Val­u­a­tions – A Dif­fer­ent Per­spec­tive

Classic Driver - - EXPERT ADVICE -

Have you ever no­ticed that some­times you keep see­ing the same sub­ject raised and you be­gin to ask yourself if you should be tak­ing note? For me in the last few weeks the on­go­ing sub­ject of val­ues of cars has been raised by sev­eral col­leagues /as­so­ciates /clients. They are people who have had a huge amount of ex­pe­ri­ence and knowl­edge with clas­sic cars. I won’t men­tion names but I can give an in­di­ca­tion of the sec­tor they are from and op­er­ate within. They have some in­ter­est­ing per­spec­tives.

MG Mad He has been op­er­at­ing in the MG world for 35+ years and knows the mar­que ex­cep­tion­ally well. We were dis­cussing his fleet of ve­hi­cles and their in­sur­ance re­quire­ments. On some of the cars he is very spe­cific in re­gard to the val­ues and on oth­ers he is not par­tic­u­larly both­ered as he re­alises that some of them are ‘just old cars that are still in op­er­at­ing or­der’.

We dis­cussed val­ues and how they were are ar­rived at. Due to his knowl­edge and the aware­ness of the cars of spe­cial in­ter­est in New Zealand he felt con­fi­dent in the es­tab­lish­ment of val­ues. How­ever, he made an in­ter­est­ing com­ment which I wanted to share. He said that we have a per­cep­tion of the car’s value but it is not ac­tu­ally ever re­al­ized un­til it is sold. So if you have a high value on your car, are not in any hurry to sell it and are pre­pared to wait for 12-18 months then the mar­ket will come to your price.

How­ever if you want to sell the ve­hi­cle quickly then you are go­ing to be sub­ject to the laws of sup­ply and de­mand. You are also sac­ri­ficed to the punter who is look­ing for a quick kill (pick­ing up a very good car for a very aver­age price). It comes down to who is in the mar­ket at the time and with cash in hand.

Then of course there is an additional pro­viso. There are many cars out there that are of ‘aver­age’ stan­dard but the own­ers think the cars are worth much more. It does put an in­ter­est­ing fac­tor on un­der­stand­ing of the me­chan­ics of set­tle­ments for in­sur­ance claims on your clas­sic car.

Pres­tige MV Im­porter The sec­ond gen­tle­man on my radar has been in the clas­sic car scene for a large num­ber of years and fo­cuses on the higher end cars. These cars are val­ued in ex­cess of $80,000 and some as high as US$1,200,000. He buys cars from the UK and sells them to the USA or to any­one who recog­nises the value of the car.

He is a New Zealan­der and he mixes in the top line of busi­ness people and clas­sic car fra­ter­nity. He be­lieves the New Zealand mar­ket is not ma­ture enough to recog­nise value when they see it. His per­cep­tion is that we are not pre­pared to spend the large dol­lars on these cars.

FROM THE SIM­PLY CLAS­SICS IN­SUR­ANCE DESK

How­ever, in say­ing that, New Zealand’s mar­ket has been rather blessed in hav­ing some very unique cars here. Call them ‘Barn Finds’ if you will, but there are not many of them and you have to keep you eyes and ears open to be able to find that pur­chase of a life time. He con­sid­ers that many of the clas­sic cars that we have in New Zealand are over-priced and over-val­ued be­cause in re­al­ity they were just your ev­ery­day con­sumer car of the 50s 60s, 70s and now 80s that have just been well kept. But are they truly clas­sics? This then puts an in­ter­est­ing spin on the value of cars and is it fair?

The en­vi­ron­ment of the clas­sic car fra­ter­nity is for­ever chang­ing as many ex­pats from the UK, Europe and USA bring their cars with them to New Zealand and put them on the road. Thus we are now see­ing cars that we had never seen be­fore and if these cars have come from Texas or Cal­i­for­nia they may be 40 years old but no rust.

In the next few years we will also have the re­lease of many cars into the mar­ket from horders who pass over and the es­tate wants to get rid of the cars. This raises the ques­tions of: 1) who is go­ing to buy them, and 2) based on the law of sup­ply and de­mand how will this af­fect the value of your own car?

This brings me to the point of my think­ing. In re­gard to mod­ern ve­hi­cles, those within the in­sur­ance in­dus­try have a rel­a­tively high prob­a­bil­ity of get­ting the in­sur­able value cor­rect. How­ever, clas­sic cars, trucks etc are an­other mat­ter.

The sit­u­a­tion is re­ally de­fined when the ve­hi­cle is about to be writ­ten off as the in­sur­ers will use their own re­sources to es­tab­lish the mar­ket value of the ve­hi­cle. How­ever, some­times a huge canyon emerges be­tween the owner’s per­cep­tion of value and re­al­ity. Thus re­fer­ring back to MG Mad, in the event of a to­tal loss you don’t have 12-18 months to re­alise your per­ceived value. The de­ci­sion is based on the here and now. In re­gards to Pres­tige Car Im­porter his per­cep­tion is that you’re lucky to get any­thing un­less it’s a true clas­sic of the type that he deals with.

So my ad­vice to many of the people that I talk to is to get a writ­ten val­u­a­tion done on your ve­hi­cle when you pur­chase the car or you are about to in­sure it. It is just so much safer in es­tab­lish­ing pre-ac­ci­dent val­ues. It also re­duces stress lev­els in the event of a claim as ev­ery­one is talk­ing from the same page.

As an additional bit of info for those that read my page from time to time, I have re-cal­cu­lated the sta­tis­tics that we hold on the cars in­sured and quoted on. The mean value of a clas­sic (and this in­cludes both Aus­tralian and Bri­tish mar­ques ) is $12,000. The high end Euro­pean ve­hi­cles like Fer­raris and valu­able vin­tage cars are about 5% (of the dis­tri­bu­tion bell curve) of the cars we have looked at to in­sure.

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