By on October 7, 2008

With the economic downturn, recession, depression, or whatever you want to call it, we already know that new car sales are taking a long vacation from existence. And cars like the Ferraris and Alfa 8Cs of the world shouldn’t have too much trouble selling, since there are still millions of millionaires. But how about the muscle cars? By and large, the boom in muscle car prices was the result of nostalgic shoppers, laying out significant – but not exorbitant – sums for the dreamcars of their youths. We’re talking about people that had been buying and selling drivable muscle cars in the $20k to $50k range, not just the Barret-Jackson shopping insanity. With financial “gurus” like Jim Cramer telling punters to cash-out all their investments, we can expect a glut of reasonable condition cars on the market, as folks look to pick up more money before the storm. And then consider that in the context of a hugely reduced buyers’ market: how many people are looking for five-figure toys these days? I’m far from an expert, but I’d guess we will see something on the order of a 60 percent drop in the market values of cars like Camaros, Mustangs, Chevelles, and Pontiacs. The rarer and collectible models will no doubt fare better, as these tend to go to buyers that do more polishing and less driving (if ever). While some sellers may decide to hang on to their cars because there are so few buyers, there will still be plenty of cars on the market. It’s a buyer’s opportunity, no doubt about that. If, like me, you’ve ever just wanted an AMC AMX in the driveway, the next few years might be the time, should you be employed.

Get the latest TTAC e-Newsletter!

46 Comments on “Old Muscle Car Bubble About to Burst...”


  • avatar
    Airhen

    You are correct that value is headed down. I have a family member with some rare collectibles that was going to sell one, but he’s now going to hold onto the car longer. As he told me, guys walking around with enough cash are not as plentiful. Plus as you said, value going down may hurt sellers, but not buyers. ;)

  • avatar

    I’m not so sure, Justin. Muscle cars are still a tangible commodity with a large audience, and may just hold their value like precious metals. Maybe small fries like AMCs, Mercurys, etc will go down, but the big names will always** have big demand.

    **until its fanbase grows old and dies. Witness the drop in value of the Model T from the 70s to today.

  • avatar
    Matthew Danda

    I totally dig the Challenger SXT recently reviewed. I have the urge to test drive one and spontaneously buy it…but then reality sets in. The economy really, really sucks right now.

    EDIT: Oh, I see the title is “OLD Muscle Car…” and not just “Muscle Car…” No, I disagree: there is always a market for collectibles.

  • avatar

    The Muscle Car bubble already popped about a year ago. It will just deflate a lot faster now.

    There will always be a market for collectibles, of course. But you have to narrowly define the collectibles with extraordinary value. Mass-produced items like GTOs and the like don’t qualify. The fact that idiots were paying Ferrari money for Detroit iron only proves P.T. Barnum right.

    –chuck

  • avatar
    whatdoiknow1

    There rising prices of these cars has been fueled by the inflation of value in just about everything of minor substance in the USA. The Muscle car craze has pretty much mirrored the whole illogical SUV craze in this country, go figure?

    The value of these things are going to tumble right along with the value of many other “collectable” cars. In times of trouble cars (outside of maybe a real GTO or Dussie) are NOT rock-solid investments and the faint of heart are going to exit this seen very quickly.

  • avatar
    Domestic Hearse

    The rough stuff will decline. The marginal cars. So-so restorations. Daily drivers. Or flashy cars but not numbers-matching.

    But the quality stuff will stay even or increase.

    There’s a flight to tangible assets now. In times of economic downturn, money finds its way into precious metals, collectable art, prime real estate (at bargain prices), etc.

    The same is true for collector cars. Shelby Mustangs are still Shelby Mustangs. Ford isn’t going to make any more “real” ones ever again. Nor will GM fire up the Yenko Camaro line again any time soon.

    There’s only so many left. There will never be any more, only less.

    Average Joes will not be able to scarf up a ’73 Porsche 911 RS for 20k (down from a quarter million) because some millionaire lost his a** in hedge funds and needs quick cash. No, that car is still a one-and-only. And another millionaire will offer the same, if not more money, to acquire it.

