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Correlation Between Classic Car Prices and Financial Markets

hpmctorquehpmctorque Posts: 4,332
Every asset class competes with every other for investor dollars. Given the sub prime and other credit problems, and the weak housing and stock markets, to what extent will the current turbulence affect classic and collector car prices?

We've noted in the Classic Cars discussions that the market for ordinary collector cars has weakened, while prices for well kept, rare classics, especially the luxury and super high end ones, have held up well. Will the declines in the housing and equity markets spread to high priced classics? The fact that they represent an asset class, like art or coins, leads me to believe that there will be a spill over, but I'm not an expert on classic car market cycles. What are your thoughts on this?
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Comments

  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,986
    It depends how severe this so-called "recession" becomes, or if it is already correcting itself.

    The "bad news" often comes late with economic cycles, so the worst may be over while the bad news is still being reported.

    But in general, it has been my observation over the past 25 years that:

    If the economic doo-doo really hits the fan, the FIRST thing to go are "the boys' toys".

    Would a person with assets of 500 million dissolve his 50 car collection? I doubt it. Would the person with $10 million in assets? You bet hie would.

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  • andre1969andre1969 Posts: 22,150
    at the Carlisle PA swap meet this past fall, was that there were an awful lot of Corvettes out there for sale. More than I had ever seen in the past.

    Now, the Corvette is a big enough draw that it gets its own dedicated show at Carlisle, and I'm sure plenty of them get put up for sale there. But I'd never seen this many at an all-inclusive Carlisle event. I wonder if that's a sign that people are starting to get scared, and ready to unload their toys? I always looked at the Corvette as a car with incredible brand loyalty. People dream of owning them, and when they find their dream-come-true, they intend to hold onto it. So if they're willing to put these dreams up for sale, I imagine that's an indication that there's economic turmoil a'brewing.

    Just my observation. I dunno how much of a barometer for the economy the Corvette really is...
  • texasestexases Posts: 5,695
    I think you saw what Shifty's referring to - folks getting rid of boys toys as things tighten up. Lots of folks bought them to restore, and are now finding the pot of gold nowhere in sight! Of course, this isn't referring to the super rare ones, but I bet those weren't the ones you saw at Carlisle.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,986
    I think older Corvettes are a pretty good barometer of the "toy" market, like Harleys. Big noisy nasty things, not very sophisticated or practical. LIke 1000HP speedboats, old juke boxes, resto-rods, etd.

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  • lemkolemko Posts: 15,207
    If you ever see me put my 1989 Cadillac Brougham up for sale at Carlisle, you know I'm in fierocious financial turmoil.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,986
    I would be shocked. You just hold onto that puppy for another 50 years and wait for the big bucks! ;)

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  • andre1969andre1969 Posts: 22,150
    If you ever see me put my 1989 Cadillac Brougham up for sale at Carlisle, you know I'm in fierocious financial turmoil.

    I guess with me the real sign that the kitty litter hit the fan would be if I put my DeSoto up for sale. I have other cars I could unload first if I had to, but I vowed I'd take that one to my grave.
  • grbeckgrbeck Posts: 2,361
    I remember seeing those Corvettes, too, andre. I wonder what we'll see at this year's shows.

    I just hope that people selling cars begin to understand that just because a 1970 Malibu SS convertible with the 454 went for big bucks, doesn't mean that grandma's 1970 Chevelle sedan with the straight six is now worth five figures....
  • isellhondasisellhondas Issaquah WashingtonPosts: 17,946
    If you blow a wheel cylinder on those center plane brakes it may well take you to your grave indeed! ;)
  • andre1969andre1969 Posts: 22,150
    Oh, I've had experience in driving it with no brakes already. Trust me, it's an eye-opener. :surprise:
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,986
    There are no atheists in a car with a single circuit master cylinder failure. :P

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  • andre1969andre1969 Posts: 22,150
    Oh I learned how to use the handbrake and the "1" button on the selector REAL fast! And dual master cylinders aren't foolproof. When my grandma's '85 LeSabre lost its brakes, it lost them totally. That pedal would go right to the floor. And a foot-mounted parking/emergency brake isn't as easy to use as a substitute for regular brakes as a handbrake is. :surprise:

    That actually surprised me though...I thought that dual master cylinders couldn't fail totally. Until that LeSabre taught me otherwise. I had the brakes go out on my '76 LeMans about a year and a half ago, and they're starting to fail on my '67 Catalina. Both of those have dual master cylinders, and in both cases, the failures have been partial.
  • texasestexases Posts: 5,695
    Was it the master cylinder on the Buick that failed? Might have had partial failure, and then, when the other half's seal failed, nothing!
  • andre1969andre1969 Posts: 22,150
    I never really looked into what exactly caused that LeSabre's brakes to fail. We were thinking about getting rid of that car anyway. However, the insurance was paid up on it, and the emissions test was good for about another 6 months. My original plan was to wait until the emissions test came around, see how bad it was, and then make the keep it or ditch it decision. But that morning when the brakes failed was the straw that broke the camel's back, and we decided to get rid of it.

    They had been working just fine, nice and firm, no sponginess, no need to pump the brakes, etc. But then one morning I went out and hopped in the car to drive it to work, and when I put my foot on the brake to shift it into gear, the pedal went right to the floor.

    That weekend, we got it over to my grandmother's place so it would be off the street, at least. I had one of my friends drive my Intrepid and I followed in the LeSabre, so that if I did have a little boo-boo, at least it would be with my own car! It wasn't too scary of a trip. We just took it slow, and I tried to time the traffic lights the best I could, use the lower gears for engine braking, and only use the emergency brake when absolutely necessary.
  • euphoniumeuphonium Great Northwest, West of the Cascades.Posts: 3,347
    of the Financial Markets?

