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Correlation Between Classic Car Prices and Financial Markets

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  • fintailfintail Posts: 33,567
    And a funny thing...the Dutch and Belgians - the former especially - seem to have a thing for 60s and 70s American luxobarges. Lots of that material has been shipped there. A fair bit of tailfinned 50s stuff has made it to the continent too.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 44,538
    Yes the gaudier and showier the better. I guess in a country where flamboyance has been somewhat suppressed, a '59 Caddy makes quite a splash. It would be like the reverse effect of being modest and shy in Las Vegas.

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  • fintailfintail Posts: 33,567
    Yeah, if you drove around a major European city in a 59 Caddy convertible, you'd get more attention than in a Lamborghini.

    The last Dutch used car periodical I had was full of surprising things - big old 70s GM sedans, Chrysler Cordobas, whale Thunderbirds, 70s wagons.
  • omarmanomarman Posts: 695
    I can think of possible reasons for this, but why did this happen?

    There's an old but still interesting article online about the Ferrari market roller coaster ride back in the 80's. "When Japan Ruled the World"

    Here's a GTO that sold to Japan for $13.3 million plus commission in 1989. Five years later it sold to an American for $3.5 million:
    image
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 44,538
    ouch! And now it's back up over $10 million again (presuming it's a correct car). Sky's the limit on those babies. There are only so many to go around, even if you HAVE more money than God---you can't have one unless you raise your bid....up and up to ????

    Even at those rarified heights---it's still the supply and demand formula setting the price.

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  • andre1969andre1969 Posts: 21,902
    A '64 Olds 98 convertible? A nice one? Hey, now you're talking my speed. Anyone snap any photos of it?

    Yeah, it was in very nice condition. It was dark metallic green. Hard to tell the exact color as it was under the pavilion in the shade, but I'd say it was a bit more "forest", as opposed to "olive". I think I took a picture of it. I'll let you know when I get the pics off the camera and post them. I've been really lazy about that this year. :blush:

    I think all this improved technology helps breed laziness. I remember not that long ago, the camera I used could only hold something like 150-200 pictures on one memory card, so I had to clear it off occasionally to make room for more. Well, the camera I use now holds over 1000, depending on the resolution. So, there's not as much hurry to clear 'em off.
  • lemkolemko Posts: 15,145
    Heck, that car pales to the drop-dead gorgeous 1970 Cadillac Sedan DeVille that was there earlier! If that car had been a 1969 model, I'd have gone for it!!!
  • parmparm Posts: 723
    Would love to see the photos for that '64 Olds 98 convertible, but don't sweat it if it doesnt' work out. Holy cow, for $35K it better be the best one on the planet. Does anyone know if it sold, or did the owner take it back home with him?
  • andre1969andre1969 Posts: 21,902
    Does anyone know if it sold, or did the owner take it back home with him?

    Well we were only there for the day on Saturday, but it was still there that evening when we left. I have a feeling that it didn't sell. I'm going back up there for Hershey tomorrow, so who knows...maybe it'll be there?
  • hpmctorquehpmctorque Posts: 4,187
    edited February 2012
    Both major domestic equity indices have posted strong recoveries from their '09 lows. Shifty, or anyone who follows prices, can you give us an update on classic and collector cars, including the more affordable ones that middle class enthusiasts can afford? Thanks in advance.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 44,538
    Well in the "affordable" range, I'm seeing more interest in clean mid-70s domestic coupes (pre-downsizing I'd guess you'd say), and in full-size wagons if they are more luxury/highline models.

    Sporty 80s/90s cars like Mazda RX-7 and Toyota MR2 are still dirt, dirt cheap, and for lovers of old British stuff, the Spitfire and MG Midget give you traditional British good looks and summer fun for under $5,000 bucks.

    Many of the late 70s corvettes are still unloved, and the early C4s are well under $10K for very decent performance (in the C4) and excellent handling. Build quality? Not so great.

    For German car lovers, BMW 2002s are still affordable, especially the heavier-bumpered 74-76 models. Their successor, the BMW 320i, can be had almost for free these days.

