The State of the Collector-Car Market: What to Buy, Hold, and Sell
Our expert panelists offer up their insights on 2019 and beyond.
It's time for our annual deep dive into where the collector-car market has been, where it is now, and where it is headed. Below, our invited panel of experts discuss the shifting tides and trends of 2019 with an eye toward the cars you'll want to put in your garage for fun and maybe even a little profit.
|David Brynan||Wayne Carini||Gord Duff||Craig Jackson|
Automobile Magazine: Is this year's market meeting your expectations? What emerging trends are you seeing?
Craig Jackson (President and CEO, Barrett-Jackson): Barrett-Jackson made history in Scottsdale this January by selling more cars at no reserve than ever before. The growing demand for professionally built restomods, along with Japanese imports like the Toyota Supra, are trends happening now, which have long been predicted by Barrett-Jackson.
David Brynan (Car Specialist. Gooding & Company): We're seeing an increasingly discerning market, with a widening divide between good, better, best. This trend spans all categories of collector cars, from antiques to the latest supercars. Average examples, or cars with significant issues, are not in demand, and it has become more of a buyer's market for all but the very best and most unique examples.
Gord Duff (Global Head of Auctions, RM Sotheby's): Overall, the market is shaping up better than we expected so far in 2019. RM Sotheby's sales are stronger over the same quarter in 2018, though we're seeing some surprises in the million-dollar-plus range in terms of what's selling and what isn't. We're seeing positive trends, especially for the formerly underappreciated "youngtimer" cars of the 1980s and '90s, as well as sustained interest in late-model and modern supercars—particularly for truly special examples. The Ferrari F12tdf with the special-ordered Brunito paint and saddle leather interior that we offered in Paris comes to mind as a car that far exceeded expectations in the current market. [It sold for €1,197,500 ($1.34 million) against an estimate of €825,000 to €950,000 ($925,000 to $1.07 million.]
Wayne Carini (Owner, F40 Motorsports; host, "Chasing Classic Cars"): Heading into this season at Scottsdale, there was a little bit of hesitation as to where the market was going to be. Monterey last fall showed a sign of the market softening—a lot of the big cars at Monterey did not sell. That followed in Scottsdale, too. We could see this coming—how many more years could this surge over the past six or seven years last? Prices were crazy. Because of that, we needed a correction, and we're getting that correction. Restomods and Japanese cars are really coming on and limited production cars have always been strong.
We saw a lot of speculators buying cars for profit three years ago. Are more cars selling to end users in today's market?
CJ: We don't see much speculation among out buyers. Our buyers are entering the point in their lives where they want to drive and have fun, which is a huge factor that's accelerating the hobby right now. Roughly 40 percent of the consignors selling a vehicle at one of our auctions will use that sale credit to purchase another vehicle at that same auction. This is a sign of a very healthy market. The rest are people who are looking to purchase their dream car or looking to build on their personal collections for the love of the hobby. Not strictly as an investment.
DB: Yes, the majority of buyers are end users or known buyers in the trade. One reason for this is the end of the 1031 exchange tax benefit for cars. This has slowed the velocity of trading and sellers with a large gain are less likely to sell, knowing that they will have to pay capital gains taxes and cannot simply replace their cars.
GD: I would argue that most buyers in today's market are end users. Typically, more than two thirds of our buyers at our sales are individual collectors versus dealers; dealer participation was stronger in the 2013 to 2016 period. This has always been the underlying driver of the overall hobby and collector-car market.
WC: There was speculating for sure in the market, there were conglomerates put together and there were investment clubs that went in and started buying these cars because they looked at the numbers, the pie charts, and said "Wow, this is going nowhere but up. These cars have been making 300 percent over the last five years and this is the market to jump into." Most of those people really don't understand cars, they're just another asset to invest in. As soon as there's a correction in the market, those guys bail. I think that's why we saw the correction that we did, because some segments started to get a little soft and they all bailed out. End users are really buying more whether it be at auction or private sales. That's good; we want the buyer to enjoy the car and use it as intended.
The market for Japanese classics seems to be heating up. Is this just a fad?
CJ: The collectability of classic Japanese cars is not a flash in the pan; it's here to stay. These are the cars that many Gen Xers and Millennials grew up admiring, like the Toyota Supra, Nissan GT-Rs, and [Acura] NSXs. In the past five years our average buyer age has decreased from 68 to 58 years old. As this new generation of buyers move into their prime earning years, those cars are now affordable to them. This is a natural evolution of the hobby and market.
DB: These are, for the most part, relatively attainable cars and were relatively unknown or unappreciated in the U.S. market. Most of these buyers are younger, and these are cars that spoke to a generation of enthusiasts who grew up in the 1970s through the '90s. I doubt that this is a fad, and it will continue with more collectors in this age bracket. With few exceptions—like the 2000GT, early Skylines, rare racing cars, LFAs—the production numbers of these cars will keep a steady supply available, and I don't think there will be enormous gains in value as we have seen with limited-production Ferraris, Porsches, etc.