    However, if Joe is patient, shops carefully, he may be able to get a decent, original, papered 911 SC for a couple thousand less than it was going for last year. Maybe 16k instead of 19k.

    Both are collector cars. But one will stay unubtanium. The other, a decent bargain for those of us who still have any extra cash left.

  • avatar
    sellfone

    I don’t agree. When Cramer is telling people to cash out a big chunk of their investments, he means equities (stocks, bonds, mutual funds).

    Tangible assests like precious metals, collectible vehicles, diamonds, and even real estate are in a totally different category. When the equities markets are being battered (and they are), people will seek other places to “store” their money and these tangible assets will make way more sense than equities or even just keeping it in the bank (will your bank survive?). How safe is it keeping it under the mattress?

    Tangible assests also guard your money against that other value stealer, inflation. The US dollar has been falling dramatically in value and many predict this trend to continue. By keeping some assets in tangible items like precious metals, diamonds, and yes, vintage autos, you are hedging at least to some extent against inflation.

    So, yes, the unrealistic “bubble” values of vintage and muscle cars may have popped a bit, but I do not expect to see widespread plummeting of values in this arena or a glut of cars on the market.

  • avatar

    maybe I’ll be able to pick up that Peugeot 404 really cheap

  • avatar

    maybe I’ll be able to pick up that Peugeot 404 really cheap

  • avatar

    maybe I’ll be able to pick up that Peugeot 404 for 3 figures instead of 4

  • avatar

    I’m kind of hoping this is the case as I’m casually shopping around for a pristine 1970 Chevelle SS 396 or LS6 454, the latter isn’t cheap. I’m also not an old nostalgic man, I’m a 20 something gearhead with a passion for real cars with real style. Muscle cars can’t be beat in that respect. The new ones are cool, but I’m dying to get a hold of an old one again.

    Funny a 1970 AMC AMX is pictured. When I was in high school in the 90s I was shopping with my father for my first muscle car and AMC was high on the list. Primarily because they were unique and uncommon, but also because they were very cheap for a nice restored example. I looked at the AMX and Javeline and they were only $10k – $15k back then. Now I’m shocked when I see the same restored examples going for $50k – $70k. It’s the same with the GNX too. When I was in high school they were $30k (way out of my budget) at the time, now they’re near $100k. If only I had more money back then.

  • avatar
    Domestic Hearse

    Exactly, sellfone.

    The guy with a ratted-interior 75 Corvette in the garage, under the tarp, who just got his hours cut back will reluctantly put his car in the paper because he needs the cash.

    It’s not a vintage year. It’s not in collectible shape (he was gonna get to that…some day).

    And if it’s what you’re looking for as a buyer, you’ll get a great deal. The seller doesn’t want cash. He needs it. And if you got extra, you now own a, um, project.

    But that all-original, low-mile, numbers-matching big-block Chevelle SS in concours condition owned by the guy in the mansion on the hill?

    It’s not for sale.

    Especially not now.

    In fact, that guy’s looking for another one to put his money in. Or maybe a GTO. 63 Splitwindow, perhaps.

    Smart money flies to quality tangible assets during a downturn and then hides till it finds better things to do.

  • avatar
    CanuckGreg

    I think the same reasoning can be extended beyond muscle cars. Anything in the mid priced near-collectible/hobby segment will be impacted. I’m thinking the market for low-end Ferraris, E-Type Jags, 80′s vintage 911′s, etc. will all suffer.

  • avatar
    toxicroach

    Everyone wants precious metals because everyone else wants precious metals.

    That Mustang is not gold; its a cute, totally obsolete money sink to most people.

  • avatar
    Domestic Hearse

    That Mustang, Toxicroach, is better than gold.

    After 9/11 and the dot-bomb crash, my neighbor was disgusted. His 401k was deflated to the point of sickening (as were all of ours).

    So he went crazy. He cashed out. Took the penalty, and the money, then went shopping.

    Showed up with a 66 Fastback, 289.

    “You’re crazy,” said all of us neighbors.

