It can be hard to interpret some of the convoluted pseudo-fiscal commentary on the classic car market, but the good news is that right now most of it is broadly aligned so we’ll offer you our translation in plain English.
Generally speaking, market commentary (mainly derived from auction results – only 10% of the UK market) is pointing to a reduction in sale volumes and lower prices for below-par collector cars. In general auction sell-through rates remain stable in and around 70% which is healthy and roughly where we were this time last year. Translation: things have cooled off a little bit in certain sectors of the collector (expensive) car market and this applies particularly to the must-have “investment cars” of the last 18 months which were mainly certain Ferraris and Porsches.
Are we seeing a price correction?
Let us make a really important point here before we carry on: Advertised price does not necessarily equal invoice price.
The classic car market was incredibly busy in December and January with what we considered to be an unusually high enquiry and sales levels. February and March were slightly quieter but this was to be expected – February is the quietest month of the year for classic car sales in the UK and school holidays always affect sales activity. April has been another busy month for dealers and auctions but not quite as busy as the same period last year.
With so many cars on the market, sales activity peaking in January and the question of Brexit yet to answered Classic & Sports Finance have certainly seen a gap between invoice prices compared to the prices advertised. Advertised prices have also begun to see some downward movement – the Ferrari Testarossa being a great example.
Now this certainly might look like a price correction but if you care to check the price of an early Testarossa using Hagerty’s Online Valuation Tool you will quickly notice that prices are more closely aligned than they were previously with values (Hagerty have seen insured values reduce by around 7%).
This is reflected in the cars that we are funding – over the past 12 months we have seen prices remain stable and certain marques, such as Aston Martin, continue to perform well. Enquiries for Ferrari and Porsche are less plentiful than 12 months ago, though. Have invoice prices dropped significantly? In our eyes, no.
Advertised prices have come under pressure at the top end of the market but invoice prices remain stable.
Where are the price increases now?
The best of the best continues to rise steadily- we have seen some impressive prices paid for great cars at established classic car dealers recently – but we are not seeing the stratospheric growth of the last 18 months. As we mentioned, Aston Martin continues to perform well and experience good demand primarily due to the low production numbers and we have also seen a marked increase in interest in affordable classics. Fast Fords have performed very well with some assistance from the marketing department at Silverstone auctions. H&H seem to have cornered the market in cars featured on classic TV shows (Bodies Capri, Arthur Daley’s Jag) which has added some momentum to this particular market segment.
Investors have generally left the market but we are now seeing enthusiasts diversifying from the established marques and classics into alternative marques and younger cars – partly because some of them are willing to take a punt on these types of car to see if they will go up in value (for example, we have seen increased interest in both Land Rover & Range Rover classics in the last month). If not it doesn’t really matter to them – they will still enjoy the car and this can only be healthy for the classic car hobby.
Limited-production supercars (eg Porsche 991 GT3 RS, Cayman GT4, Ferrari 458 Speciale) are still attracting significant premiums & selling well and many seem to be driven from the showroom straight into long-term storage – a trend reported by our storage partners.
If you’ve been out on the road over the last week you will have seen plenty of classics on the road. Classic cars are engrained in our nation’s culture and consciousness and it is for this reason that we believe that the market will remain bouyant.
The Classic Car Indices
The Classic & Sports Index
Our index is based on invoice prices, enquiries and customer sentiment.
Speculator activity in the market has reduced further while experienced buyers are active in the market looking for “bargains”. Enquiry levels for finance have increased compared to the same period last year after an incredibly busy start to the year – we are seeing more first time entrants to classic car ownership. Dealers are reporting that trading conditions have become slightly more challenging with sensibly priced stock hard to find and buyers expecting to negotiate. The best cars are still selling for good prices – many LHD cars and those with less than great provenance have been languishing in showrooms. Correctly priced cars from marque specialists remain sought after and prices strong.
Outlook – steady. Desirable/ limited production modern & affordable classics doing well. Room for negotiation on prices in most cases. Market expanding – slowly.
Hagerty’s US market rating declined last month (April 2016) for the reasons they give below:
After a slight increase last month (March), the Hagerty Market Rating fell 0.44 points to 69.34. Though the rating still indicates an expanding market, this marks the ninth time over the past 12 months that the rating has dropped.
While auction activity increased slightly for March’s rating, it significantly dropped for April as both the number of cars sold and the median sale price at auction decreased.
While it didn’t see as large of a month-to-month drop as auction activity, private sales activity did decrease and is at an 18-month low.
Requests for insured value increases among broad market vehicles fell again this month and the number is at a 19-month low.
Requests for insured value increases among high-end vehicles, meanwhile, increased.
External market forces accounted for the biggest increase in the Hagerty Market Rating this month, as Correlated Instruments rebounded after a significant decrease last month. The S&P 500 has climbed past the 2,000 mark and gold prices fell slightly.
March’s reported rating was revised to 69.78 from 69.87 due to newly released inflation numbers.
The HAGI Index reported increases in their TOP 50 Index of around 1.2% in April – significantly lower than the first four months of last year.
Their Ferrari (HAGI F) index increased by 4.5% putting it back to where it was in January after two months of decline. They report that sales volumes of Ferrari have decreased and that younger, high-production models have seen a price “correction”.
The Porsche (HAGI P) index rose 4.8% – the story is very much the same as with Ferrari as sales volumes are more limited and lower quality cars remain in stock.
The HAGI MBCI (Mercedes-Benz) index declined by 0.6% driven primarily by prices of 300SL (W198)
The K500 market average index stands at 484.4 from an opening position on 1 December 2014 of 449.9 – a slight rise from last quarter but a static market overall. Notably, Affordable Classics have advanced.
Many thanks are due to Hagerty UK and HAGI for their support and cooperation in allowing us to share their data.