FINANCE ENQUIRY

Staying ahead of the classic car market

By CSF Team | Insider Knowledge | 0 Comments

The classic car market has had its ups and downs over the last 30 years and it’s an area where we all aspire to stay ahead of the curve. Even for the die-hard classic car enthusiast, it’s nice to think you are spending your money wisely, but at the business end of classic car sales, it is nothing less than essential.

Over the last few weeks we have seen various organisations (not dealers or auction houses) encouraging owners to invest in areas of the market that at best we would consider unwise and at worst could be considered negligent. This advice seems to stem from a basic lack of understanding of the market – and it’s a growing problem.

Getting it right

From a dealer’s point of view, profit margins and stock acquisition are reliant on knowing what’s going up and what’s going down, although the latter hasn’t really been a problem for most over the past decade. From a finance perspective, making sure you know whether stock is on the up or coming down is even more critical. Lenders will not fund an asset that they believe could leave them in negative equity if returned early, and often it is necessary for us to present a case to the lender to fund a specialist vehicle. The relationships and trust we have built up over the years with these organisations mean that we can help them make the right decision on whether to fund a car, and more importantly, we ensure that the customer is making the right decision.

Why and how do we stay ahead?

Part of the reason lies in the absolute necessity for us to make a carefully considered decision for all parties involved in the sale, purchase and financing of any vehicle – a lot of thought and research goes into it and through this we evolve our market understanding . The other important factors are experience and our constant exposure to the whole market. We share information with buyers, sellers and funders to give us an excellent overview of the classic car industry and the trends that shape it, and we have done so for many years. From classic and sports to race and investment vehicles, we have access to the very best information available  which is why our close relationships with dealers and organisations such as Hagerty International are so important to us – they help us understand the vehicles as well as the market.

Market research

The reason we report regularly on auction results, dealer prices and buyer sentiment is to ensure we don’t get complacent. This analysis has been developed over time so we can identify trends and support our buyers and lenders with accurate first-hand information rather than regurgitating second-hand statistics that are out of date and out of context.

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The Importance of Relationships

 
Our relationship with buyers provides us with all important consumer feedback which helps us understand where we think the market is heading and what vehicles are becoming desirable. We also get this feedback from the network of dealers that we work with, although of course the dealers and motoring publications between them also influence consumers and this influence could not be considered to be entirely impartial, however well respected and fair a classic car dealer or journalist may be! Despite this, the dealer’s knowledge of “what’s hot and what’s not” is of course invaluable, and this influences our relationship with the lenders.
 
Lenders expect us to provide invaluable, impartial feedback on residual values and whether a deal “stacks up”. This relationship is reinforced by financial penalties the “claw back” – that ensure dealers and finance brokers need to get their sums right. In many cases the granting of finance can hinge on a well reasoned case for funding a particular vehicle to a lender that is not familiar with the product or the market.
 
So, ultimately there are no tricks or shortcuts to keep ahead of the classic car market. It’s about hard work, experience and relationships with a liberal helping of appreciation of the vehicles we deal with. The evolutionary theory of “survival of the fittest” applies to classic cars, classic car dealers and our line of business as well – without our ability to stay ahead of the market, cementing the successful relationship between borrower, lender and dealer we wouldn’t be here at all.

 

 

 

 

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