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Correlation Between Classic Car Prices and Financial Markets

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  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,974
    Well these "mandates" have little to do with what *actually* happens in the real world. They are goals that are easily avoided.

    the biggest obstacle to the future of collectible cars is, I think, that nobody will want the cars we produce today, with the exception of a few rare birds and some of the limited production high HP models.

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  • andre1969andre1969 Posts: 22,142
    To give a rough point of reference, the 2012 Fusion hybrid gets a combined rating of about 54.1 mpg, while the Camry hybrid is around 54.8. Now these are the raw laboratory numbers, which are the ones they use for CAFE fleet averages, and not what you see on the window sticker. The window sticker would probably read about 43-44 mpg combined.

    There will still be high-powered, thirsty vehicles, but they'll be sold in fewer numbers. And the auto makers will probably just do what they've always done...sell more high-efficiency cars, even if it's at a loss, to offset the more profitable cars.

    For instance, a 2012 Nissan Leaf, which is all electric, actually has a raw fuel efficiency rating of 141 mpg. Maybe they do an estimate of how much fuel would need to be burned to generate the electricity it uses? Anyway, the 370Z gets about 27 mpg combined.

    No, you'd think that if they sell three 370Z's and one Leaf, that average would come out to around 54.5 mpg. But, they use a weighted average, which takes into account how much fuel is actually used, and not just the average of the EPA ratings. I think the weighted average of three 370's and one Leaf would be around 33.9 mpg, if I'm doing the math correctly.

    With a weighted average, in this case, I think they'd have to sell two Leafs to cancel out one 370Z. In this case, the weighted average would be around 58.8 mpg.
  • hpmctorquehpmctorque Posts: 4,332
    edited August 2012
    Thanks for the explanation. The problem, as I see it, is that the demand for Leafs and similar vehicles is low, even with government incentives. We'll see how Tesla and Fisker do.

    I'll acknowledge that I'm against government incentives, and special access to HOV lanes and parking privileges since the rest of us have to pay to sell vehicles that have low appeal.
  • texasestexases Posts: 5,694
    "the demand for Leafs and similar vehicles is low, even with government incentives"

    GM just had to shut down Volt production again, they've sold something like 10k, hoped to sell 40k/year. So yeah, how many $60k - $100k Teslas are they going to sell?
  • hpmctorquehpmctorque Posts: 4,332
    It'll take a major breakthrough in battery or recharging technology for electrics to become competitive with internal combustion engines. In the meantime ICEs keep getting more efficient, so they're a moving target.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,974
    thanks for all the comments...but I'd like to ask that we not deviate from the original intent of this topic--which is the relationship between classic car prices and economic market conditions.

    I think that Automotive News has plenty of topics where your discussion might fit in.

    thank you!

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  • michaellnomichaellno Posts: 4,300
    Ok, I'll throw a question out to the group here ... (I just found this topic today).

    If you had $5K to spend on a toy (like fin's fintail), what would you get? Not a project, something that can be driven on weekends and nice summer evenings without breaking the bank for maintenance.

    60's US iron? Something British? German?

    What if the budget was upped to $10K?
  • fintailfintail Posts: 34,310
    I don't know what to suggest - depends on your driving style, aesthetic preferences, and what size of car you want. But in the under 10K market, there is a lot of nice enough 50s-70s metal to choose from.
  • lemkolemko Posts: 15,205
    For $5K:

    I would probably buy the nicest 1977-1979 Cadillac, Buick, or Oldsmobile C-Body I could find.

    For $10K:

    I'd start looking for the nicest 1969 Cadillac Fleetwood out there.
  • texasestexases Posts: 5,694
    I might try and find a clean 1st gen Scirocco or GTI, just a lot of fun. Not many around...but I did see a Scirocco on the way home today, with the whole 80's thing, louvered rear window, etc.
  • hpmctorquehpmctorque Posts: 4,332
    edited September 2012
    I've never owned a Corvette, so for $10,000 I'd take my chances on one.

    The $5,000 car would be something impulsive out of Craigslist that caught my fancy. It could be almost anything. One example would be a nice old Prelude. On the other end of the specturm it could be a Buick Regal or Pontiac Grand Prix with the supercharged 3800.
  • hpmctorquehpmctorque Posts: 4,332
    edited August 18

    A 1962 Ferrari 250 GTO Berlinetta recently sold for $38.1 million at Pebble Beach. That's a record price, and it seems like crazy bubble territory to me. How many super rich greater fools can there be at that price level?

