At the end of every year, we always ask ourselves the same question: what do we think will happen in the next twelve months in the UK classic car world? Here are Hagerty’s predictions for 2016.
The gap between top-flight classics and the rest will increase.
We’ve already seen this: while the Hagerty Price Guide shows a general calming of the classic car market at the end of 2015, sale prices of the most expensive classics (over £5m) have continued upwards. They are now being treated more as works of art: provenance and certification is key. Just as the gap between the rich and poor is growing, and so the market seems to be separating.
Manufacturers’ heritage operations will increase.
Jaguar, Porsche and Mercedes-Benz are leading the way with heritage operations. They have realised that there is money to be made from their back catalogue, and it could even help them sell modern cars. Others will surely catch on. We expect to see more ‘re-releases’ in 2016, following Jaguar’s success with the Lightweight E-Type.
The main market will slow and some values will fall.
The overall market will continue to grow but (other than the top end) most increases will be at a slower rate. The Hagerty Classic Index showed a rise of 2.8% in the last quarter of 2015, and although things will probably pick up a little in the Spring, we’re predicting a rise of about 4% in Q1 2016. Rising prices saw some models flood the market: post Enzo era Ferraris are a good example. We think this will drive prices down- watch Testarossa values over the next few months.
‘Bargain’ cars will increase most.
They are still there: Jensen Interceptors are surely undervalued, and we’ve been saying Maseratis are worth more than they achieve for ages. At the moment advertised values vary wildly. Surely 2016 will be the year that the market works out how to properly value these cars?
The term ‘classic car’ will continue to become more ambiguous.
Gone are the days when a classic car was something over 40 years old. Now people consider all sorts of vehicles a ‘classic’ whatever the age. Hagerty like the term ‘cherished cars’ for this reason: if you drive it infrequently (not as a daily driver), keep it properly protected and love your vehicle, then we’re interested, whether the car was built in 1900 or 1999. We’re now tracking the Aston Martin DB7 and the Porsche 911 (996) in the Hagerty Price Guide- the goalposts are changing.
Fewer speculators, more enthusiasts.
We’re hearing that some lenders are worried about the loans they have given against the value of classics. In short, they don’t really know the true value of the cars. Also with interest rates rising in the US and values fluctuating, suddenly borrowing money against a classic car for investment purposes doesn’t seem the sure thing it once was. Fewer speculators and more enthusiasts mean a more stable market- we like that.
Insuring your classic through a general insurer will become more expensive
We’re told that 60% of classic cars in the UK are covered under standard car insurance policies. Classic vehicles are such a complex area, with originality and provenance making such a difference to value, that these companies tend to weight their risk against the worst-case scenario, and their premiums are consequently high. By specialising only in classic car insurance, and with our own Hagerty Price Guide to support us, we’re able to understand that risk much better than most, and our premiums are consequently much more sensible.
So those are Hagerty’s predictions for 2016. Do you agree, or do you think we’ve missed something? What do you think will happen to the UK classic car market in 2016?