    Granted, it was a nice car, from Arizona, no rust, professional resto five years earlier, numbers matching.

    He’d take his kids out for ice cream on Sunday afternoons…love that 289 burble as it rolls down the road. Then he’d wax it in the driveway and we’d all stand around with a beer and comment on his handiwork.

    After four years, he sold it.

    Doubled his money.

    “How’d your 401k do in that time?” he’d ask us beer swillers.

    We’d swallow hard and not meet his meniacal grin.

    So who was the crazy one?

    And not even gold – as an investment – performed as well.

  • avatar

    toxicroach : That Mustang is not gold; its a cute, totally obsolete money sink to most people.

    But you don’t sell antique/classic/special interest vehicles to “most people” unless you’re seriously broke. Or ignorant: a friend tried to sell his 1990 Corvette ZR-1 to CarMax…the offer was insulting.

    Fact is, these are commodities that trade for hefty margins in the car enthusiast market. And, barring the extinction of gasoline from the planet, this group will never die off.

  • avatar

    One more thought: in this climate (and with any luck) we’ll see more muscle on Craigslist and less at BJ’s auctions.

  • avatar
    rpn453

    Not only that, but the people who actually want those old cars are starting to die off.

  • avatar

    I never understood the appeal in the first place – these cars drive like crap and are slower than most Sport Compacts.

  • avatar
    toxicroach

    Well thats my point.

    Gold is gold because everyone wants it, if only so they can use it to get something else.

    Old muscle cars are a luxury item to a fairly specific set of people. They are like baseball cards, and their values can collapse simply because that specific set of people decide that they don’t feel like buying a classic Mustang after they check out their last 401(k) statement.

  • avatar
    BobJava

    Of course muscle cars handle like crap. They’re American cars from the 60s and 70s. But hell, by the same token, Model Ts and Model As handle like crap. In fact, most things before this past decade handle like crap.

    Muscle cars have an intrinsic value … good styling, big engines, presence, and lots of metal and chrome. It’s a bygone era of manufacturing. For better or worse, they don’t make them like they used to.

  • avatar
    Juniper

    rpn453 :
    October 7th, 2008 at 4:17 pm

    Not only that, but the people who actually want those old cars are starting to die off
    rpn
    Not really, actually many people who are into these cars are just now retiring, if they did alright, and like cars they are now looking to buy, either to rebuild themselves or buy finished to go to shows and enjoy the hobby. That’s what it is for most people, a hobby. Recently was at a major show for 64 and older cars, over 11,000 cars showed up. I think the hobby(and its fans) are a long way from dead. there were a lot of 30 and 40 somethings there as well.

  • avatar
    Areitu

    Domestic Hearse : Great returns come with great risks. Of course, his worked out very well for him. He probably knew what to look for, what to get, and happened upon the right person to buy it. Someone who had one as a teen, missed having one, and decided to buy that one in good shape. Either that or it was right around when Gone in 60 came out.

    Around that same time, one guy in Florida bought a ’94 Supra with around 50,000 miles on it for $24,000. Kept it a while, modified it until it made twice the stock horsepower, returned it to stock, sold it for exactly what he got it for with 110,000 miles on the clock.

  • avatar
    NickR

    With these old muscle cars, you have to be very well versed in that particular make and model. Fortunately, I know an A body and E body expert. I went with the A body expert to a show, where what looked like a nice Plymouth Barracuda 340S convertible was for sale. The price was in step with a good restoration of that particular vehicle. My ‘consultant’ looked it over, and started to pick it apart, the hood inserts were the wrong year, so on and so on. The asking price was for a proper restoration…what they were selling was a decent car cobbled together from parts from similar cars. It was worth 2/3rds of what they were asking.

  • avatar
    no_slushbox

    Muscle cars, along with all other classic cars, are screwed; they are just a consumer good.

    Gold is very unique in its negative correlation to the economy. When the economy is doing well gold prices go down, while the prices of other tangible assets go up.

    The demand for collector cars, especially those under $100K, was fueled by HELOCs and cash out refinances.

    Now that nobody can get cash out of their house and a lot of people are desperate for cash there is going to be a lot of supply and not much demand.

