New Year’s Thoughts
Well folks, the election is over and whew, what a ride. It doesn’t matter which party you voted for as half my friends are pissed and think the world is coming to an end and the other half are ready to “rock and roll.” Now that the election is over, what about the car market? The car market is very interesting and will continue to be. The problem is two fold: a glut of very average cars, and politics.
The glut of cars and in average to poor quality with great quality asking prices always sorts itself out. The majority of sellers don’t have anything to truly compare their car to except the Internet. They have no clue how to rate a car and they think an oil change is a service. Because we have a near perfect example 7,500 mile 1983 SC with rare factory turbo spoilers doesn’t make your 83 SC with 85,000 miles with plenty of track time worth 1/2, or even 1/3 the price.
Start the Honest Evaluation
The first item to pick is the condition of the paint and the exterior. While 85,000-or-so miles is low for a 1983 “vintage” car, a lot happens in that time. Rock chips, parking lot dings, kid on bikes going in-and-out of the garage, etc. There is no way it’s coming out unscathed after 85,000 miles.
The second item to look at is the interior. When you slip in-and-out of a car it wears, that’s just a fact. The seat bolster, carpet, door panels, steering wheel, heck, even the pedals. Every time you get in to drive, many parts of the interior are getting worn.
The third item is the drive train. At 85,000 miles on an air-cooled 911, you are 80-90% of the way to replacing suspension bushings, shifter bushings, a clutch, or needing a valve job. Add these things up and you’re $20,000 in the hole very quickly.
When you total up what it takes to recondition and properly service your “low mileage” 85,000-mile 911, you just flushed a ton of money down the drain on an average car. The ultra low mileage 911 will seem like a bargain compared to getting nickeled-and-dimed to death. The reason cars are sitting around unsold is just that situation.
Lots of weekend-warrior brokers, discussion forum trolls, and speculators are now losing their collective butts on average, worn cars. We have always bought the best we could possibly buy and we still spend an average of $12,000 per car servicing it so our clients have no surprises. Just because you did a full maintenance on your car to bring it up to snuff doesn’t mean it went from average to excellent condition. It means your average car is now fully serviced and drivable, as it should have been in the first place.
The Four Questions
I ask myself four basic questions when I buy a car:
- How many did they make?
- How many could be left?
- How many are in this condition?
- Does it have a paper trail to back it up? (Or is it covered up?)
Buy the condition of the car, buy the paper trail, buy what you like, and the market ebbs-and-flows won’t matter. If the world comes to an end, at least you’ll have a really fun car to drive.
The politics part will sort itself out. But in the meantime, it has a huge effect on the market. Brexit started the ball rolling making the Europeans nervous. That vote, the Italian Referendum defeat, and our elections here in the U.S. have just made the Porsche world pucker. The Porsche market is worldwide, and many of our cars have been going to Europe for the last decade. Brokers bought all the average stuff and they flipped them to Europeans. The exchange rates were so favorable towards them at times that they could pay 20 percent duty and shipping on top of the car price and still get a deal.
The last two auctions in Europe have been nuts. The first in London, organized by Porsche Club Great Britain, had some very rare Porsches and they commanded unheard of record prices. At the last auction in Milan, full of average Porsche beaters (many of them incomplete and parts cars), the prices were idiotic. I’m sure when the buyers went to pay for those beauties there were more than a few shocked people when the 12% commission, 20% VAT tax and local sales tax was added on!
The winds have changed! The Europeans are nervous. The exchange rates have dropped. The value of there Euro has gone down more than 10% versus the U.S. Dollar in a matter of weeks with no prospects of it strengthening in the near future. The flip side is many are now buying assets again instead of keeping money in the banks. Low interest rates, fluctuating currency, and bonus season has heated things up again after a six month slumber.
The January auctions in Scottsdale will be very interesting indeed. I’m not expecting much and believe the market will remain virtually flat, save for a few anomalies. The rarest, cleanest, lowest mileage, and most desirable cars will always sell, as there are very few cars that fit that description. The average, used up worn cars will continue dropping.
The question now becomes what do you want in your garage?
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