    I never thought I'd see the day, but the porky 71-73 Mustangs, which nobody used to like, are being pulled up to respectable numbers by the demand for the earlier Mustang models. The 71-73 Mach 1s with the smaller engines, like say a 351, could be had well under $20K for a decent one.

    you can even get a decent buy on a 60s Camaro if you're willing to go for a 6 cylinder automatic, which are only purchased these days as donor cars for a big block project.

    Alfa Romeos are getting very pricey, but a mid-80s Spider is still a bargain at around $6K, or a good looking Fiat 124 at $4K (except for the fuelie turbo model). The lovely GTV coupes are pushing past $20K and higher, so we won't see any bargains there anymore.

    The "high end" cars, $75,000 and up, seem to be doing very well these days.

    Hotrods, clones, kit Cobras, unfinished project cars---all still bargains right now.

    Postwar (WW II) 4-doors are still affordable if you want a 40s or 50s car.

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  • hpmctorquehpmctorque Posts: 4,187
    Regarding BMWs, I think E30s can be great buys for someone looking for something newer than the 2002 and 320. I also think they're somewhat better suited for today's roads than those older models.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 44,538
    True true but they are rather ubiquitous and not very distinctive in styling, so they kind of get lost out there.

    I have a friend who powered his 2003 with an M3 motor---that's a nice combo.

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  • hpmctorquehpmctorque Posts: 4,187
    Well, okay, I guess I'm influenced by the fact that when I see one I miss the one I had.

    I happened to see a maroon 325i 4-door in someone's driveway tonight, that by the light of the moon and my headlights seemed in nice condition. Mine was a black 2-door with 5-speed and 126,000 miles when I sold it, but I don't mind the 4-doors. I suppose the 4-speed automatic wouldn't be bad with the torquey ETA engine, although I prefer the manual.
  • andre1969andre1969 Posts: 21,902
    Both major domestic equity indices have posted strong recoveries from their '09 lows. Shifty, or anyone who follows prices, can you give us an update on classic and collector cars, including the more affordable ones that middle class enthusiasts can afford? Thanks in advance.

    I'll be curious to see how prices are at the various car corrals this season. It does seem like, for the past few years, prices have become more reasonable (although that doesn't necessarily mean "reasonable"!)

    Even though the stock market has been rallying of late, I don't know if that has much of a bearing on your typical middle-class car enthusiast. I remember back in October, 2007, which was when the market peaked before the "Great Recession" kicked in, there was a sort of fear in the air at the Fall Carlisle swap meet that year. You could almost smell it. Sellers were cutting prices, complaining about the economy, buyers weren't buying. And, I don't know if this is any sort of economic barometer, but there were a lot of Corvettes for sale at the show that year. Usually, you don't see that many at the Spring/Fall swap meets, because they have a show in August dedicated entirely to the Corvette.

    I'd imagine that a lot of middle class/blue collar/etc enthusiasts have also been taken out of the market, over the past few years. A lot of people lost their jobs and had to raid their 401k, IRA, and other assets, at a considerable loss, just to make ends meet. Chances are, many of those people will never completely financially recover.

    Checking the local real estate listings, it looks like about 3/4 of all listings in my neighborhood are short sales. And those that aren't appear to fall into two categories: 1) people who have lived in their homes a long time, well before the run-up in prices and 2) listings that probably will become short sales or foreclosures, but for the time being are priced way too high, because of the amount owed on them. So, it looks like that HELOC gravy train has left the station.

    So, even though the stock markets have made some major gains, a lot of that easy money for the masses has dried up. I'm sure the high-end market, Barrett-Jackson and the like, is doing fine, still getting drunk and over-bidding on cars like they're the Great Gatsby or something. But, they're usually not the types hanging out at Carlisle and similar places.

    I'm thinking about getting another car this year. The common sense side of me is telling me to get something new and fuel-efficient, like a 4-cyl Altima, Fusion, etc. But, there's another part of me that is thinking about seeing if there's something that catches my eye at Carlisle this year.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 44,538
    I haven't seen much panic selling. If anything, people are sitting on their cash more, and bargaining a bit harder when they do bite--but they are still shopping.

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  • euphoniumeuphonium Great Northwest, West of the Cascades.Posts: 3,321
    I'm constantly amazed at the number of common looking guys having the money to afford the purchases made on that show. And while observing the process I think, "What Depression?"

