Is the classic car market overheating and where is the market going? We speak to a classic car auctioneer to get the inside line.
“Judging from our last two sales, I’d want to be selling pre-war cars”
Much has been written about the classic car market in recent years.
In 2008 classic cars was just another hobbyists market.
In 2010, after the financial crash, prices of classic cars started to rise … and rise.
In 2014, even the mainstream media was picking up on the phenomenon and citing ‘crazy’ car prices.
Like any ‘gold rush’ the rise in classic car prices drew non-enthusiasts who wanted financial returns – and many of them had large wallets.
While many spent their pounds on high-value cars, the mid and even lower tiers were affected as everyone tried to get involved with the budgets they had.
But even in a growing market, expertise goes a long way and many inexperienced buyers spent over the odds for things that classic car old-hands would have warned against. Still prices continued to rise. Inevitably, the overheating bubble began to deflate as many of the stalwarts predicted, and many prices declined.
‘Decline’ never sounds good, but the classic car cognoscenti weren’t in mourning as the ‘adjustment’ signalled a return to sanity and being enthusiast-driven, not investment-driven.
Adrian Flux spoke to Tim Gascoigne, auction manager for Barons Classic Car Auctioneers, to ask how the classic car market is performing today, and what we might expect from the future.
State of play: the classic car market in 2018
What has the classic car market been doing for the last 12 months?
“The higher value end of the market is less buoyant. Since the start of the year, anything over £100k has been a tricky sell compared to what it’s been for four years. And that threshold has moved down further still to the £60-70k market.
“There just aren’t the number of people looking to invest in expensive cars. Models like [Jaguar] E-Types that were seeing good growth, have levelled off now. Good examples will still fetch good money, but they’re taking longer to sell. Some of our trade customers are saying they’re struggling to retail cars for the same or more. And if they do, it’s taking them longer.
“The affordable end – £5-15k, the enthusiast end of the market – is really buoyant with lots of buying and selling. People who like classic cars like buying one, having it for a few years, selling it, and buying something different.”
In 2017, Evo cited Dietrich Hatlapa of investment research organisation Historic Automobile Group International when he said: “Those who were in it just for the money have moved on. The
market is now more in the hands of the collectors and specialists, which I think is good news for the real enthusiast.”
Enthusiasts know that the term ‘classic cars’ is so broad as to be almost meaningless. What patterns and trends have you witnessed within the market as a whole?
“We see little sub-trends – a marque, a particular model. Various things drive that, for example a particular motoring journalist may write a positive article on one, attention shifts to it and demand grows.
“For example: the Morris Minor was 70 this year so there are lots of magazine articles about them. People think, ‘I’ve always wanted one of them’ and so demand grows.
“Demand for pre-war cars – real vintage cars – is broadly in decline. People put this down to the fact that those who kept and maintained them got to an age where they could no longer do it.
This affects both supply and demand, and prices drop. We’ve had six pre-war cars in recent auctions (July 2018) and they’ve all sold really well, so it might be that pre-war cars are making a bit of a resurgence.
“People have been using the term ‘modern classic’ for a few years now. It describes cars from the 1980s and 1990s but it’s been pushed to include cars from the early 2000s as well. In my view, a classic car is anything over 20 years old, but that can mean a 1996 Volvo estate or a run-of-the- mill Ford Escort – is that a classic car? Probably not.
“The further back you go, the more you can accept everything, because so few run-of-the-mill models survive. The newer the model, the more survive.
“The ‘80s and ‘90s cars getting the interest – worthy of being considered ‘classic cars’ – are things like, RS-badge Fords, GTIs from Peugeot. Just because something is old doesn’t mean it’s a ‘classic’ and doesn’t mean it’s worth money.
“Trends can even be down to things like time of year and whether we’re having a really good summer, which means more people become interested in buying convertibles.”
How much is nostalgia driving the market and how can we use that knowledge to predict what the future holds?
“Buying a classic car is always linked to some historical personal reason, some connection to a particular car. Whether you grew up sitting in the back seat of a given car or you had posters of
them on your wall, there often comes a time when people can afford one or other of them. Whenever people hit 30 or 40 they look to buy that car they always wanted.
“What those cars are is always shifting, which is why you’re now seeing a surge in the price of Peugeot 205s. A couple sold for more than £30k last year. We sold one for £26k. Five to 10 years ago those cars would have been worth a few thousand.
“That’s why any Ford with an RS badge from the 1980s or 1990s is fetching good money.”
What surprises have you seen in the last 12 months?
“Modern classics – 1980s, 1990s models. Those Peugeots were a surprise.
“RS Fords. A Ford Sierra Cosworth RS500 sold for £113k recently, and a Mk I Ford Escort Mexico went for more than £50k. To me, those sorts of figures are mind-boggling.
