RE: PH Blog: boom and bust?
Discussion
Many of the previously affordable cars have risen in value in the last few years - see the silly example of the two E30 Evo Sports for 160k pointed out earlier in this thread. These would have been £20k cars just a few short years ago. Other cars "spiralling" out of control are the older baby Ferraris (308s, 328s - £50k....seriously?) and (unfortunately for me as I have been keeping an eye on them in the last couple of years) earlier 911s (SCs, 80s Carreras and now 964s) are seeing their prices starting to creep up.
But, keep in mind that in the last decade or so, new car prices have entered the stratosphere - does anyone else recall that the last of the Ferrari 355s demanded "just" £100k new? How much is the 458 going for new, 200k without any tasty options? Obviously, when a brand new Ferrari can be had for 100k, it made sense that the older models, 308s, 328s were in the 20-35k range.
The same goes for the 911 - 993s, 996s new were no more than £70k, with even the 996GT3 selling for a measly £85k when new. How much was the last 997.2 GT3 selling for?
Anyway, serves me right for not picking up and E30 M3 when they were going for £5000, or a 964RS for £25,000!
But, keep in mind that in the last decade or so, new car prices have entered the stratosphere - does anyone else recall that the last of the Ferrari 355s demanded "just" £100k new? How much is the 458 going for new, 200k without any tasty options? Obviously, when a brand new Ferrari can be had for 100k, it made sense that the older models, 308s, 328s were in the 20-35k range.
The same goes for the 911 - 993s, 996s new were no more than £70k, with even the 996GT3 selling for a measly £85k when new. How much was the last 997.2 GT3 selling for?
Anyway, serves me right for not picking up and E30 M3 when they were going for £5000, or a 964RS for £25,000!
That 993 GT2 is utterly senational, and if I had the funds, I would snap one up in a heartbeat.
Funny how values of cars tend to fluctuate.
On a slightly different level of price, I have noticed that the values of genuine E30 325i Sports are now dropping.
About a year or so ago, you couldn't pick a half decent one up for less than £4k, now I've seen the prices drop to around £3k.
All about supply and demand, I suppose.
Funny how values of cars tend to fluctuate.
On a slightly different level of price, I have noticed that the values of genuine E30 325i Sports are now dropping.
About a year or so ago, you couldn't pick a half decent one up for less than £4k, now I've seen the prices drop to around £3k.
All about supply and demand, I suppose.
dimik said:
Many of the previously affordable cars have risen in value in the last few years - see the silly example of the two E30 Evo Sports for 160k pointed out earlier in this thread. These would have been £20k cars just a few short years ago.
£160k fior an E30 M3 Evo is plain silly and unattainable. Even the 964RS is available for half that money.CraigyMc said:
So when they state it's "fully documented", that's wrong?
I'm surprised they are allowed to get away with that. Explains why the car didn't sell though.
C
The documentation may well exist but they couldn't find it when he went to view which didn't fill him with confidence.I'm surprised they are allowed to get away with that. Explains why the car didn't sell though.
C
mph said:
CraigyMc said:
So when they state it's "fully documented", that's wrong?
I'm surprised they are allowed to get away with that. Explains why the car didn't sell though.
C
The documentation may well exist but they couldn't find it when he went to view which didn't fill him with confidence.I'm surprised they are allowed to get away with that. Explains why the car didn't sell though.
C
"Would not buy from this seller again."
C
Cheib said:
TobesH said:
Back in 2002 I bought a new Boxster S @ £42,000!
At the time I toyed with the idea of a Golf GTI @ £16,000 and a 964RS German Import @ £ 25,000.
A 964RS is now upwards of £ 50,000 or nearer £ 100,000 for the cream.
Foresight and all that...
Yes....I very nearly bought a 2.7 RS in 2002 for £55k from Autfarm who were selling it on behalf of someone...they thought it was a bit toppy though so I didn't buy it. Ho hum.At the time I toyed with the idea of a Golf GTI @ £16,000 and a 964RS German Import @ £ 25,000.
A 964RS is now upwards of £ 50,000 or nearer £ 100,000 for the cream.
Foresight and all that...
A mate of mine did buy a Muira in 2003. Paid £55k.........dealer had been trying to sell it for £70k for months and he bought it at auction. As Chris said in the article I actually think they are "cheap" at £400k relative to other cars....universally recognised as a truly iconic design, the first of it's genre and very rare. If I was buying into the classic car market that's where my money would go.
I dont remember those prices!!
zebedee said:
Podie said:
Years ago, the missus and I nearly bought a 246 Dino.
We thought about it, came back the next day and it had sold.
It was up for £50k.
I remember one for sale in the 80s for just over £30k and telling my dad it would be a great investment. Funnily enough I remind him of that from time to time!We thought about it, came back the next day and it had sold.
