Insurance Edge spotted this classic car market round-up piece in our press release inbox recently. Experts from Hagerty Insurance take a look back at the year that is rapidly vanishing, and the year ahead. Will values overall soften, and which classics are set to rise in 2020?
We’ve also come firmly to the end of the period of general growth in the classic car market. OK, so it started well before January 2019, but this year has seen the attitudes of buyers and sellers catch up with the reality of what’s really going on. Some buyers, especially those in the speculation business, have realised that making money on classic cars isn’t as simple as buying a certain make and model, and a lot of them seem to have left the building.
On the other side of the coin, sellers (including those in the trade) have realised that the prices they were getting in 2016 and 2017 just aren’t coming back any time soon. This time last year, we used the Ferrari Testarossa as an example of how far sellers’ expectations were above the reality of auction sold prices. Then, the average (mean) price of an advertised car was £116,000 but the auction reality for it was £87,800 (a difference of £28,200). This year, the advertised mean was £110,225 and the auction reality £91,100 (difference £19,125). Things are now much more realistic than they were a year ago.
This is a trend that has been replicated across the auctions: 2019 was the year the quality of cars consigned improved, reserve prices became (mostly) more realistic, and the type of cars filling the catalogues changed. In came more modern classics, out went unexceptional but expensive cars. As a result, sell-through rates really picked up in the last quarter.
Hagerty’s Classic Index has mirrored this turbulence during 2019. Although some models have increased dramatically in value, many have also fallen: 23 of the 50 tracked models have increased in value, 10 fallen and 17 remained static since December 2018.
Cars that could be classed as niche collectables have been hit hardest, and those with mass appeal seem to have done best. The Aston Martin Lagonda S1, previously a big riser, has slipped back 11.2% from last year, with an average value of £51,125. Similarly, the Fiat Dino 2400 Spider has seen its average value slip back to £94,100, a loss of 7.8%. The Porsche 944 Turbo has lost around 8.7% of its value, with an average of £21,325.
These cars all rose dramatically over the past few years, and they’re all models with compromises built in. The Lagonda has very idiosyncratic styling, the Fiat has a wonderful engine and striking styling, but it’s still a Fiat, and at that price point there are lots of other options, and the 944… is just not a 911.
In terms of risers, the Jaguar Mk II has been a surprise this year, with some really positive auction results for the best cars, including a very original low-mileage example that achieved a shade under £70,000 for Silverstone Auctions back in May. That’s huge money for a car that had remained relatively static over the last few years, and our average price has risen a whopping 23.6% as a result.
The Citroën DS 21 Pallas is another similar car: a very well-known classic, it’s been a quiet riser, making up 7.9% this year. Rather more noisy is the Ford Sierra RS Cosworth: after an almost stratospheric rise a few years back, values had stalled a bit. 2019 saw a number of strong sales, putting this modern classic very much back on the radar with a 13.7% rise.
So, what are the market trends? As we discussed in our October market analysis, the UK’s autumn sales have, for the most part, been more positive than we expected. Mid-market, enthusiast cars are selling well, especially those of a post-1990 vintage. At the top end, things are not as rosy. The very best cars are doing well, as they have done throughout the year. These are the best models from the most prestigious manufacturers with perfect provenance.
A lot else at this level (roughly £150,000 plus) is having a harder time, and dealers are privately admitting it’s a very difficult period for them. Why is this? Maybe enthusiasts are looking at the unpredictable economic situation and buying cars that make them happy. Maybe people who were putting their money in more expensive cars are buying cheaper models to lessen their risk. Whatever the individual reasons, having a healthier enthusiast sector of the market has to be a good thing, and we believe this will continue into the spring.
Insurance Edge Comment:
The classic car market faces a huge challenge in the shape of climate change activists, who wish to curtail the consumption of anything carbon-fuel related. There will be a concerted effort to ban ALL older cars from the roads, except for events like the London-Brighton run, one-off club meetings and shows etc. The UK government may well cave into the demands, at least partially, and place various restrictions on pre-2008 cars; no city centre accesss, a special green/carbon tax, weekend only road use, or repeal of the pre-73 VED freebie and so on.
The essence of classic cars, bikes, scooters or anything else is, the social side of club life, the fun of reliving a part of your younger days. The insurance specialists involved in this market would do well to form a strategy to cope with the inevitable criticism from a younger audience who see car ownership itself as being `evil’ and driving a classic 3-litre Capri as a kind of planet hate crime.
By telling human stories surrounding classic cars, focusing on the recycling aspect, the costs of maintaining an old car compared to producing three or four newer ones, the old fashioned craftspersons jobs that are created etc the industry will protect itself from those who would ban classics completely.