  • hpmctorquehpmctorque Posts: 4,332
    Classic car prices seem to be following the stock market to new records this year. Question for those of you who know more about the history of these two asset classes than I do: It this relationship typical?

    It makes sense to me that today's super low interest rates are supporting classic and collector car prices, in addition to the stock market, but what other factors are propping old car prices? I look for prices to weaken, maybe significantly, when interest rates normalize.

    Would you predict that classic and collector are prices will be higher or lower in two years?
  • berriberri Posts: 4,270
    I don't know if they are correlated, but the economic environment may play into it. I guess I'd want to know if the buying is spread around different demographics, or primarily older buyers. The latter may just have more disposable income and it is a growing segment in the US, so it may be the driver here rather than financial markets per se?
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,974
    All this hoopla is taking place mostly in the land of the ultra-rich. There are some classes of collector cars that are dying right now, and others that have remained relatively stagnant for the last 5 years. Judging the classic car market by a few hot stocks is no more accurate a bellweather than judging the current stock market's health by glancing at today's top ten gainers.

    Unless you have a collector car so rare, so utterly unobtainable, so magnificent that it aproaches the craft level of true Art, then all you have is a "toy" that can lose 1/2 its value in a day's time.

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  • hpmctorquehpmctorque Posts: 4,332

    There are some classes of collector cars that are dying right now, and others that have remained relatively stagnant for the last 5 years.

    Which classes are dying and which are stagnant?

  • fintailfintail Posts: 34,310
    I think the classic car market is representative of current socio-economic trends in general - the top are doing maybe better than ever in modern history, a few bright spots in the middle, and a lot of stagnation and slow decline elsewhere. We are in a new gilded age today, and the top few are making out like bandits - not just the top few people, but things, too, whether it be real estate, art, cars, antiques.

    Stagnant or dying classes in particular are mass market prewar cars and earlier postwar mass market cars, as the enthusiasts have died off or are doing so. I think a lot of common prewar material was worth as much 30-35 years ago as it is now - not even adjusting for inflation. But had you bought a gullwing or certain Ferraris then, you'd be feeling pretty good right now.
  • berriberri Posts: 4,270
    All this hoopla is taking place mostly in the land of the ultra-rich. There are some classes of collector cars that are dying right now, and others that have remained relatively stagnant for the last 5 years. Judging the classic car market by a few hot stocks is no more accurate a bellweather than judging the current stock market's health by glancing at today's top ten gainers.


    So I guess rather than a correlation to the financial markets, it's more of a second derivative thing.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,974
    Well look at it this way. When you have the amount of money that some of these bidders have, a $500,000 car is essentially "free" for them.

    But to the question: Which car types are dying and which are stagnant?

    Dying: 1920s era cars (Ford Chevy, etc) that are common makes & 1946-54 domestics.

    Stagnant: Many 60s and 70s era "muscle cars" except the very rare optioned models. Also T-Birds, 60s "personal luxury coupes".

    Dying: Hot rods, except the ones built in the immediate postwar era.

    Stagnant: 2nd and 3rd tier collectibles, like Delorean, Avanti, Metropolitan, most "micro-cars"

    What's Hot: Rare European exotics from 50s and 60s, British motorcycles from the 50s and 60s, American Pickups up to mid 60s.

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  • andre1969andre1969 Posts: 22,142
    Just out of curiosity, what would an ultra-low mileage '77 Catalina sedan go for? We saw one at Carlisle, and then a week later at the Hershey PA swap meet. It only had about 1,000 miles on it. Here's a pic of it:



    It's a bit hard to tell in the shadows (I got a better pic of it at Hershey but haven't uploaded those pics yet), but it's brown, with a buckskin interior. I think it was vinyl, but can't remember for sure. Anyway, in those days I think vinyl was actually the upgrade, and I don't think the Catalina offered anything ritzier by this time...they wanted you to go to the Bonneville if you wanted luxury. It did have power windows, a bit of a rarity for a Catalina. It also had the 301-2bbl V-8, which is what the vast majority of them had, so nothing special there.

