My 10 month cancer vacation is over and I got back to work with more questions about the classic car market than ever. Let me explain what I think I see going on in the market. It would seem a lot of collectors were in it just for a return on their investment. Others bought cars because of the memory tied to a particular model. Still more took the advice of an online chat room or broker as to what a great car to invest in was. Some even had money burning a hole in their pockets and bought the first car they saw! Others only invested in great cars with a great story or provenance.
The market has shifted as we can tell. The shift has taken place on the lower end of the market and has affected average cars adversely to the tune of 25 to 40% of their high values just a few years ago. The lower end cars or average cars are getting killed for a few reasons. The first reason is there are average cars with nothing particularly special about them. News flash! They made more than 150,000 of the 911’s between 1974 and 1989 and they all look the same! Most have been well used, which doesn’t make them rare, it makes them worn! These cars had crappy A/C, a barely-working radio, no cup holders, and lousy ergonomics. That being said the feel, the sound, the smell, and the memories they evoke are outstanding!
The people looking for some return on their investment have left the building. Since the crash of 2008 we have been dealing with free money. The money you borrow is damn near free and the interest you can earn on your money is even less. You couldn’t trust real estate or the stock market, so what was the average guy going to do? They invested in a car they always wanted; they weren’t going to make any money on their money so why not drive their investment? A great idea until the last two years when real estate has made a huge comeback and the stock market an even bigger one. Do you sense a trend yet?
Still others have lusted after a particular model since high school or college and they reached the earning power to buy it so they scratched that itch. The G-50 cars, the 964s and 993s saw prices rocket up until a recent re-entry and fall back to earth.
Others in the age of the Internet got online and started chatting with the sexual intellectuals (fucking Know It All’s) and really got screwed. The trolls and brokers sold them anything and everything even as they touted what great investments or how rare they were. A few got lucky and bought great cars, others just plain got hurt.
Last but not least, some of us just plain had money burning a hole in our pockets and had to buy something. Generally the first car we saw. There is nothing wrong with this as long as you know what you are getting into. But most of us don’t.
Cars have been called a lot of things over the past century. A dream, an investment, a pleasure to drive, a nightmare, a clunker, and so on. But we tend to buy them for the feelings they evoke in us, the way they make us feel, the memories they bring back. Whether going out for an early drive on a Saturday after a long week or heading out on date night or for ice cream with your wife, classic cars bring back those memories of simpler times, those days of hanging out with your dad or your high school times. Those memories cost money, remember! Service, insurance, up keep, and storage are not free! If you take the money part out of the equation what are the memories worth?
That BMW or pick-up in your driveway just set you back $60,000. If you drive it for five years you’re going to lose 80 to 90% of that “investment.” And it’s not going to bring back one memory of when you were a young man and truly lusted after something. Open the window and start shoveling the cash out on your morning commute.
That’s brings us to what has held up in this crazy market. The answer is simple. Great cars with great histories, with ultra-low mileage, that have had fanatical owners are still selling well. Never-rusty and very rare racecars sell even better, and now cars that are a good buy are selling.
The moral of the story is this: Buy what you like. Buy the best cars with the best provenance and you will truly have an investment car you actually drive and enjoy. Maintain that investment just like your house; do the maintenance when it’s time to do it and quit kicking that can down the road. Most buyers are now smart enough to not only get the car inspected but they also expect it serviced before they take ownership.
Last but not least: get in the car and drive it. Remember why you wanted it in the first place, feel what it was like before power steering and smart phones. Clean and wax it just like you did 40 years ago to your first car. That investment factor gives you a far greater return than you’d ever realize in the bank.