Is the classic car market about to crash?
It has been years since I last saw a usable 40 year old classic sell for less than £5,000. Yet here is a Triumph TR7 convertible that achieved just £4,320 at ACA’s latest auction.
Yes it’s an automatic and yes it has had significant welding done, but on the face of it this is a car you could use and enjoy from the moment you bought it. Even Porches like the 944 and 924, that in recent years finally became appreciated and thus much more expensive, have dropped in value. This is at a time when the same money would not necessarily buy anything more reliable on the modern used car market.
While I’m no expert, it’s fair to say the value of classic cars in the mid to low end of the market has dropped over the last year. People are making tough choices and trying to offload their costly hobby cars in droves, and sales are drying up for dealers and auction houses. Many of the lots at this auction did sell and even this Triumph even sold for above the estimate… however it is clear that the lockdown induced boom in classic values has come to an end.
Supply and demand is fluctuating and it’s very hard to predict what could happen. So it might be tempting to splash some cash, if you have any, on a classic now that the values have dropped a little. I don’t think there’s any right or wrong time to buy but I do wonder with all the economic uncertainty if perhaps now isn’t the best time to buy a classic car.
Could the market crash and what would likely be the cause? I really don’t know. Tighter restrictions on running classics certainly might not help. A general economic downturn could definitely have an impact. Rising fuel costs or a reduction in the availability of low-ethanol fuels also might affect things. Even changing attitudes and a cooling of positive sentiment towards classic cars and their restoration might have an impact.
None of these factors alone are likely to cause a big shock to the market, but there are a number of risks and enough uncertainty that it is probable. Unlike the housing market, classics are a luxury and not a necessity so their prices are much more volatile.
Which leads me on to a more important point: With the economy in general being on shaky foundations, and important essential costs having risen so much, even if classic values are dropping now might not be advisable on a personal level for anyone to buy. I certainly haven’t been tempted enough by slightly lower prices to get back into a classic yet.
Still it’s fun to window shop and think if you did spend a bit of money on a car, at the moment it might be just as well spent on something with a bit of heritage and gravitas than on something newer which perhaps hasn’t been as well looked after.