Send Lawyers, Guns, and Money if You Want an E-type
I'm not a socialist. Really, I love America, and I'm quite sure capitalism is the best economic system going. But I'm not happy about current market forces. You see, the average automotive enthusiast can no long afford such iconic classics as an early Porsche 911 or Jaguar E-type. Sure, some of the collectors paying six-figure prices for such classics are car geeks who just happen to be very rich, but the dramatic value appreciation of collector cars also attracts "investors."
First, there are wealthy nonenthusiasts who are just searching for the latest "look, I'm rich" statement. Their interest in certain badges tends to be based on what they read on Wikipedia. They play into the hands of opportunists who hope to maximize profits by massaging the histories of the classics they're selling in order to enhance the car's pedigree.
One particular classic coming up for auction next year looks impressive, with top-spec workmanship and some period parts. But I see no evidence it is anything more than the re-creation of a very special factory car that was destroyed many years ago in an unfortunate accident. There is no documentation to prove that any portion of this car ever left the factory in the same time period as the destroyed car.
Some people are trying to make the car out to be more than what it is, which unfortunately is all too common in the classic car world. This typically results in a car that sells for more than what it's worth because an exaggerated provenance puffs up its value.
And it's not just old cars that are reaching stratospheric value levels. If you're not a Porsche VIP (a 918 Spyder owner among the 297 in the U.S. ), it's rather tricky to purchase a new, limited-production Cayman GT4 or 911 GT3 RS, let alone for a price close to MSRP. True, Porsche has a number of these models available for non-VIP buyers, but those customers must have a relationship with a reputable and honest Porsche dealer in order to score a rare non-VIP allocation. Some have been trading the new 911 GT3 RS for more than $100,000 over sticker price. Some Porsche VIPs order the cars—or dealers order the cars under the names of their VIPs—and then immediately sell them to automotive brokers or resellers.
Porsche's VIP policy clearly bans this practice. But dealers and VIP buyers circumvent the policy anyway, resulting in scenarios in which "Bob, the longtime Porsche guy" wasn't able to get a new 911 GT3 RS or Cayman GT4 from his regular dealer.
This practice isn't limited to high-end European brands. Consider the Dodge Challenger SRT Hellcat and the new Ford Mustang Shelby GT350 and GT350R. Some dealers would rather make a quick buck than reward their loyal customers and cultivate long-term relationships. Dealers could—and, in my mind, should—sell the 526-horsepower Shelby or 707-horsepower Hellcat to their loyal customers for MSRP. Instead, some stores are auctioning off cars to the highest bidders or offering cars at a predetermined amount above sticker price. Manufactures don't like this practice, but most U.S. dealers are independent businesses and can charge what they want. Remember, MSRP stands for manufacturer's suggested retail price—a common line spouted at certain dealerships. It conjures the words sung by Warren Zevon: "Dad, get me out of this."
So what's the fix? For the old cars, there is little we can do about the sky-high prices. It's supply and demand. This is America and that's capitalism, and in any event, we live in a global market. Though I'd love to buy a nice 1965 Porsche 911 or 1967 Jaguar E-type for under $50,000, I don't think it's going to be possible again. All we can hope is that cars are being properly represented with correct and honest histories.
With prices out of control, shady shops will perform quick, less-than-stellar restorations on rusty, poor examples of popular collectible automobiles just to make them look pretty on the auction block and earn the quickest buck. If you are in the market, do your research, fact-check everything, and make good friends with a reputable expert. If the history looks too good to be true or if there is a ton of controversy around that specific automobile, there is likely good reason for it.
The new car situation is trickier. Brands such as Porsche need to vigilantly enforce their VIP programs. If a VIP or a dealer breaks the rules, the manufacturer must come down on him hard. Porsche has penalties in place for the dealers—two future vehicle allocations of equal demand will be pulled from the offender. But the profit margin when selling a hot product early in the game can make the loss of future vehicle allocations worthwhile.
If Porsche isn't sufficiently penalizing dealerships, at least the online forums are doing a pretty good job of exposing dealers that charge obscene markups and aren't being honest or fair.
The key here is dealer transparency. Dealers should keep detailed, chronological lists of interested buyers for important, special cars. They should also ask for a refundable deposit and put in writing the position where each buyer sits on the waiting list. When the dealer is given an allocation, it should contact the first person on the list and offer the car. If customer No. 1 passes, refund his or her deposit and move onto the second person on the list.
Buyers are getting smarter, and the Internet is offering a plethora of research and communication options. I hope that good old American capitalism proves itself by helping the quality dealers thrive and the old-school, less than honest dealers fail. Otherwise, it may be time to take Warren Zevon's advice and just hide in Honduras or run off to a Havana casino.