    Anyway, they wanted something like $10-11,000 for it. The '77 Catalina is actually on my list of favorite 70's cars. And if this sucker was in a better color (preferably green or blue) and had a better engine (350, 400, or 403), I would've been temped to make an offer. But, not $10-11K! I was thinking this one might be worth $5-6k? If it was just the way I wanted it, I might be willing to go with $7-8K, although even that might be a bit high?

    Another problem with a car like this, is that I'd want to drive it. And suddenly, the thing that gives it value goes away.

    I would guess that the market for old, everyday cars from the 1970's, no matter how nice, isn't exactly going anywhere.
  • fintailfintail Posts: 34,310
    That's a pretty cool survivor. What a change from the 76 models. But yeah, you could only drive it maybe several hundred miles per year - I guess if you got it cheap enough, maybe there wouldn't be much value to lose. 5-6K, why not?

    I think the malaisey big bumpers and detuned engines will always hamstring collectible values for cars of that era. Even many Ferraris etc from the time aren't particularly valuable.
    andre1969 said:


    Another problem with a car like this, is that I'd want to drive it. And suddenly, the thing that gives it value goes away.

    I would guess that the market for old, everyday cars from the 1970's, no matter how nice, isn't exactly going anywhere.

  • hpmctorquehpmctorque Posts: 4,332
    Since this Catalina is a $10,000 car, at best, and not a $50,000 one, so what if it's driven and loses some value? As this probably wouldn't be your daily driver, how much could it ever be worth with extremely low mileage versus, say, 20,000 or 25,000 miles, in 10 years?

    Also, while the Pontiac 301 V8 isn't known for its durability, if it's driven 3,000-5,000 miles per year, and is well maintained, it's likely to outlast your love for the car.
  • andre1969andre1969 Posts: 22,142
    Heck, I don't think I'd even put 1,000 miles a year on it! I'm 44 now, so my guess is that I have, at the most, about 46 driving years left in me (Granddad gave it up at 90, and my grandmother's cousin just turned 90, still drives, but doesn't think she'll be driving much longer).

    So chances are, that 301 might outlast not only my love for the car, but me, as well! And yeah, I do think it's a car that I'd get tired of, after awhile. As for the 301, I've heard that as long as you don't overheat it, let it run low on oil, go too long between oil changes, etc, it's not a bad engine. Of course, you shouldn't do that kind of stuff to ANY engine, but some engines can take more abuse than others.
  • fintailfintail Posts: 34,310
    Thinking of low value malaise era cars, this comes to mind - low miles, maybe the best year, lovely condition, and it brought 6K at auction. I still like this thing, that interior color is amazing, and the car is pretty, especially in the shot with the fog lights on. And it might never be worth more - 14mpg and disco chic can be a hard sell.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,974
    probably $5000 is all the money here. Probably the low miles just adds a headache to the deal.
    andre1969 said:

    Just out of curiosity, what would an ultra-low mileage '77 Catalina sedan go for? We saw one at Carlisle, and then a week later at the Hershey PA swap meet. It only had about 1,000 miles on it. Here's a pic of it:



    It's a bit hard to tell in the shadows (I got a better pic of it at Hershey but haven't uploaded those pics yet), but it's brown, with a buckskin interior. I think it was vinyl, but can't remember for sure. Anyway, in those days I think vinyl was actually the upgrade, and I don't think the Catalina offered anything ritzier by this time...they wanted you to go to the Bonneville if you wanted luxury. It did have power windows, a bit of a rarity for a Catalina. It also had the 301-2bbl V-8, which is what the vast majority of them had, so nothing special there.

    Anyway, they wanted something like $10-11,000 for it. The '77 Catalina is actually on my list of favorite 70's cars. And if this sucker was in a better color (preferably green or blue) and had a better engine (350, 400, or 403), I would've been temped to make an offer. But, not $10-11K! I was thinking this one might be worth $5-6k? If it was just the way I wanted it, I might be willing to go with $7-8K, although even that might be a bit high?

    Another problem with a car like this, is that I'd want to drive it. And suddenly, the thing that gives it value goes away.

    I would guess that the market for old, everyday cars from the 1970's, no matter how nice, isn't exactly going anywhere.

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