    Remembering there are a few buyers (for others) with boyish smiling faces, the majority are old men with younger women paying through the nose for the car she wants as well.

    Not all could be retired government employees with unlimited retirement funds, forever. ;)
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 44,538
    Well there's been a tremendous transfer of inherited wealth in the USA in the last 10 years or so, so that might explain it. I certainly know a lot of people like that.

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  • fintailfintail Posts: 33,567
    That's true. The greatest generation has been dying off en masse, and because of their depression era childhoods, a lot of them were "thrifty" (to put it nicely) and socked away savings and other investments. That generation beget the boomers, who are still spending like it is going out of style. My generation is the children of those spenders, and we won't benefit so much from parental largesse. My mother will inherit more than I, and I will wager everything that's a standard pattern.

    I wonder if there will be much market for a lot of these cars once the boomers are gone, especially if the economic spectrum continues to devolve.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 44,538
    No I don't think so. The collector car hobby is an end game, for sure. I mean, how many people collect stagecoaches?

    it's not like the horse lovers or dog lovers, where each generation can renew the same adoration for the object of their desires. Lots of young people could care less about old cars---I mean, they'll point and say how neat they are and all that, but restore them, or pay $80K for one? I don't think so.

    it's hard to say, but I'd guess the car hobby will devolve back to what it once was before mass media whipped it into a frenzy. You had the Model T and Model A people quietly doing their thing, you had some car museums, and you had a few wealthy people collecting historically significant cars that were hand-built works of art.

    But really, cars built after the 1930 are slammed together mass produced products, and I just don't see the inheritors of these cars wanting to care for them.

    So then you'll have a tremendous glut of old cars, which will drive down prices, which will dampen the motivation of the "investors", which will shrink the hobby, which will make lavish car shows untenable, etc etc.

    They'll always be people who love old car, in the same way that a niche right now loves brass era stuff---but it'll be a lot smaller group of people---maybe 5% of what it is now, IMHO.

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  • fintailfintail Posts: 33,567
    I wish brass era stuff would collapse, I have always loved Brighton era cars. But there seems to be more than enough demand to work up the small supply.

    In another 40 or so years, I suspect a lot of these muscle cars that people have chased will be real white elephants, and common cars will simply be relics. Model T-A era stuff is going that way already, and when the boomers are gone, few will want it, I think.
  • lemkolemko Posts: 15,145
    As long as andre1969 and I are around, there will be a demand for big V-8 RWD 1970s and 1980s domestics! :P
  • fintailfintail Posts: 33,567
    There will be enough fetishists for those things to keep them above scrap value anyway. There's a contingent of Europeans who also love those cars, so you might have a little competition so long as oil doesn't run out. But, the days of 6 figure Chevelles and the like will eventually become like a weird dream.
  • hpmctorquehpmctorque Posts: 4,187
    edited June 2012
    From AutoWeek...

    "German courts rule on status of rare Mercedes-Benz 500K roadster

    RM Auctions
    1935 Mercedes-Benz 500K roadster: object of desire, source of contention

    By: Graham Kozak on 6/01/2012

    'The saga of a rare 1935 Mercedes-Benz 500K roadster has taken yet another intriguing turn. German courts have ruled that the vehicle is the rightful property of German industrialist Hans Prym's grandchildren because it was illegally seized from Prym in 1945.

    Frans van Haren can't be too happy with the ruling. The Dutch businessman and vintage-automobile enthusiast paid $3.76 million for the car at the 2011 RM Monterey auction, only to have it impounded in March when he attempted to exhibit it at the Techno Classica Essen. He now stands to lose both the car and the millions he spent on it.

    The top-of-the line 500K, one of only 342 built (of which 29 were roadsters), was purchased new by wealthy German industrialist Hans “The Zipper King” Prym. Whether obtained legitimately or claimed as war loot, the car left Prym's possession in 1945 while he served a war-related prison sentence.

    The car was then shipped to the United States, where it was owned by a series of collectors. It even spent time in the auto collection of the Imperial Palace casino in Las Vegas for a while before turning up for auction last year at Pebble Beach.

