The final Hagerty Price Guide update of 2015 is due to be published on 10th December, and the figures make interesting reading.
In general, the market hasn’t grown at the same rate we have come to expect. The new Hagerty Classic Index (which tracks 50 influential classic cars) showed a rise of 2.8%, almost a third of what it was in the previous three months. The big question is why, and what this means for the market, if anything.
In one respect, an autumn slow-down is normal. There is usually a flurry of activity at the end of the summer with people buying cars to tinker with over the winter, but then there’s a natural pause. After all, who wants to buy a new classic when rain, snow and salt stop you from using it on anything but the odd sunny day?
On the other hand, I’ve detected a feeling, shared by many people from different areas of the classic car world, that the market may have reached a tipping point over the summer of 2015. The feeling was that the market was just getting a bit too silly, and that many people had just had enough.
Silly may seem a strong word, but I think it’s justified. The Hagerty Price Guide ‘Condition 1’ figure is supposed to represent the very best car of that particular model. But this summer, we have regularly seen cars offered for sale at prices that are well over, and sometimes double, our Condition 1 values.
“Ah,” I hear you say, “but sellers have always inflated their prices.” Agreed, most sellers will add in a bit of a fudge-factor to allow for a haggle, and I’m not talking about them. I’m talking about the cars that are so totally overpriced that they get shared on Facebook. You know the post: “Look what they’re asking for this Cossie/M3/Mondial!”
But-and this is the difference- I’m not just talking about sellers. We recently had a situation where an owners’ club valued a car for a client at more than double our Condition 1 value. It was an unexceptional car with no unusual history or pedigree, and it was a US-spec left-hand-drive model. We approached the club, showing the prices of all those cars sold at auction this year and a synopsis of our own insured values, none of which bettered our top HPG figure, let alone their valuation.
So how, if there’s a lot of people with various agendas wanting to keep values climbing ever upwards, have they managed to slow down? One answer is that things may have got more difficult for the speculators, which has given power back to the enthusiasts. We’re hearing of deals having fallen through because investors can’t get the finance in place, as banks tighten their belts even further. Ironically, we hear that one reason for this is that lenders feel that some of the classic car valuations they have been provided with in recent months may be overoptimistic; leaving them in a vulnerable position should the borrower default.
Most of the true classic car enthusiasts I know, no matter which marque appeals to them, have an instinctive feeling for the true value of a car. Sure, this varies over time, but in general it doesn’t tend to make huge leaps upwards. I think that a lot of these people either can’t or won’t pay the prices that were being asked for a lot of cars last summer. They have two options: sit on their hands and wait for prices to correct, or look for a more reasonably-priced alternative. I think we’ve seen evidence of both this autumn.
So what does this mean? Has the power returned to the enthusiasts, will speculative pricing subside and will the growth in values stabilise into the spring of 2016? Or will the New Year bring another year of crazy price hikes? Only time will tell; the first indications will be from the January auction extravaganza in Scottsdale, Arizona, and we’ll bring you all the news from there as it happens. In the meantime, enjoy your classics for what they are, and if we have a few sunny days over the next couple of months, maybe I’ll see you out on the roads.