It was up for £50k.
In 1985, £30k is about £75k today.
1985 was 27 years ago.
Say a Dino is now worth on average £150k it is not unreasonable to assume all in you would pay more than £2.8k a year to look after it.
Not that great an investment.
An awesome ownership proposition though!!!
Cheib said:
That's an interesting and well written piece.
If you are really going to look at Classic Cars as an investment though you need to do the analysis looking at other factors. As Chris mentioned in his article the 993 traded for more than the 959 because of the cost of maintenance but also regardless of that all cars cost a decent amount to keep in the condition of say that 993. At that level you have to pay for professional storage, insurance, maintenance/restoration or have the facilities itself....that's all very expensive.
Be interested to know what you think the cost of that is ?
Obviously against that stocks and or bonds do pay a dividend or coupon so that does make quite a big difference. 4% yield a year means an investment returns 50% over a 10 year perid if you reinvest.
You also need to factor in bid/offers when looking at liquidity I think.....that's probably 20% on a classic car aginst less than 0.50% when you are buying stocks in clips of £100,000. If you own a Muira that's worth £400k you can't sell 10% of the car....you can do that when you own shares!
Thanks. I think that at that end of the market maintenance, restoration and other running costs are not overly relevant: I fail to see how somebody paying over £300k on a Porsche would choose a GT2 over a 959 because it is cheaper to run. If you are really going to look at Classic Cars as an investment though you need to do the analysis looking at other factors. As Chris mentioned in his article the 993 traded for more than the 959 because of the cost of maintenance but also regardless of that all cars cost a decent amount to keep in the condition of say that 993. At that level you have to pay for professional storage, insurance, maintenance/restoration or have the facilities itself....that's all very expensive.
Be interested to know what you think the cost of that is ?
Obviously against that stocks and or bonds do pay a dividend or coupon so that does make quite a big difference. 4% yield a year means an investment returns 50% over a 10 year perid if you reinvest.
You also need to factor in bid/offers when looking at liquidity I think.....that's probably 20% on a classic car aginst less than 0.50% when you are buying stocks in clips of £100,000. If you own a Muira that's worth £400k you can't sell 10% of the car....you can do that when you own shares!
Edited by Cheib on Thursday 8th November 16:21
This phenomenon is much more evident at the bottom end of the market: as a proud owner of a R129 SL600, I just need a fuel stop to remember why my car isn't twice the value of a SL500...
Overall, I believe that running costs are actually a factor that will contribute to stronger value growth among complex and expensive to run machinery than among cheap classics. The reason for this paradox is the impact of running costs on investment values: my beetle costs less than £1000/year to run, but with a value of £10k, it has to appreciate by more than 10% every year to become a reasonable investment; if I had a DB4GT worth £1m, a 5% growth in value would cover running costs for £50k per year! In this sense, whoever looks at cars as investment will opt for the more complex/valuable/expensive cars, further pushing up prices, whereas cheaper car will only be sought after by "pistonheaders", limiting demand and ultimately value growth.
You are right re dividends/coupons, and re the indivisibility of cars. However, in an investment perspective, cars are eminently comparable to art and yet there are virtually no investment funds working on cars, whereas any private bank will offer its client some ancient art fund. In this sense, there must still be some potential for growth in the market.
virgilio said:
However, in an investment perspective, cars are eminently comparable to art and yet there are virtually no investment funds working on cars, whereas any private bank will offer its client some ancient art fund. In this sense, there must still be some potential for growth in the market.
My view is the fact there is even one investment fund for cars is indicative of the speculator's bubble which that market is now in.And I do think running costs play a part, because they will impact on the investment return. See the Veyron for example - the running costs may only be a small part of the cost of purchase, but they are enough to put second-hand sales down 50% from new.
will_ said:
My view is the fact there is even one investment fund for cars is indicative of the speculator's bubble which that market is now in.
And I do think running costs play a part, because they will impact on the investment return. See the Veyron for example - the running costs may only be a small part of the cost of purchase, but they are enough to put second-hand sales down 50% from new.
You may have a point on your first sentence: by definition, if anybody buys a car for investment purposes he is a speculator and part of the market becomes speculative. However, I guess that the question is whether it is a speculative bubble which will burst. I believe it will not burst, yet. I wouldn't buy a GT40 for $10m even if i could, but I don't think many cars will go down from their current values. Maybe the stupidly expensive 190SL or some over-hyped muscle cars, but not many more. And I do think running costs play a part, because they will impact on the investment return. See the Veyron for example - the running costs may only be a small part of the cost of purchase, but they are enough to put second-hand sales down 50% from new.
Would be interesting to see which other cars PHers think will lose value!