GD: Frankly, I am fascinated by the classic Japanese market right now. I don't believe it's a fad—based on the results we're seeing from our offering of the Youngtimer Collection, as well as those achieved by online auction forums—but just like the Porsche market, I do believe the tremendous interest will likely bring a flood of average cars to the market, which could saturate it. In this case we may see prices begin to fall, as average examples bring less than the record prices we've seen over the last few months. This situation makes it difficult to know exactly where true market value lies as sellers will want the prices that top-tier examples are bringing. We saw a similar case study with the Toyota 2000GT a few years ago. While they'll always be worth more than they were 10 years ago, I do believe the strongest prices will be reached by the truly special, low-mileage cars, and prices will level out for the more average examples.
WC: I think a Supra for $200,000—I don't see it, myself. And every time that I say that, I get corrected! But then that market drags everything else on its coattails. So what's the next thing? We've got the right-hand-drive cars coming over from Japan are great, funky cars, but people want cars they can drive. We are seeing Honda S2000s and that lower end of the market really start to increase, and I think it's great. It's wonderful that these cars are being recognized. The guy that buys the new NSX is going to want the old NSX, too. Those young people who wanted a Supra when they were growing up, they're able to purchase one now. Early Japanese cars are cool, too, but are going to be different types of buyers.
And the 1960s and '70s SUV market is picking up, too . . .
CJ: One of the fastest-growing segments in the new car industry is SUVs and trucks. It's not just 1960s and '70s, either; you're also seeing plenty of 1980s SUVs starting to gain traction in the market. The younger Gen X and Millennial buyers grew up in these cars and can relate to them. These vehicles are also great canvases for customization, which is another huge trend. We expect that demand to keep rising.
DB: These cars resonate with many younger enthusiasts, and they are relatively attainable.
GD: I'd say it's here to stay, demonstrated by increasing hobby interest via events like the Copperstate Overland tour. These collectible SUVs are a ton of fun, they remain relatively inexpensive despite their accelerating prices, and there seems to be a strong market for customization, as well.
WC: I don't think it's a fad. It's one of those things where if you've got a car collection, one of them should be this because SUVs have become such a big part of our lives. I'm not so convinced that the larger SUVs—Suburbans, for instance—have the following that smaller SUVs like Broncos do. Broncos went absolutely nuts, and to tell you the truth, the Bronco's okay, but I think the Jeepster is so much cooler. I've got one, and I just love the thing. International Harvesters and Scouts are coming around, too—they're quirky and there are fewer of them around. Broncos are mass production, and there's a zillion of them out there. It's like the FJs; they really went crazy and suddenly they were $100,000 to $150,000. I had an FJ once and I wouldn't give $10 for it. It was one of those crazy flavor of the month things. Now really nice FJs are going for 35 to 40 grand. Every good collection should have at least one of those, there's a lot of room there.
Give us three of your favorite entry-level ($30,000 or less) classics.
CJ: It is hard to beat a 1965 to '66 or 5.0-liter Fox-body Ford Mustang, a 1970-73 Datsun 240Z, or a late-1960s Austin-Healey Sprite. All of these are fun to drive and easy to work on, and there are lots of parts available. Plus, there are lots of clubs and communities built around those marques.
DB: Prewar: You can still find interesting Model T, Model A, and V-8 Fords. Huge community of support, events, and they are fun to drive and work on. Postwar: Alfa Romeo Spiders and BMW 2002s. Fun, exciting cars from good marques. Eligible for many events. Modern: 996-generation 911s and early Boxsters. Same as the Alfas and BMWs, these are among the last "affordable Porsches," and their values seem to have bottomed out.
GD: I would say an International Scout, which remains affordable next to the Ford Bronco, even for the special-edition examples like the Rallye or Patriot. The later-model front-engine Porsches like the 944 remain good buys—for the moment! Particularly if you can get a Turbo or S example. Finally, I think it's the right time to get into a third-generation Mazda RX-7. In my opinion, they are a recognizable future collectible and currently undervalued. While very special and highly original, low-mileage cars are bringing record prices, I think you can still find a nice example for under $30,000.
WC: I think what you have to do is look at marques that have been overlooked. For example, an Oldsmobile from the 1930s or '40s. There are not that many around, but they're wonderful cars to drive. Buy unusual cars. Buy cars that people don't see all the time. When you go to a local show and you see 40 Camaros or 60 Mustangs but only one Gremlin, the Gremlin's going to get all the attention. And if you want a great car that won't cost a lot of money, buy a Model A Ford. They're one of the best little cars out there—you can fix them for almost nothing. A really nice Model A is $15,000 to $20,000.
What are thirty- and fortysomethings buying today? Is there much interest in prewar or even mid-century cars in this demographic?
GD: Not at this point. I would say the majority of collectors currently buying prewar cars remain in the 60 to 80 range. That's not to say there aren't any buyers under that age, but I believe this will continue to be the key demographic even as the market ages. We often see affluent individuals who retire or sell their businesses and now have the time and assets to participate in the hobby jump right into the classic/prewar market, an area they've been holding out for. There is certainly interest in this segment from a younger demographic however, even from within RM Sotheby's team of specialists.
