Is the Classic Car Market Decelerating?

Over the last decade or so, buying classic cars has proved a sure way to make massive returns while satisfying a passion for historic and rare vehicles. Auction after auction, price records were broken throughout the world with neglected beauties being discovered in the strangest circumstances and scooped up as soon as they were on the market, even when they were partly disassembled.

The Knight Frank Luxury Investment Index tracks the price of luxury items, including classic cars. While the usual suspects in the world of wealth investment did well over the last period, with the value of wine increasing by 9 percent, according to their latest report, and coins by 6 percent, art and furniture decreased by 5 and 6 percent, respectively. Classic cars, on the other hand, outperformed all of them by far, with their average value increasing by 17 percent.

And looking at numbers over a few years makes their rise even more impressive. Their value increased by 161 percent over the last five years and 467 percent over the last decade! Now, these are numbers that would make any investment broker salivate!

Despite these positive results, there have been signs that this trend may be about to change as the HAGI Top Index, which tracks the value of 50 of the allegedly ‘world’s most desirable cars’, only saw an increase of 1 percent last year.

Recently, some auctions in the UK and Monaco also saw a significant numbers of cars unsold, while a Jaguar C-Type in original condition that was auctioned in May 2016 and expected to reach A$5.5 million actually sold for double that amount, after interest from twelve bidders. Likewise, a 1957 Ferrari 335S Scaglietti achieved AZ$43.5 million at the Retromobile in Paris in February 2016.

The picture painted by this data may seem contradictory, but according to Knight Frank, this is representative of the state of the market, which is that buyers are taking their time to find the right cars.

Cars that are top of their class and truly unique will still be able to fetch high prices as evidenced by the recent sales mentioned above, and less rare but desirable cars may still sell well, but vehicles that are relatively easy to find won’t achieve the record levels that the market experienced over the last decade. Nowadays, potential buyers will expect a fairer price, which could be up to 20 percent lower than vehicles were originally purchased for. So not good news if you are thinking about selling, but certainly a buyer’s market.

This trend is certainly echoed by car manufacturers who have caught on to the fact that their cars need to stand out to maintain their value over time, and now produce in very low numbers to create ‘limited editions’. Special engines and finishes, handmade features and bespoke bodies are all additions that will contribute to make a vehicle a prized possession.

Ferrari is one of the brands that have adopted this strategy with great results, but you don’t have to purchase one of their stallions to ensure a good return. Legacy and rarity will ensure a car’s value, as demonstrated by a humble Citroen 2 CV Sahara that sold for A$290,000, against an estimate of A$135,000.

So, in this mixed market, what should aspiring or confirmed classic car collectors do? Like with any investment or significant purchase, do your research. Some well-known brands like Porsche and Ferrari are unlikely to disappoint, but they don’t exactly come cheap so if your budget is more modest, you need to look for underrated cars.

The Rolls-Royce Silver Shadow, for example, was produced in large numbers between 1965 and 1980 which makes it a more affordable yet solid classic car which you can find for A$17,000.

If you love Porsche but haven’t got a million dollars to spare, go for older models like the Porsche 914, with sharp edges typical of the 1970s when it was built. Put aside the more powerful 6-cylinder model which comes at a premium and aim for the slower yet nimble 914-4. Far less expensive but as beautiful.

Japanese cars have long been underestimated but they have recently started to garner attention as they are particularly interesting ‘entry’ cars. Datsun cars, for example, are ones to watch. The Datsun 240Z is a good sports car that was produced for four short years between 1970 and 1974 and their prices have only been going up. While some of them can go for huge sums, it is still possible to find a relative bargain for A$17,000 to 25,000.

The French Citroen GS, made between 1971 and 1984 was the hi-tech car of its days, made available to the man in the street. Unbelievably, it is possible to find a robust specimen for as little as A$3,500.

Another route you may consider exploring is restoring an old car to its glorious self. Whether you see classic cars as an investment or are buying them out of love, this is a route which you need to research thoroughly before embarking upon.

Buying cheap cars in various stages of decay can be profitable, but it can also be a financial bottomless pit. What makes a restored classic car valuable is authenticity. It’s not all to make the engine start again and restore the body, true connoisseurs will expect genuine parts of the time, the highest level of finish and materials that are consistent with the era and spirit of the car. So unless you know your cars extremely well and have a realistic expectation of what you can sell it on for, you may end up spending much more than you will get back.

Whether you are bringing a car into or out of Australia, contact us for a no-obligation quote online. We have been in business for over two decades so we must be doing something right! To find out more, call us on +64 9 303 0075 or send us an email via our form.