This year’s Monterey Car Week auctions set a new record for collector car sales, bringing in $469 million, 18.9% higher than the previous record from 2015 of $394.5 million with a 78% sell-through rate and an average sale price of $590,713 were reported by auction companies.
According to some commentators, the current bear market, increasing inflation and recession fears were the motivating factors behind Monterey’s record prices, forcing investors to hunt for alternative locations to put their money, much like they did during earlier, sharp declines in stock prices.
Additionally, according to industry insiders, the decline in asset values justifies their investing their money in something more real, like classic cars.
What it really means
“The industry is clearly resilient to whatever is happening broadly. But going forward, it’s a mixed bag,” said Juan Diego Calle, the chief executive officer of Classic.com in a Bloomberg News report.
But others disagree, notably David Kinney, publisher of the Hagerty Price Guide, an accredited senior appraiser with the American Society of Appraisers, and a longtime reporter on the collector car market.
“The market is always nuanced,” Kinney said. “There’s never been a time when there haven’t been strong segments and weak segments. But the overall market is doing very, very well.”
Particularly for cars price more than $5 million. Exhibit A: a 1955 Ferrari 410 Sport Spider by Scaglietti, one of the most noteworthy purpose-built Ferrari “large block” sports-racing prototypes from the 1950s brought $22,005,000.
Of course, that’s always been the case.
A changing market
Still, the market also showed changes industry observers such as Kinney have been predicting for 20 years, as Baby Boomers begin aging out of car collecting, and decline as a driving force of auction market results going forward. While Boomers are still buying very expensive cars, other segments are exploding, such as analog supercars, aka ones that are bereft of computer controls and attract younger buyers.
“There’s a very, very long list of these,” Kinney said, citing such cars as the Ferrari F40s and F50s, Bugatti EB 110s and Porsche 959s as examples. “Those cars are doing very, very well.”
But other markets have maintained their value, and that’s not unusual to anyone involved in the collector car hobby. Some segments grow while some segments stay the same. Others might even decline.
“Absolutely. I wouldn’t go along in 1955, ’56 and ’57 Thunderbirds right now. There are still people who want them, but the demographics work against them,” he said.
Other factors that affect a collector car’s value is their design. Many earlier cars — 1920s and earlier — were designed for a driving public who were generally smaller than we are today, making them hard to drive for larger, modern collectors.
“You can’t deny the fact that we’re generally, as a population, getting bigger,” Kinney noted.
One segment remains strong
But there are cars from one era that always seem to enjoy high values and equally robust popularity; those from the 1930s.
“You know, 1930s cars are no longer just plain automobiles; They’re investments in art. They’re no longer driven every day or driven even occasionally,” he said. “They’re more likely to be cars that are only driven on a very limited basis just to maintain their mechanical integrity. You’re not buying Duesenberg to take it out on a long road trip anymore. You’re buying a Duesenberg as an object of art.”
The period marks the very first cars that were purposely styled, Kinney said, not just built. It’s a time when car designers began to take their place alongside engineers with the establishment of the industry’s first design department, GM’s Art and Colour Section. Design quickly became an essential part of the car-building process and it’s a key reason why cars from before the late 1920s are not more popular.
“They’re are not as pretty, generally speaking,” he said, adding it’s important to remember that for most collector car aficionados, cars remain a passion, not an investment.
“Anybody who buys a classic car purely as an investment is either that, an investor, or somebody who got lucky because they bought the right car.”
Collector cars should be bought to be enjoyed, Kinney says.
“Always buy it for the joy of driving it; you should never buy it for the investment. That’s just the icing on the cake.”
I have a collector car, but I prefer to invest in farmland. With car investing, you need to keep finding a bigger sucker.
I’m not going to make judgement but just note that, with rare exception, the prices just keep going up, even during economic downturns. Sure, some vehicles stall, others take off unexpectedly. But it’s hard to argue against betting on the collector car market.
Paul E.