    The $3,767,500 that van Haren forked over for the Benz was below the $4 million to $5 million preauction estimate published by RM, but considering the trouble that ensued, it's hard to call the purchase a bargain.

    By bringing the car to Essen, Haren unwittingly exposed his magnificent Mercedes--back in its home country for the first time in nearly seven decades--to immediate seizure (or repatriation, depending on one's perspective) by German authorities. German law dictates that the 30-year statute of limitations that would normally make the vehicle immune to seizure is only in effect while it is physically in the country. Since the car spent its postwar years in the United States, the 30-year period began only when the car was returned to Germany. Upon its return it became eligible for impound.

    There's no word on whether Haren plans to contest the court ruling or whether he has any grounds to do so.' "
  • fintailfintail Posts: 33,567
    edited June 2012
    I'd hope that anyone with so much money to throw around would smart enough to be leery of anything that was caught up in the rampant looting in Europe by both sides, before and after VE-Day, whether it be art or anything else. Documented prewar and postwar ownership in the same hands would be the only way to go. I will say I am not disheartened to see Germany putting a foot down about the war booty.
  • hpmctorquehpmctorque Posts: 4,187
    edited August 2012
    Buy High, Sell Higher

    "INVESTMENT GRADE Ferraris like the 400 Superamerica and 365 GTB/4 have outstripped gold in returns.

    FOR solid financial returns, gold seems nearly alone among investments that are legal — and fathomable — to those of us who are not bankers. Gold’s performance over the last five years has been overwhelmingly positive, its price per ounce more than doubling since 2007.

    But the skyrocketing prices of certain Ferraris built from the 1950s through the 1970s have in some instances made gold’s gaudy rate of appreciation look like a passbook savings account at the neighborhood bank branch.

    'People who have been in the collectible automobile market and originally bought for the love of object are now looking at it as a diversification tool and a strategic part of a well-organized investment portfolio,' Claiborne Booker, an independent financial consultant based in Virginia, said.

    Certainly, Ferraris are not the only vintage vehicles whose values have outstripped inflatiand conventional investments, but they have been one of the most reliable market indicators among collectible automobiles. And their sales at auctions are closely followed, so there is a reliable track record on which projections can be based.

    Examples of impressive returns can be found in several Ferraris consigned to the auctions that took place here in the days around the Pebble Beach Concours d’Élégance. Gooding & Company of Santa Monica, Calif., offered a rare 1962 Ferrari 400 Superamerica Coupe Aerodinamico, one of only about 14 built by the coachbuilder Pininfarina, each car individualized for its first buyer. No two were precisely alike in their details.

    That car was offered with Gooding’s presale estimate of $1.75 million to $2 million; it sold for nearly $2.4 million, including buyer’s premium. The same car sold nine years ago at a Barrett-Jackson auction in Los Angeles for $432,000. That represents a $2 million return in less than 10 years, a period that some investors consider a lost decade.

    Perhaps those results could be attributed to good luck or great intuition. But the timing of the buyer in 2003 could scarcely have been better: shortly after the red Superamerica was purchased, prices for the model began to rise, indicated by sales of other Superamericas: a $560,000 sale of a similar car in late 2005, followed by a jaw-dropping $1.6 million sale in Pebble Beach in 2008 and culminating with a $2 million sale at RM’s Monterey auction last year.

    The year-over-year difference between this year’s sale and the one last year is an impressive $400,000. Condition, ownership history and the circumstances of the sales are all influencing factors in the price, surely, but the trend is still unmistakable.

    Later, higher-production Ferraris like the 365 GTB/4, commonly known as the Daytona, have also seen increases in price exceeding that of gold over the same period. The Daytona was one of the last models whose development was influenced directly by Enzo Ferrari. They’re brutish, exceedingly handsome and quite fast even by today’s standards; with a top speed of 172 m.p.h., the Daytona was the fastest production car available for much of its time on the market.

    RM Auctions of Chatham, Ontario, offered two Daytona coupes this year, a black 1973 model and a bright yellow 1972. The yellow car had a relatively active auction history over the last decade. The same car was offered at a Bonhams auction in Massachusetts in 2003 where it failed to sell on a high bid of $97,000. Six years later, Bonhams once again offered the car, this time at its auction in Carmel, Calif., where the seller again declined the high bid — which, at $210,000, was more than double that of the last time out.

