Supply or Demand? Collector Car Market Update
Supply or Demand?
Those within the industry are often accused of ‘talking up the market’- that is reporting only good news to try and install confidence and some sense of urgency into prospective buyers, when the reality may be somewhat different.
The automotive industry as a whole has had a pretty good time of it lately. With the collector car market performing especially well compared to the slower growth and turnover of the previous two years.
Entering the initial stages of lockdown, many dealers quite naturally feared the worst and prepared for a long and difficult summer. Who on earth is going to buy a classic car without seeing it, without driving it and with nowhere to drive it?
For mainstream retail in the automotive industry, main dealers closed their doors, factories closed down and there were no orders for new cars and, crucially, no supply of new cars.
Naturally this led to an increase in demand for used cars and prices have been strong since. Dealers are now paying close to what they consider retail prices, just to fill the showrooms back up. As dealers have now re-opened with aggressive sales incentives on new cars, the order books may be filling back up, however factories will no doubt be on a limited capacity with a limited workforce. The demand for used cars is set to continue.
While the collector car market is not in the same scenario with a supply problem, there is unquestionably a huge demand and that has been since the world entered lockdown. This demand seems to be built from something other than a lack of supply, but what? Again, with no viewings and nowhere to go, where and why is the collector car market so active?
For those dubious of the market commentary, you can choose to ignore what your dealer says, but you cannot ignore the astounding auction results of late. Most auctions have been online only in empty sales rooms, yet sales rates have remained as strong, and so have the prices achieved. If you do choose to listen to dealers, they will tell you how many cars they sold from their sofas during lockdown and how surprised they were to be doing so. As an intermediary between buyer and seller, we too can confirm the levels of activity are as strong as ever.
Back to why. Many theories are being passed around with the most common being that of pent-up-demand. However there wasn’t much of a time that you were unable to buy a collector car. Another theory is that there may be an opportunity to ‘grab a deal’, yet we are aware of only a couple of fire-sales where sellers were desperate to liquidate.
The most uninteresting, yet probably most valid reason of all is boredom. Yes, it would seem extended periods of time at home and a longing to travel was indeed enough to push the market
back to its most active period of recent years. A new toy in the garage can be very exciting when little else is allowed.
Some too report buyers using their government backed, bounce-back loans for purchases. We do not support this and strongly advise against it.