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.
Highlights from the report:
Jaguar E-Type-Hype Calming
A good example is the Jaguar E-Type Series I 3.8 Roadster. This car has been a byword for significant price increases over the last few years, but this update has shown values of a Condition 2 car rise from £118,000 in July to £121,000 (a gain of just 2.5%). At auction, of the 38 Series I E-Types (of all models) we’ve seen go to auction from June to October, a total of 19 achieved the lower estimate or under, or failed to sell. Only nine achieved their top estimate or higher.
Other Jaguar models have had mixed fortunes. Mk I Jaguars have performed well at auction, although people want real quality: two Hawthorn replicas, both prepared by very well-known and respected preparation companies, sold very strongly (£66,000 and £51,750 respectively). Meanwhile the Mk II Jaguar did not fare so well- the average values of the 3.8 Saloon were unchanged in the three months to December.
Porsche Growth Mixed
The growth of the Porsche market was one of the big news items over the spring and summer of 2015, with some huge prices being paid- the £393,500 achieved for the ex- Richard Hamilton 911S at the Bonhams Festival of Speed sale being one of the high points. Since then, whilst growth has continued, the market has calmed, especially for 1960s and ‘70s Porsche 911s. For example, the Porsche 911 SC 3.0 Coupe has gained just 5.5% in the period (£38,2000 from £36,2000) compared to a huge 35% increase in the previous six months. The Porsche 928 GTS, which had risen firmly in value in the first half of 2015 slipped back slightly, losing 0.1% in value.
One model that bucks this slowing trend is the Porsche 911 996 GT3 RS. This car, new to the Hagerty Price Guide due to its young age, has just started to take off- one recently sold for £142,875, where a price of a quarter of this value would not have been unusual only 18 months or so ago.
Ferrari: Quality Still Sells
Top Ferraris are still in very much in demand. The ex- Richard Colton Ferrari 250 GT SWB and 275 GTB/4 were good examples of this- both well-known cars with excellent provenance and extensive history; both achieved superb results on the day for H&H Classic Auctions (£6.6m and £1.93m respectively).
Values of the Ferrari 308 GTB and Ferrari Testarossa, both of which have achieved significant percentage value increases over the last 12 months, have continued to rise, but at slower rates. The 308 GTB achieved an average gain of 6.5% in the last quarter (down from 10.4% previously) and the Ferrari Testarossa a rise of just 0.9% to an average of £136,250.
‘80s Cars Still Hot
Cars from the 1980s are still very much in vogue. These cars used to be called emerging classics, but we’ve come to accept that they now form the mainstay of many dealer and auction house catalogues. In particular, the BMW E30 M3 continued its spectacular rise, gaining a strong 14.4% increase (£31,800 from £27,800). The DeLorean DMC-12 was another, which gained 8.3% on average and with the very best examples now valued at over £50,000.
MGCs Are Rising Stars
Most MGs have been increasing very slowly over the period, with the exception of MGCs which have been moving upwards rapidly. As an example, the MGB-GT increased by 0.8% (£12,600 to 12,700) whilst in the same period the MGC-GT increased 10.9% (£15,600 to £17,300). Good examples of this previously rather unsung MG have been performing well at auction, with half of those selling for top-end of estimate or above.
Conclusion
The Hagerty Price Guide Q4 2015 shows the classic car market in the UK is still growing, but at a slower rate than in previous quarters. Some of this slow-down is seasonal, and values are expected to pick up again in Q1 2016.