    This year, the presale estimate for the same car was $375,000 to $475,000. The third time across the block was clearly the charm, and patience paid off: the yellow Daytona sold for $396,000, while the more staid black car went for about $30,000 less.

    The impressive returns have not been limited to Ferraris and other rare European exotics. Following Carroll Shelby’s recent death, there were an unusually large number of Shelby automobiles offered in Monterey.

    There were predictions of a Shelby feeding frenzy, but in reality the market seemed to have taken Mr. Shelby’s death at age 89 into account quite some time ago. Even so, over the last 10 years, the most collectible Shelbys have done quite well.

    For instance, RM’s auction here included the sale of a 1965 Shelby Mustang GT350 R, a rare competition version of the GT350, for $990,000. Three years ago, in the depths of the recession, Russo & Steele sold a similar car in Monterey for just $396,000. In 2003, RM Auctions also sold a GT350 R for $206,700.

    To maximize the return on a Shelby, however, one’s timing had to be astute —either getting into the market in the early part of the last decade or buying after a recent, but apparently short-lived, correction. It should be noted that at the prerecession height of the market in 2007, these cars were trading for prices near what the RM car brought.

    Just as gold has had its share of peaks and valleys, so have collectible automobiles. Ferraris in particular have had periods of considerable volatility.

    According to Michael Sheehan, a Ferrari historian and dealer, the market has imploded twice in the last 30 years or so. The first time was in 1979, and then it happened again — spectacularly — in 1990 after a sharp downturn in the stock market, coupled with the bursting of the Japanese real estate bubble, began a slide in the Ferrari market. By 1995, some models lost 75 percent of their value.

    'There’s no sign of an imminent bubble burst in the current market, but most people don’t realize that some Ferraris still haven’t regained their 1989 highs,' Mr. Sheehan said.

    Naturally, this raises questions about the wisdom of buying a classic automobile for its investment potential — after all, there are storage, maintenance and insurance costs to consider — rather than the pleasure that ownership brings.

    Drew Alcazar, founder of the Russo & Steele auction house, said in a telephone interview that he had witnessed three previous boom periods in the collector car market before the current one.

    'Some of the really big cars eclipsed high-water marks from a few years ago that we didn’t think would return this soon,' he said. 'While there are without question certain cars that are blue-chip cars, if you wake up tomorrow to find that what you paid XYZ for is now worth five bucks, but it still puts a smile on your face, then you’re doing things right.'

    'You should do your due diligence and then buy what you like,' Mr. Alcazar said."
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 44,538
    What people have to realize about articles like this is that they are talking about very VERY scarce objects, not '57 Chevys.

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  • hpmctorquehpmctorque Posts: 4,187
    Agreed, and it says nothing about the average collectible. At least '57 Chevys are in relatively high demand, while still being affordable to a wide segment of collectors. But how about, say, a (non-convertible) '57 Dodge, Mercury or Rambler? Not much pricing power over scrap for these, I presume, unless they happen to be the rare example in immaculate condition.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 44,538
    they'd have value but it would be rather stagnant value.

    Making money on cars as investments is like playing the stock market to make money---you have to have a pile of cash and you really have to know what you are doing. It's not a game for beginners.

    Also, a rare Ferrari in bad condition can cost a frightening sum to make right.

    One thing the article doesn't mention is that very rare cars can be counterfeited. you might not think it'd be worth it to fake an entire automobile, but if $5 million bucks is at stake, and you have a VIN plate, you can have everything reproduced by craftsman. After all, many of these cars were made by hand in the first place and many parts, like engines and frames, were originally fitted from far more common "related" cars made in greater numbers.

    Always beware of a rare car that suddenly "appears" with no prior history.

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  • hpmctorquehpmctorque Posts: 4,187
    Will the mileage standards that were just introduced eventually affect the supply and demand for collectible cars? If so, how? My guess is that it'll have a long-term effect, simply because it'll result in a decreased supply of the cars we and young people of today know, and the cars the next generation will know. I believe that some effect will be seen before 2025.

    Please see News $ Views for a broader discussion about the new mandate.
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