseman (head Economist at Moore Captital from 1998 to 2010) has just published a book called SWAG, an acronym for Silver, Wine, Art and Gold. He argues that the current era of financial repression, when governments keep interest rates below inflation, and money printing through quantitative easing (QE) is likely to last longer than investors realise. QE is the only option for governments looking to stimulate nominal GDP and pay down debt because national indebtedness is too high for real GDP growth to occur fast enough. In such an environment, capital preservation should be the main investment strategy for the decade ahead, by seeking stores of value, assets which are characterised by scarcity, longevity, physicality, internationality, uniformity, no income stream, no inherent debt and of no currency denomination. These are the assets that should benefit, due to their scarcity in relation to the increased supply of fiat currencies. Those who benefit from money printing the most are in turn those that do the printing, borrowers and the rich i.e. governments and those that own inflation hedging assets"
crankedup said:
RichB said:
crankedup said:
Used to drive TVR up until about nine years ago.
I had you down as a Griffith driver just by looking at the pic on your profile. Didn't realise it had gone ages ago. Gassing Station | Classic Cars and Yesterday's Heroes | Top of Page | What's New | My Stuff