    I've found where the individual seller of a classic is ignorant of financial markets, doesn't care about being sensitive to the FM, but just wants so much for his wheels and doesn't care about anything else.

    On the other hand, the buyer is much more aware of FM and that does influence his purchase quite a bit. In this FM, prices should be down 25% over 2006.

    It is a buyers market this year. ;)
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,986
    I think buyers are always ahead of private sellers on market trends. Only dealers are sharply in tune with the market's ups and down because they are buying as well as selling and can't afford to be buried in their inventory. Dealers may ASK silly prices but they know full well the "real money".

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  • [quote]There are no atheists in a car with a single circuit master cylinder failure. [/Quote]

    Or clean underwear.....
  • hpmctorquehpmctorque Posts: 4,332
    Classic and collector car prices have been weakening, but are they off from their highs as much as the equity markets (+/- ~20%, depending on the index)? I know the really rare, high end cars hold their value best, but excluding the Bugattis, pre-WWII Benzes, Deusenbergs, and other cars of this caliber, how has the rest of the car market done in the past 12 months, three months?
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,986
    Seems to me it all depends on what you are trying to sell. I'd say the Mopars have flattened out but certainly aren't "cheap"; all the clones and mystery cars (is it a REAL SS?) are taking a beating. The quality stuff is still like gold, and some cars, like classic Ferraris, don't even seem to notice the crisis.

    I'd say most of the formerly "hot" cars are flat but not dropping, some of the neglected classics are becoming interesting to buyers (old MGs, TRs, etc), clones and retro-rods are dead.

    Woodies, if they are NICE, are still red hot.

    So I guess the carnage we were expecting in the high quality muscle car market has not happened (yet), but the droop we expected in questionable merchandise is real and its getting ugly. I think now's a great time to shop in the under $20K market.

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  • hpmctorquehpmctorque Posts: 4,332
    Thanks, Shifty. The under $20K market is the only one of real interest to me as a potential buyer, although I enjoy staying informed on the higher end segments too.
  • andre1969andre1969 Posts: 22,150
    Yeah, that's pretty much my range, too. IMO, $20K is still an awful lot of money for what is essentially a toy. Luckily, most of the stuff I like can probably be had for four figures...or even 3!

    Probably about the most "exotic" I'd ever get is a '57-58 Chrysler or DeSoto convertible. I imagine a really nice one of those would be pretty pricey these days. Even getting away from the Adventurers and Letter Series 300's, I'm sure even a Firedome/Fireflite or Windsor/New Yorker convertible would set me back quite a bit.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,986
    Yeah, 50s ragtops are pretty pricey because of a) rarity and b) the cost of restoring them. You can get just about any part in the world for a '66 GTO convertible but try and find something for a '56 Chrysler. Good luck.

    So anything in a drop top Mopar that's still decent from the 50s, you're gonna have to pay for. But they have to be really NICE to bring good money. A ratty 50s drop top is just a ratty 50s drop top and a hard sell---the costs of restoration are daunting.

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  • lemkolemko Posts: 15,207
    I remember watching the Barrett-Jackson auction and seeing a 1959 DeSoto Adventurer two-door hardtop go for 6 figures! It was nuts
  • andre1969andre1969 Posts: 22,150
    I remember watching the Barrett-Jackson auction and seeing a 1959 DeSoto Adventurer two-door hardtop go for 6 figures! It was nuts

    Yeah, that kind of stuff is WAY out of my price range. Maybe if I was so filthy rich that I could never spend it all, but there's no way I'd mortgage up the house that much for a car! Although, if the Fed keeps dropping rates the way they've been doing... :P
  • euphoniumeuphonium Great Northwest, West of the Cascades.Posts: 3,347
    Asking if you've seen for sale: 1947 Chrysler New Yorker, Highlander, convertible.

    It has the Scotch plaid/Merlot leather interior & the body is a "woodie". :) :) :)
  • andre1969andre1969 Posts: 22,150
    I don't think I've ever actually seen one for sale, but there's usually one or two on display at Fall Hershey and at Das Awkscht Fescht, a show near Allentown PA that's put on in early August.
  • hpmctorquehpmctorque Posts: 4,332
    To those of you who follow classic and collector car prices, has the high and rising cost of gasoline had a noticeable effect on the prices of collector cars, other than, maybe, the rare and very expensive rare ones?
  • euphoniumeuphonium Great Northwest, West of the Cascades.Posts: 3,347
    More than affecting the prices asked, the cost of fuel seems to deter somewhat the collector from traveling previous long distances to show his beauty. This is related to the family who will be staycationing this and future holidays or perhaps camping within 50 miles of home. Forget the Ocean, the lake is closer.

    Collector car prices are softer now, but few are dumping their rides as they don't want to take a soft price for their wheels. It is a wait and see attitude.
  • andre1969andre1969 Posts: 22,150
    More than affecting the prices asked, the cost of fuel seems to deter somewhat the collector from traveling previous long distances to show his beauty.

    A few people in one of the online Mopar clubs I'm a member of commented on just that. They said that because of the high gas prices, they're going to cut back on some of the car shows they go to.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,986
    I think it will affect the "cheap and cheerful" type of collectible, like a 70s or 80s V8 sedan or barge-like coupe (Lincoln, etc) since these buyers are high dollar people to begin with. But I don't think a person shopping for a $50,000 restored 60s GTO is going to care about gas prices, no.

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