What Do The Experts Predict For The Classic Car Collecting Market?
The value of classic cars rose by 16% in 2015 according to one report, hitting record highs midway through the year. But experts agree that the market has somewhat levelled out of late, with the health of the market dropping significantly in 2016. Though still indisputably prosperous, a marked ‘cooling off’ has been seen since the frenzied auctions and sky-rocketing prices of previous years.
Dietrich Hatlapa, Founder of the Historic Automobile Group International (HAGI), tells Classic Driver: “Generally speaking, demand hasn’t tailed off, but there has been a notable increase in supply”. With auction houses and private dealers putting on more sales than ever, sellers have been able to demand high estimates for their cars in an effort to populate catalogues. Of course, an increased supply eventually has an effect on prices; Gord Duff, Car Specialist at RM Sotheby’s, points to air-cooled Porsches and sports cars from 80s and 90s as an example which flooded the market in recent years until recently significantly cooling in price.
Whilst previously sought-after models have somewhat oversaturated the market, collectors’ appetites for rarer but more recent sports cars and supercars, such as limited edition LaFerraris, GT3 RSs and 458 Speciales, is on the up says dealer Gregor Fisken. These purchases are especially likely to be popular with first time buyers, entering the collector’s market on ‘best-of-the-best’ cars.
Of course, a period of economic uncertainty does not make ideal trading circumstances for any market, let alone a high value luxury one. Last summer’s news of Brexit represents unchartered territory for the UK and European financial markets. How might Britain leaving the EU affect the classic car trade?
If any free trade restrictions come into play after we leave, buying or selling cars in EU countries could suddenly cost much more due to additional taxes and duties. Around 10%-20% of UK dealer and auction house sales are currently made to buyers outside the UK. Any dramatic change in exchange rates could also impact whether the UK or Europe is the best place to buy classic cars, for example to American investors.
It could be argued that classic cars are one of the few commodities which are not too closely linked with financial markets, as they are usually collected by passionate enthusiasts rather than investors who are simply focused on profit. Therefore a period of low return on investment, whether caused by Brexit or a slowdown in buying and selling for other reasons, is not likely to put off serious buyers. The majority of collectors will continue to operate on the market as it is also their hobby, with vehicles viewed as prize possessions rather than simple investments.
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