“I like Mk I Escorts but you have to compare what you get and with what else you could buy for £50k – another car, a boat, a house. I can’t see those cars being worth that much, but there must
be more than one person willing to pay that much because they wouldn’t have reached that price if there wasn’t.
“Is it a bubble? Yes and no. Fords have been really popular for a few years now with some high prices paid. There’ll be a ceiling, but where it will be I don’t know.”
What’s the future of the classic car market?
“There are a number of things that could affect the classic car market in the long term. Emissions is becoming a big talking point in government and a lot of cities are going to ban or tax cars that don’t reach targets or standards. Is there going to be an allowance for classic cars? And what will they be? Then there’s the government legislation and the diesel scandal.
“Further down the track, the government says they want a time when there are no petrol or diesel cars being produced – we’ll all be moving to electric. What does that mean for classic cars? Will there be the infrastructure for petrol and diesel cars?
“In the short term, it’s healthy right now. It’s enthusiast-led again, rather than investment driven, which will make it more sustainable. The market will be fairly stable short to mid-term.”
Tim, which car(s) would you… Buy? Sell? Drive?
“I’d buy an MGC. I think they’re going to have a bit of a revival. They’re basically the same shape as an MGB but they’ve got that bulge in the bonnet with six cylinders under it. They were initially created to compete with Austin Healey, but because they look so similar to MGBs people aren’t quite sure what they are. I’ve seen a few for sale recently – people seem to be starting to appreciate what they are, so prices are growing. There have also been a few magazine articles about them – one even saying how undervalued they are. You never know, but one to take a punt on…”
“Judging from our last two sales, I’d want to be selling pre-war cars. I went from thinking they were on the decline to thinking they may well be on the rise. We’ve sold seven or eight recently and three-quarters of them went abroad. Maybe there’s a new Cool Britannia thing going again.”
“My personal favourites are: Sunbeam Alpine, Jaguar MkII, Ford Mustang (original early 65-66). I love the Alpine’s lines and look, the simplicity, and the fact that they are quite unusual. Those early Mustangs are just so iconic, and I’ve loved them since we built a couple of race cars in the late 1990s and early 2000s.”
2008-2018: Ten crazy years in the classic car market
Tim gives us the inside track on what happened to the classic car market for the last few years.
“For many years, classic car prices were creeping up steadily, growing naturally.
“In 2008/9 we had the financial crisis. And, while you could ask 100 different people why they bought what they bought when they did, you’d get 100 different reasons to buy 100 different cars. But, at the time, people were looking at what was available in terms of investments – many of whom had been bitten by big losses in stock and shares in previous recessions – and wanted alternative investments.
“Then, in 2010, there was a media-fuelled hype about classic cars. Magazines and newspapers were saying you could buy any classic car in any condition and double your money within a year or two. They were telling people to invest in classic cars, instead of putting their money in the bank. So, a lot of people bought cars. Because there’s a finite supply of classic cars, demand suddenly rocketed followed quickly by prices.
“Part of the problem was that a newspaper would run a headline saying that a Ford Sierra had sold for X-amount, but it didn’t say it was an RS500, one of only 500 made and had low mileage. Joe Bloggs reads this and think they can make that much on someone’s old runabout with 200k miles on the clock. Those people didn’t go into the right amount of detail and that's why the market went mad.
“As auctioneers we were surprised at how much some cars were going for. In 2015 we had a barn find Bentley Continental R Type in need of complete restoration. It caused quite a stir because
there were so few made and they were only available to order and by invitation only. They’d always been quite special and this was seen as a missing car.
“A gentleman had bought it, intending to do some work on it but never quite got round to it. When he died, his wife put it up for auction. She wanted £100k but our expert consultants said it would likely fetch £250k-300k. It ended up selling for £660k. It needed another £200k spent on a full restoration and you think, ‘wow, how did that happen?!’. But it’s not like we just stick a silly price on something and hope it sells, it’s always other people bidding against each other.
“We also had an Aston Martin DB6 Vantage. It went for £800k plus commission. You get those results and you think, ‘Well, that’s the new benchmark for these cars’. Sometimes that’s the peak, sometimes they keep on going up. And of course, sometimes, they come down.
“I think those were the peak for those two cars. If we had them again they certainly wouldn’t fetch as much as they did.”
“That peaked around 2014/2015. Since then the market’s been re-adjusting to more realistic figures. Some cars have continued to go up in price since then. But certainly not at the previous
rates. A lot of cars have either maintained their value or gone down – especially if people overpaid in the first instance.
“There were people who didn’t really know what they were doing and just bought cars for any sort of price. Unfortunately, when they came to sell them after a few years, they couldn’t get the money they expected to make. Some sold at a loss, others are just holding on to them for longer in an effort to make their money back. Whether that will be the case or not is difficult to say.”