Classic and “Investment” Car Prices Declining on Slow Economy

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Classic cars have enjoyed a strong decade, with prices rising significantly from 2010 onwards as economic growth picked up and asset prices increased across the board.

However, after a dizzying period of increasing prices, the classic car market is cooling due to a combination of falling demand and slow economic growth as many of the world’s top economies enter into recession due to the coronavirus. 

Classic cars were one of the top assets classes from 2015 to 2018, with research indicating that popular classic car brands returned an incredible 28 per cent annual return — significantly higher than many stock indices and other investment assets.

Many cars peaked in value from 2016 to 2017, with highly desirable vehicles double or tripling in price as demand for investment vehicles grew.

Today, however, prices are declining, with many experts stating that a drop in the market is here potentially to stay as economic slowdowns affect a market that was already facing a significantly reduced level of demand.

In an article published by Automobile, several classic car experts shared their thoughts on how the classic car market may change over the next few months. One expert noted that prices for some cars were off by as much as 30 to 40 per cent compared to the 2014 and 2015 period.

Another has noticed that despite falling prices, customer interest in many classic cars is on the rise, with an increased number of people visiting classic car listings and looking at vehicles that are available for sale.

Industry experts and analysts have pointed to several reasons for the fall in prices beyond slow economic activity. Many point out that years of growth in the classic car market left prices overly high and the market over-saturated. 

Data from Hagerty published a 2019 Bloomberg article showed that demand for very expensive collector cars, including those priced at $500 thousand USD and more, has declined from peak levels in 2016 and 2017. Prices also declined for more affordable classic cars. 

However, one section of the classic car market that had continued to grow was affordable cars, including those popular with Millennials and Generation X collectors — audiences that previously hadn’t been significant buyers.

Cars such as the Volkswagen Golf GTI and many 1990s Japanese import vehicles, which have largely eluded the older car collector audience, remain in demand despite a fall in the market as a whole.

Popular sports and collector cars from the 1980s — a decade that previously hadn’t been viewed by collectors as a major period for collectible cars — had also enjoyed a modest but steady rise in value from 2010 to a peak in 2017. Many remain valuable today despite slowly falling prices.

Other cars that have retained their value include iconic cars, such as the Aston Martin DB5 and other vehicles popularised by the media. Many of these vehicles command multi-million pound valuations and are attractive to the most ambitious and discerning collectors.

Of course, classic cars aren’t the only assets to have suffered during the coronavirus pandemic and its economic fallout. Other luxury goods, such as high-end jewelry and fashion, often fall in demand and value as consumers become more frugal and limit their spending.

Despite the fall in prices, many classic car enthusiasts, collectors and investors feel confident about the future, particularly with the economy gradually returning to normal after a period of significant contraction.

For others, the drop in prices is more opportunity than crisis — a chance to purchase an iconic vehicle and upsize their collection, all at a significantly lower price than one, two or three years ago.

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