POST-BREXIT CLASSIC MARKET ‘WILL WEATHER THE STORM’
Despite gloomy predictions, dealers and experts on both sides of the Channel say trade in historic cars will prevail, even if there’s ‘No Deal’
‘I see a potential short-term blip as people are subject to the initial shock’
NICK SZKILER, DEALER
Market experts on both sides of the Channel have said that prices for classics will withstand any shocks to the economy as a result of Brexit – even if the UK leaves without a deal.
On 28 November, the Bank of England published projections of how the UK economy would fare under multiple Brexit scenarios, ranging from a ‘close relationship’ to a ‘disorderly Brexit’, but market analysts think that the classic car market will carry on after final leaving arrangements are fully understood.
Worst case first, however: ‘In the more severe, or disorderly scenario, the sharp fall in Sterling, alongside the imposition of tariffs, pushes up the cost of imports and overall CPI inflation will peak at 6.6 per cent. The Bank rate would then have to rise sharply to 5.5 per cent,’ said Governor of the Bank of England, Mark Carney.
Many classics are bought with finance, a proportion that only increases as the value of the classic in question does, and this would be made significantly more expensive were interest rates to rise to levels not seen since 2001. Richard Hudson-Evans,
CCW’s auction guru, said: ‘Until now, people have been able to borrow at less than the rate of inflation, but there is now a danger of negative equity. We were in a similar situation in the late Eighties and when the markets faltered then, many people simply stopped fulfilling loan payments and repossessed classics stacked up.’
However, the increased globalisation of the classic car scene could serve to steady the UK market, with any loss in domestic demand for classics made up by increased demand from overseas as Sterling falls in value.
Over the Channel, Bernard Marreyt, manager of Belgian classic specialist Marreyt Classics, took a longer-term view based on the deal brokered by Prime Minister Theresa May.
He said: ‘I think there is some anxiety at the moment about what’s going to happen but I think that the market is big enough now to find a way to right itself, and that in two years’ time we will be trading with the UK in much the same way as we are now.
‘ We buy more from the UK than we sell there because of the weak pound at the moment, so I think that the worst thing that could happen as a result of Brexit is an import duty being applied by the EU on cars coming in from Britain, but now that there’s a deal on the table we don’t think that that’s going to happen. Theresa May might not be very popular in the UK at the moment but we think that she’s got the right approach – the deal that’s been agreed with the EU is better for the market than the UK leaving with no deal at all.’
Concerns that classics may not serve as effective returns on investments were allayed by founding director of Yorkshirebased Classic and Sportscar Centre, Nick Szkiler.
He said: ‘Classic cars have been the best assets going which has created a global market that simply wasn’t there in the early Nineties, so no matter what they’re denominated in pounds, they ultimately, but for a few glitches, retain their enduring value.
‘I see a potential short-term blip as people are subject to the initial shock, but the growth in values we have had in the past few years has not been the speculative, red-hot market we had in the late Eighties, so isn’t destined to do what that market did. So too, the tougher things get, the more people are going to want to invest in assets like classic cars, as in 2008.’
Wheeler Dealers co-presenter Mike Brewer said: ‘People are holding on to their cars rather than selling them because there’s a lot of uncertainty – are they going to get the right price now, or should they wait? If you’ve got a classic, enjoy it. You’re currently in a world where you’re making between 10 and 15 per cent a year, so long as you look after, maintain and keep your car the way it should be, you’ll do right by it.’
The classic vehicle market will survive whatever Brexit result we get, experts say.