I predicted that the classic car market would slightly weaken in 2015. Turns out I was not so wrong.
For 2016 I thought it would be interesting to the get the views of 4 leading experts in the classic car world. Here is their opinion on the classic car market for 2016. I will submit my own views in the end.
James Cottingham, DK Engineering – a leading Ferrari specialist in Europe:
2016: Modest expectations
For 2016 we will see some extremely rare and ultimate “blue-chip” motor cars coming out of long-term ownership; these continue to appreciate in value & break records. We have seen a number of new significant collectors joining the party over the last few years, their taste has matured and so have their ambitions! Meanwhile in the general classic car market we will continue to see strong sales but growth of these will maintain a steady/stable pace, the expectations of owners must match the market.
2016: The Great Unknown
More than ever in recent years, collectors, professionals and onlookers look ahead to 2016 with uncertainty and, if they’re honest, a certain trepidation. Recent world events- political and economic- have done nothing to bolster confidence and serve to remind us how quickly established and accepted wisdom can change. I expect more sellers than buyers, and some exciting opportunities. But your BS detector will be working overtime to sniff out the gems from the shrapnel…
Marcel Massini, leading Ferrari historian and expert in vintage Ferrari:
Outlook 2016: All depends on economy and interest rates. We will see some very expensive top tier/high end Ferraris becoming available in early 2016. Only the very very best will do well, everything else is stabilizing.
Max Girardo, MD Europe RM Sotheby’s leading auctioneer:
My view on the market is that most cars have reached what I call their happy place. Prices are stabilizing in that I do not think that we will see the same increases that we have seen in the last 5 years. I see this as very positive as a market that reacts to price fluctuations is a healthy one.
And finally a collectors point of view:
The car auction houses have reported record sales again and some important cars have set new records. Even Kidstons Index K500 shows a 7.5% gain for the year so far. But these numbers are misleading. Look beneath it and the classic car market is clearly weakening. Let me explain.
The top end of the classic car market has held up well. Trophy cars like the Ferrari 250 SWB, the Aston Martin DB4 Zagato or rare Ferraris (like the 290MM that just sold for $28 at RMSothebys) have continued to sell at near record prices. But this does not make up the classic car market. The broader market has fared less well. What do I mean by that? I am talking 300SL Gullwings, roadsters, 246 Dino, Porsche 911 Targas, Porsche 356, Aston Martin DB4 and DB5 and Ferrari 275 GTBs. They have hardly shown any price growth at all for 2015.
There are several reasons why prices are stagnant.
1) Owner’s expectations. If there was one consistent theme throughout 2015, it was that the owners expectations of selling prices did not match the market prices. Owners of cars got greedy from a strong 2014 and set their price expectations very high. The auction houses did a bad job of curtailing these expectations. But since auctions houses wanted to secure good cars – they accepted the owners demands. Many cars had unrealistic expectations and buyers striked with many cars going unsold.
2) The second reason has to with diminishing returns. Prices have risen strongly over the past decade and as one expert rightly noted ‘trees do not grow to the sky. Not even for vintage Ferrari’. Sooner or later the price increases we have seen were bound to slow down.
So how I do I see the classic car market for 2016?
I see further weakness. To elaborate – I don’t really see a crash coming but rather stagnant to slightly falling prices. Exceptional and rare cars will continue to hold up better than the rest of the classic car market. I personally think that many investors- collectors are leveraged to the car market. When rates start rising in the US next year this will have adverse effects on prices. Maybe not so much in 2016 but in the coming few years. Nobody wants to admit it but exceptionally low rates for so many years was an invitation for collectors, investors and speculators to leverage themselves.
I think the party is over in the classic car world. Every year price increases of 20%+ that is over for the time being. Its time to fasten your seat belts. For the long term collector this could be a good opportunity.
