We get asked by customers almost daily “what is the classic car market like at the moment and where is it going?”. Unlike most classic car indexes – which simply report on past performance – Hagerty have tried to answer both of these questions with their new Hagerty Market Rating index. Hagerty already provide past-performance indexes for various market segments but their new tool uses a uses a weighted algorithm to calculate the strength of the North American collector car market and it will no doubt appeal to the classic car community as well as investors and institutions.
What’s interesting about the market rating is how it is calculated. All the other classic car market indexes we have seen to date track the prices of a selection of cars sold at auction and this data is then weighted to provide an index over time. Although some indexes also claim to include dealers sales transaction prices in their indices we haven’t come across any evidence of dealers providing that data (if you know a dealer that is – please let us know). In their own words, the Hagerty Market Rating
measures the current status of the collector car market in terms of activity or “heat”; directional momentum; and the underlying strength of the market.
In our words, it looks at more than just auction prices – which according to Hagerty account for only 5% of sales in the US. Our own research into the UK market also shows that auctions in the UK account for only a small proportion of UK classic car sales.
The components of the Hagerty Market Rating
Hagerty Price Guide – Editorialized Values: Hagerty Price Guide (HPG) publishes new prices every four months, calculations are based on a book-to-book comparison of overall current average price and overall current median price of condition #3 for all published vehicles.
Auction Activity: Number of cars sold at auction and median price of all cars sold at auction
Expert Sentiment: An average of the responses from experts polled on 1-100 level of confidence in the market
Hagerty Price Guide – Indices: The current value of Hagerty’s Hundered and Blue Chip indices which are calculated using the average condition #2 value for 100 most popular Year/Make/Models insured by Hagerty and the 25 component cars of Hagerty’s Blue Chip Index (most collectible production cars of the post-war era).
Private Sales Activity: Hagerty claims that their private transaction database is the largest of its kind in the collector car world. The components of the index are average sales price and the percentage of cars selling for more than they were insured for.
Insured Values – Broad Market: Ratio of the number of cars valued from $20-$200,000 that increased their insured value to the number that decreased their insured value
Insured Values – High End: Ratio of the number of cars valued above $200,000 that increased their insured value to the number that decreased their insured value.
Correlated Instruments: Current values of the S&P 500, current median US home price index value as reported by Federal Housing Finance Agency, current spot price of Gold per ounce (USD), current value of Retail Sales less Food Services Sales (USD).
What we like about it.
Volume of data – Hagerty undoubtedly has a vast amount of its own data at it’s fingertips which no other classic car index has access to. We believe that one of the problems with existing indexes is that the data sets used don’t appear to have been verified (details of where historical price data comes from are hazy at best) and even today we see auction results being collected and reported incorrectly. Auction prices are only one small piece of the puzzle for the Hagerty Market rating.
Private sales activity – this is a really important factor when it comes to values that has previously been ignored due to the difficulty of obtaining and verifying the data.
Expert sentiment – Hagerty have access to a panel of experts who we are broadly speaking “neutral” and their opinion makes this index more than just number crunching. Also, there’s little point in asking a people with a vested interest in the market going up what they think.
Comparison with other non-automotive “instruments” – we really like the fact that they are looking at other areas outside the classic car arena that are relevant to prices and buyer enthusiasm.
It’s a shame that they haven’t included dealer stock levels and transaction data although it is unclear whether dealer sales prices are included in Private Sales Activity. It’s also worth remembering that the market rating is specific to the North American market which differs significantly from the UK and European market and we believe that a UK market rating would be a few points higher….
McKeel Hagerty discusses the Hagerty Market Rating and the classic car market on Bloomberg
You’ll find more detail on how the market rating is calculated here – it’s updated on the 15th of every month (or the previous business day) – and it will be interesting to see how accurately it reflects the market.
Classic & Sports Finance use a combination of our own auction data, dealer transaction prices (this is unique to us), dealer stock data and customer and dealer sentiment to rate the current classic car market – please get in touch with us if you would like to find out more.