2015 has been another amazing and intriguing year for the classic car hobby. We have seen more growth in values but this has slowed compared to 2013/2014 in many sectors. Where we have really seen growth is in activity. Auction houses have had what we are certain will have been a record year, enthusiasts continue to buy and sell at pace and we saw two significant additions to the classic car calendar – or “historic motoring events” as the are so grandly called – The London Classic Car Show and Classic & Sports Car – The London Show.
What did well in 2015?
Let’s add a bit of perspective. This time last year we predicted that the growth in values would slow and plateau and in general terms we feel this is correct, but you would be forgiven for disagreeing if you get your classic car market news from Bloomberg or the rest of the financial media.
The problem is that to truly understand the market you have to be able to read between the lines and that isn’t easy to do – despite the number of tools we now have at our fingertips to assist us.
Overall – the market appears to have advanced. HAGI’s latest report for its TOP Index November 2015 reports YTD growth of 15.52 and YOY growth of 16.05%. The K500 Index also reported gains.
Prices went up
One thing is for sure – prices went up in 2015 and predictably Ferraris were at the front of the charge. Testarossa prices soared as did those for other models.
The Best Of The Best
The best examples of pretty much any marque and model have been the real winners when it comes to increases in value. From delivery mileage Metros to 6-cylinder Aston Martin and 12-cylinder Ferrari, enthusiasts are willing to pay top dollar for the very best. The market for the very best collectable cars £5m plus remains stable.
80s and 90s classics
Cars from this era have been bought enthusiastically this year by the “new” generation of buyers who were forming their automotive habit in this era. The NEC Classic Motor Show auction in November illustrated this enthusiasm nicely, as does the rise in values of the Porsche 996 Turbo. For many, membership of the classic car hobby is a bit of a revolving door so this trend looks set to stay for a while but certainly not for ever!
Cars of the 80s and 90s would be included in this, but we have seen an increase in the number of people wishing to buy cars other than “investment” Ferraris and Porsche. Think really good sub-£100k cars – Austin-Healeys look good value to us and classic car people apparently think so too if enquiries are anything to go by. No doubt we are seeing some “portfolio diversification” as those who have traded out of more expensive classics begin to look for opportunities on the ground floor.
Classic motorcycles – we said it last year and we’ll say it again. The popularity of classic bikes continues to strengthen as do values for the best bikes.
Pre-war cars got a shot in the arm this year at Bonhams’ Frederiksen auction where they sold an incredible collection of pre-war cars that for many rekindled enthusiasm for these beautiful cars and we have certainly seen the evidence in the form of increased enquiry levels since the auction. Will they bounce back on a more permanent basis? In general it’s unlikely but we feel that the best and most beautiful have re-found some of their traction in the market.
Trends in the 2015 classic car market
The trends of 2015 by and large mirrored the trends of 2014.
Value increases slowed.
Yes, prices went up on many forecourts and the market remains strong – talk of a bubble seems to have been brushed under the carpet by many naysayers. We have seen more flexibility on price this year from many dealers so don’t necessarily assume that the price is always the price. We thing Hagerty’s market index graph sums things up nicely.
Enthusiasm for the classic car hobby remains undiminished in 2015 – what has changed is where the enthusiasm is coming from. Investors out – real car enthusiasts in.
Sellers expectations – too high?
We know that auction houses have had a challenge on their hands this year – winning consignments. Sellers expectations of the values of their cars have often been too high, which led to cars selling under estimate but still for decent market values. This trend seems to have levelled itself out in the last quarter of 2015.
Cars as commodities
We thought the media hype over classic car investments couldn’t intensify after 2014 but it has – significantly, it has actually increased even more in the last quarter of 2015. Talk of cars as an investment class reached new highs just as many in the industry begin to move away from the focus on investment potential.
At Classic & Sports Finance we saw “investor” interest peak in Q2 of 2015 – in the second half of the year enquiries of this nature have been fewer and farther between, with the real car enthusiasts returning to the market.
More cars on the market.
As Jamie Knight of Bonhams mentions in our Expert’s 2015 classic car market review, there are few classics now that aren’t readily available. The choice has never been so great – expect the focus in 2016 to be on the the truly unique, whatever the marque.
Prices rising even when supply outstrips demand.
We have seen the supply of some cars – particularly Porsche and Ferrari – explode with the availability of some models almost doubling. This certainly seemed to affect the prices, which in many cases also doubled….
Difference between the best cars and the rest gets wider
Quality became the real differentiator in the market towards the end of 2014 and this has been a defining feature of 2015. The best cars make the best money – the rest are sticking around. Beware though – there are still plenty of average-condition but expensive cars out there and the market knows it. Make sure you get the right advice when buying.
The rumoured opening up of the Chinese export market for classic cars didn’t happen in 2014. Late in 2015 things seem to be starting to move – very slowly – in China with Frank Dales & Stepsons opening a showroom in Hong Kong.
The first half of 2015 saw an enormous influx of cars LHD cars into the UK from Europe. This flow has been stemmed as LHD cars begin to pile up on forecourts and fail to hit auction estimates. RHD is where it’s at, which is probably why we are seeing more cars coming in from RHD Asian markets like Japan.
The media – still behind the times
We thought they would catch up in 2015 but they haven’t and still lag months behind the market. Quantity not quality seems to be the watchword for many media organisations and the financial media were particularly active this year in giving investment advice. Our advice is be careful who you listen to…..
Restoration over originality
In the latter part of 2015 we have seen a shift in focus – sellers are beginning to market restored cars more heavily, presumably in the absence of truly original cars. It makes sense – provided it really is a quality restoration.
The right stock at the right price is moving fast and this tends to be on the forecourts of established classic car dealers and marque specialists. On the other hand, many cars are languishing in showrooms for extended periods.
What to watch out for in 2016
Alternatives to Ferrari & Porsche classics
The right cars from these marques will continue to sell well but the market for average cars has softened – and there are plenty of average cars out there. Limited production Porsche were flying earlier in the year but the feeding frenzy seems to have eased. Enthusiasts are now looking for alternatives to these two dominant marques.
In 2015 we saw classic car market indexes on something of a roller coaster ride – the Scottsdale auctions saw many cars sell below estimate and many assumed that the market was heading for a slowdown. That turned out not to be the case and the market continued to grow but it certainly saw some ups and downs. The market is more unpredictable than it was 12 months ago – predictably so….
While stock levels will no doubt remain high, we don’t believe that we will see as many new and exciting cars coming to market in 2016. We’ll leave it to the auction houses to prove us wrong.
The industry seems to be pretty happy with where prices are at the moment with no particular worries over falling prices. There might be a few more bargains out there in 2016, but if you are a classic car owner we believe you should be confident that your car’s value will remain healthy – provided you bought it right.
Manufacturers will begin to ramp up their involvement and investment in the classic car scene to support new car sales. This will be good for the hobby but may have have an impact on restorers.