WC: Younger buyers seem to follow trends. These are young buyers that are thinking about cars as investments. And more than a person that's 55 to 65 years old because their investments are already set. These are people looking to invest in something for their future and I think they tend to follow certain fads. People seem to be so concerned about young people collecting cars, that they don't have the interest. And I say, well they do, they think Honda Accords are cool and Toyota Corollas. But that's okay. It's like when you're in high school and you sneak beer, then you get to college and its shots. And then as you graduate and get older you start drinking fine wine. It's the same type of thing with cars. I also see that segment wanting to get into older cars and that's good.
Prewar—even Brass-era cars—were strong this year at Amelia Island.
CJ: New collectors are becoming more aware of vehicles from all eras, which may increase the appeal of Brass-era cars. However, we see the most interest by younger buyers for vehicles from the '80s and '90s, both domestic and foreign. These are becoming canvases for personal customization by collectors who want to add technology and drive the cars.
DB: The right prewar cars are strong, from Brighton-era machines to the large multi-cylinder American classics of the 1930s. These cars appeal to a wide variety of collectors, and we see many younger buyers attracted to these cars. They are not purchased solely by 70-year-old and older collectors. In particular, sporting classics (roadsters, speedsters, etc.) and important racing cars are increasingly sought after.
GD: Prices for prewar cars were particularly strong in Amelia Island because we had a lineup of exceptional cars offered from well-known collectors of the era. The combination of good pedigree, rarity, and concours-quality expert restorations again proved worthy of top dollar.
WC: I think it's renewed interest in the segment. It's also people growing up. I know quite a few collectors that were at Bonham's Brass-era sale and I never thought they would have been interested in a Brass car and now they're looking at it a little differently. There was a collector of Porsches and Ferraris there and I was asking what he was doing there and he said "Oh man, I'm sort of catching on to this. I watch your TV show and I went to Pebble Beach and saw what that was all about. And then there are guys like me who have way too many cars, but never enough, and you walk into the room and look at all those brass cars and go, "Wow, this is so cool!" If there was one or two there, you'd walk right past them but there are so many that it really piques your interest. I walked away with a 1904 Pope-Toledo. I had no intention of buying a car!
Are you concerned about potential U.S. tariffs on imported collector cars and parts? Should collectors be concerned?
CJ: Collectors and enthusiasts hate cheap knock-off parts, especially sheetmetal, so tariffs on those parts might actually help ensure better restorations. However, this situation is fluid. The ongoing trade talks cover a large number of topics, so it is really too early to understand where this will all end.
DB: Nothing has happened as of yet, and we don't see any reason there should be increased tariffs on cars entering the U.S., but you never know.
GD: This remains a 'what if' situation. It will certainly propose a problem should it happen down the road, but it is not yet a tangible concern.
WC: First off, I think that a lot of this stuff is smoke and mirrors to do with power. We don't purchase a lot of European cars from Europe and I don't see many coming over so it shouldn't be a problem. Parts I see as a possibility of a problem because we buy a lot of parts from Europe. It's like anything, though—you make it all work. There are some issues, but I don't see it affecting our hobby that much.
At Amelia Island, we saw roughly two-thirds of sold cars bring less than their low estimate. Some significantly so. Why is that?
CJ: The big-dollar cars are really in the smallest part of the market, which sees those cars as a safe haven during a recession. With the economy strong, the smaller part of the market is slowing and we're seeing the biggest, broadest part of the market surging. People are also looking for different types of cars; they want ones they can drive and modify, which you haven't seen as much historically with the big-dollar cars. And we are starting to see some categories where the restomods are beating numbers-matching cars because people want to drive and enjoy them, so we are likely to start seeing more of those become big-dollar cars.
DB: Estimates are often a balance between the auction houses' recommendations and the seller's expectations and preference for seeing a higher number published, particularly on cars offered without reserve.
GD: Some of these results are simply due to the fact that the market is tough to gauge in 2019 as it shifts from one quarter to the next for various subsegments. For example, at Monterey 2018 we were surprised by the strong prices achieved by 300SLs, while by the time we reached our Petersen sale in December of the same year, the interest wasn't at the same level. The market for certain segments is sometimes remade at each major auction week, and that's the nature of the public auction sphere where presale estimate ranges are posted in advance. We set estimates based on a careful examination of previous sales, how an example compares to others within its category, alongside expectations from sellers, which all interacts with current economic conditions and at times this does not add up.
WC: What we're seeing is sellers still can't understand that the market has corrected and I think the low estimates sometimes are a little aggressive. When you buy a car for $200,000 and are being told, "I'm sorry sir, your car is now worth $160,000," it's a tough pill to swallow. Auction companies are trying to make people realize what the reality is.
This story was originally published on May 21, 2019. It has now been updated with additional insights from our panel of experts.