As for the second point: can anybody prove that the Veyron's fall in value is due to running costs? Some Daimler machinery (SLR, "65s" AMGs, Maybachs) have lost even more value and they are not crazily expensive to run compared to similar cars, whereas McLaren F1's and Ferrari Enzo's running costs are the stuff of legend, yet their values show no sign of weakness...
sleep envy said:
I was offered a 993 GT2 for £120k in 2007.
One hundred and twenty grand.
On hundred and twenty f
king grand.
Bought a one owner from new 1998 993GT2 from the Porsche dealer in Aachen for £85k in 2005 with 21k klms.One hundred and twenty grand.
On hundred and twenty f
king grand.Thought I'd done well to sell it for £125k 3 years later!
All of this does make for some interesting observations going forward.
A lot of value is placed on racing heritage. So how many modern road cars have genuine racing connections other than just a similar looking shape?
And also, with so many modern cars being so technically complex where will the appetite to keep them road going come from if the negative annual yield is so high?
Poses the question as to just how many real future classics have been built this century so far and in small enough numbers?
A lot of value is placed on racing heritage. So how many modern road cars have genuine racing connections other than just a similar looking shape?
And also, with so many modern cars being so technically complex where will the appetite to keep them road going come from if the negative annual yield is so high?
Poses the question as to just how many real future classics have been built this century so far and in small enough numbers?
DonkeyApple said:
All of this does make for some interesting observations going forward.
A lot of value is placed on racing heritage. So how many modern road cars have genuine racing connections other than just a similar looking shape?
And also, with so many modern cars being so technically complex where will the appetite to keep them road going come from if the negative annual yield is so high?
Poses the question as to just how many real future classics have been built this century so far and in small enough numbers?
Or perhaps there will emerge a different variable to place value on? A lot of value is placed on racing heritage. So how many modern road cars have genuine racing connections other than just a similar looking shape?
And also, with so many modern cars being so technically complex where will the appetite to keep them road going come from if the negative annual yield is so high?
Poses the question as to just how many real future classics have been built this century so far and in small enough numbers?
I agree that racing cars - and the racing scene - are a world away from those in the past, when you could take your 250GTO to Le Mans for the weekend and compete at the sharp end of your class. It's much less accessible, which perhaps changes our perceptions of its value to road cars, going forward?
However, the E30 M3 is closely linked to racing; the Porsche 993 GT2 is as well.
We are in the middle of the "South Sea Bubble" time for classic cars. It is only more "investors" trying to get a return on their money who are fleeing banking & stock markets, that are pumping up the paper bag that is the classic car market. Eventually when these people tire and take their funds elsewhere the bubble will burst again as in the 80's.
DonkeyApple said:
Or has a large car collection. 
For example, Evans dumped some Ferraris but he didn't need the money, still loves cars but simply saw better value whether financial or personal elsewhere.
Nope, he is trading. Even has a guy working for him...For example, Evans dumped some Ferraris but he didn't need the money, still loves cars but simply saw better value whether financial or personal elsewhere.
A chap in the trade told me that the people who are throwing cash at Dinos and the ilk are different from those who were doing that in the last boom. Then, those people were pure speculators who had generally financed the car and wanted to turn it over for profit. The current crop are moneyed and want the car to enjoy. For them, the recession is irrelevant. They are not on their uppers.
Those who pay over the odds for a DB6 or DBS or 512TR are in a different class. They are the ones who will get their fingers burnt
Some of my odd balls have gone up in value and am restoring another one at this time,
its the ability to drive the one I choose, as and when and where too.
They all bring a smile when in use etc and at least are not stuck on the wall like a picture. I can get a print of any good picture for £50 or so but a bit a hard mechanical engineering on wheels is a touch of joy.
Goes up in value, probably - but not the point of getting involved in the beginning.
rubystone said:
Nope, he is trading. Even has a guy working for him...
A chap in the trade told me that the people who are throwing cash at Dinos and the ilk are different from those who were doing that in the last boom. Then, those people were pure speculators who had generally financed the car and wanted to turn it over for profit. The current crop are moneyed and want the car to enjoy. For them, the recession is irrelevant. They are not on their uppers.
Those who pay over the odds for a DB6 or DBS or 512TR are in a different class. They are the ones who will get their fingers burnt
When it goes, they will all go. Just some will go further. The classic car market works within the same parameters as all markets. A chap in the trade told me that the people who are throwing cash at Dinos and the ilk are different from those who were doing that in the last boom. Then, those people were pure speculators who had generally financed the car and wanted to turn it over for profit. The current crop are moneyed and want the car to enjoy. For them, the recession is irrelevant. They are not on their uppers.
Those who pay over the odds for a DB6 or DBS or 512TR are in a different class. They are the ones who will get their fingers burnt
And the remark about buyers being different from the last boom? Buyers are the same in every boom as are the excuses and explanations.
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