Firstly, whatever the market dictates, it will never erase the love and the passion of the car enthusiast, the true petrolhead but it may deter the car Investor or perhaps should we say the asset investor!!
Driven by the world pandemic of COVID19 and the financial devastation this has and continues to cause, It’s now time I put a view on the subject of classic and sports car values and how these could be effected in the future.
I have listed below the four main questions I am faced with on regular occasions.
Most of these questions come from the true car enthusiasts either because they are wanting to purchase a car or because they are selling or thinking about selling their current car.
It also has to be said that when a true car enthusiast wishes to make a purchase, investment and value is often not the core decision as to why they wish to do this, it’s more to do with the love of the car and the lifestyle which it brings.
Now let’s get into our four main questions
Is the classic and retro car values:
- Still increasing?
- Is it crashing?
- Is it at its peak?
- What is the future?
Starting with the first question, Are classic and retro car values still increasing? Well I’m afraid I have to answer this in a bit of a long winded way. Why? because there are many very rare and valuable cars around the world and when I say valuable I mean cars that start at £500,000 through to 30 Million so for me to try and answer this question I want to concentrate on values from £2000 – £100,000.
Are classic and retro cars still increasing? … In a nutshell, No! but before I explain, remember a car is worth what someone is willing to pay and what the owner is willing to accept. If two parties agree on a price that is what a car is worth.
Ok, before COVID19 struck the classic car market was in my opinion in decline for most makes of cars, and even at a greater rate for the top marks such as Ferrari, Lamborghini and McLaren to name a few.
You may recall I wrote a series of blogs over the past three years called “classic cars to watch” and this was my very first blog featuring the Ferrari Testarossa. This blog alludes to the fact that in 2015 I had seen a Testarossa sold at an auction for £45,000, the blog also mentions that it was in our opinion this car will increase in value, which it certainly went on to do in the two or more years from when I penned that blog. My estimation of value did peak at around £180,000 and we know many Testarossa’s changed hands for these amounts or thereabouts.
In early 2019, I started to see a slight change in values, and it was at this time I believe the market had already peaked and have been in decline ever since. Of course there are exceptions to many, but as a whole we were seeing very slight decline in values, many of which were a little noticeable but very relevant.
I have to go back to the Ferrari Testarossa and the 308 as examples because I have first hand experience of these two models.
In the peak of 2018/9, my Argento 308 GTS Ferrari was in my opinion valued at between £70,000 – £90,000, but like many of us I did not sell it at the time, thinking, “wow” this car could be a £150K car if the market continues to rise like it had over the last few years, and just to prove my point in 2004 I sold a 308 GTB Ferrari for £22,000, fourteen years later (2018) that car, I estimated to be worth between £60,000 – £75,000. So in late 2018 let’s call it’s value £70,000, that’s a cool 255%+ increase. This just proves if you keep your car for a period of fifteen plus years, invariably you could make some healthy profit, pending of course upkeep and all the trimmings that comes along when owning these cars.
Coming back to the Testarossa, I had seen in late 2018 incredible examples where values were typically between £150,000-£180,000, and although there are still some being advertised for these amounts and more, they simply are not selling and permanently stuck on the Ebay and pistonhead merry go round like many other cars.
Just recently I purchased what I consider is probably one of the best examples of the Ferrari Testarossa in the UK. It’s a 1988, with just two previous owners, 8003 recorded miles. The car is totally original as it left the factory, with FFSH. The advert below is less than 11 months old and as you will see the car was advertised at £160,000. After a lot of toing and throwing and tough negotiations, I haggled the price down and paid £115,000 for it, which is a staggering £45,000 less in such a small period of time. This represents approximately 28% loss of value.
It’s not just cars like the Testarossa that’s lost this size of value, I believe that the majority of the classic and sports car market has lost 18-25% in the last 8-12 months alone, and now we face the issue and devastation of COVID19.
COVID19 will surely impact car values, which is not necessarily driven by the car enthusiast but unfortunately the car Investors. Classic sports cars have been pimped around to Investors for years and this has played a huge part in increasing values over the last decade, leading up to 2019.
These investments have invariably helped the car enthusiast in some ways, simply because if you invested in a car, your prized asset was increasing too. But now the investment market is changing because of COVID19 and assets will have to be released, and as much as we might not want to face it, cars will be an easy target to release for much needed cash. The effect of this will force values down, and when I say down I mean, ankle deep!
I certainly have not got a crystal ball but what I do have is experience of a late 80s early 90s classic car market crash and unfortunately because of COVID19 I believe we are heading to similar times.
I can clearly remember a chap who paid £25,000 for an Aston Martin DB5 in 1988 and commissioned CarCraft in Suffolk to restore the car, which he duly invested a further £55,000. Over a period of 3 years the country witnessed an awful recession where bank interest rates rose to a staggering 17%+. The same chap sold his DB5 in 1992 for £40,000 losing 50% of his entire investment. Can you imagine this happening today to a DB5 with their current values, let’s call it a cool £500,000 loss, it would never happen I can hear you say. Mmmmm, lets see.
So if I was a gambling man (which I am not) then I would predict many classic and sportscar values to fall up to a staggering 50% over the next three years, with the top marks being hit the hardest. Put it this way, it’s certainly not going to go up!
The decline, like many crashes, will start small, perhaps from now until the end of the year, I envisage 10-25% with a further 10-15% on top of that early 2022 through to 2023.
Now after reading the doom and gloom of where I think values are going, I want to place a positive note and to leave you with a food for thought 🙂
I have always looked at purchasing cars in the same way as many people purchase and value their house’s. Remember that if your house price has crashed, then so has the one you were looking to purchase, it’s the same principle with cars, if your car value has crashed, then invariably so has the one you have been chasing for many years and therefore means it just might be more viable, my Testarossa above is a good example, I would have never paid the £160,000 asking price just 11 months ago, but I committed to pay £115,000.
Having chased the classic and sports car market for well over 35 years, my experience tells me their values come around and start to increase over a period of 15-20 years, peaking at around year 18. So if you’re investing now, I believe you could face a loss for the next few years, but not to worry, I estimate by late 2023, your Investment could be the best one could ever make, as long as you see out the next 10- 15 years.
Finally, buying a classic and sports car is a wonderful experience where the excitement grabs you, it brings out the emotion and the passion in many of us by simply driving our cars on road trips and rallies, some people like collecting cars to look after and cherish by polishing them on most weekends, but whatever your preference is, classic and sports cars will always be the addiction us petrolheads simply can’t cure.
Now let’s get back to those ads!
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Peace & Love as always.