HEATED CLASSIC CAR MARKET TAKES A BREATH
This year’s Monterey Car Week looks set to be a high-water mark for the classic car industry. Its 1000plus lots represent a mass of activity following the market’s resumed development from pre-pandemic levels. Unprecedented numbers of million-dollar-plus cars, modern classics with blue-chip values and a trading environment that’s more accessible than ever have driven an exciting classic bull market.
But it is overheating? High trading volumes and recordbreaking prices make comparisons with the market crash of the early 1990s inevitable. Hagerty, the insurance provider and industry pundit, has pointed to big rises in its price guide over the past year, including the Jaguar XJ220, Porsche 959 Komfort and Bugatti EB110, up 14.6%, 15.2% and 32.9% respectively. It also points to muscle cars such as the 1967-’69 Chevy Camaro SS and Z/28, up by more than 35%, and even the less traditional choices are climbing.
Then, in July, Hagerty’s 15-data point ‘Market Rating’ algorithm dropped for the first time in 15 months, while its similarly complex repeat-sale index, which uses the Mercedes-benz 300SL Gullwing as its basis, also showed a slight dip.
Wider economic conditions are stormy: rising energy costs, a squeezed labour market and unravelling operational business costs are driving inflation, leading to central banks stepping in with interest-rate hikes. Recession looms as war in Ukraine continues, and global supply chains and the job market untangle their COVID-19 disruption. This would normally spell trouble for a leisure sector, but demand for classic cars among generations old and – especially – new appears to be developing rather than diminishing.
“I’ve been in the industry for 25 years, and the pandemic has been an explosive era for classic cars like nothing we’ve seen before,” says John Kraman, markets expert for Mecum Auctions. “We are seeing a transition of buyers, with new generations – Gen X and Millennials – coming to market with different buying behaviours. Collections are more popular than ever, and the younger buyer is willing to pay more. Living memory limits what we consider some cars to be worth; these people look at the beauty, the perceived romantic era, from movies, music, stories from their grandparents, and have their own ideas of value.”
This does tally with some of the big risers of the recent past, such as the ‘malaise era’ Pontiac Trans-am – Hagerty now prices a concours 1977 example at $90,400, up 70% over the year to April.
The rise of modern classics is well known, but Kraman suggests that this will filter down through the eras: “Take Shelby buyers, for us a big market. We see them going back through the years: they’ll start with an SVO and then tap into the heritage, learn the history and end up with a GT350. That’s the wave we’re in the middle of right now.”
A substantial segment of this new, younger market also embraces modified cars, while those building classic collections are more akin to traditional enthusiasts, with a fastidious attention to originality, but also a fresh willingness to see classic cars as investments. This explains the soaring values of low-mileage ‘timewarp’ cars, such as the 246-mile 1987 Saab 900 turbo convertible that Bring a Trailer sold in August for $145k.
Driven by new generations with both increased buying power and investment confidence, the market looks broadly robust enough tackle a dip. Where it goes afterwards is the interesting part: certainly back through the eras, but on a different path to those owners selling today.
“The younger buyer is going back through history: they’ll start with an SVO, then tap into the heritage and end up with a Shelby GT350”