    If there was really a flight to tangible assets going on, as some people erroneously claim, then the housing market would be booming – land is the most tangible asset of all – and they are not making any more of it. I case any one has noticed, the real estate market is not booming. All other commodities, except for gold, are also sharply down in price.

    Even Ferraris and other rare classics are not recession proof. I remember seeing charts in Car and Driver where rare Ferrari’s values plummeted during the early ‘90s recession.

    We’re in for a very long buyers market – horrible news for people that bought what they could not afford, annoying-but-not-devastating news for those who bought what they could afford, and great news for those who have not bought yet and can manage to keep their jobs.

  • avatar
    mikey

    cretinx: You don’t understand the appeal?And you probably never will.But thats OK cause I can’t get my head around Tuners.People today get worked up over a VW.When I was kid a VW was a nerdmobile.

    A 69 Chevelle SS 396 or how about 69 Swinger 340?Maybee a Roadrunner 426 Hemi.
    Nah, your generation will never get it.I mean really you guys figure a Fart can on a Civic is something special.

  • avatar
    Qwerty

    Muscle cars were being bought by people taking out HELOCs. Now that the housing ATM has been shut off, prices will go down the crapper.

  • avatar

    toxicroach : Old muscle cars are a luxury item to a fairly specific set of people. They are like baseball cards, and their values can collapse simply because that specific set of people decide that they don’t feel like buying a classic Mustang after they check out their last 401(k) statement.

    I see where you are coming from, but nothing short of an epidemic or a economic meltdown that causes a run on our banking system will keep car guys from buying what they like.

  • avatar
    plee

    Talking about AMX’s. I had a 69 Go Package 390, 4 speed, Bittersweet Orange with Black over the top stripes and Charcoal leather that I sold in 1973 to a dealer for $850 wholesale because I needed the money to back to college. It would run 14.7′s, 99mph in a pure stock class at Atco Dragway in NJ. I doubt if muscle cars will fall that low in price again but we can always “what if”.

  • avatar
    no_slushbox

    Sajeev Mehta

    I see where you are coming from, but nothing short of an epidemic or a economic meltdown that causes a run on our banking system will keep car guys from buying what they like.

    The inability to get cash out of their homes and the penalties that come with cashing out 401K/IRAs will stop car guys from buying what they like. Demand is the desire to possess something, combined with the ability to purchase it.

  • avatar

    no_slushbox : Yup. But I think the supply of muscle cars is small enough that there will still be a market for expensive toys. There are plenty of wealthy upper/middle class pistonheads who aren’t heavily credit leveraged.

  • avatar
    Buick61

    Ha! My dad bought a brand new 1969 AMC AMX when he was in high school. He sold it around 1986 in order to pay for a new driveway…

    …I wonder if I can track it down…

    I was never interested in the muscle cars and didn’t really understand the absurdity of the market in recent years.

    I’m a ’50s man, myself. I (Heart) my 1958 Plymouth Belvedere!

  • avatar
    John Horner

    Fifteen years ago good Jaguar E-types were trading hands at crazy prices as the WWII era retirees just had to have one. Prices and interest moderated quite significantly since then. The recent muscle car bubble will also surely burst.

    I don’t buy the argument that these vehicles are investments. They are, at best, speculative.

    Investments should be in something which actually generates a return. You invest, for example, in a rental property, a factory, a new design for something, a storefront or some other activity or property which has the possibility of generating future cash flow through ongoing activities. Any other kind of “investment” isn’t an investment at all, it is speculation. Spending money to open or expand a gold mine is investing. Buying existing gold to sit on in the hopes that the price will go up is speculation/gambling.

    People seem to have completely forgotten the distinction between investing and gambling.

    Pricing on collectibles is set by the relative balance between supply and demand. You don’t need to loose all of the buyers for demand to go down, just some of them. If cash strapped owners increase the number of vehicles on the market by 10% and the reluctance of some wannabe buyers reduces the demand by 10% then you will see a big reduction in prices. A lot of the collectors already have garages and warehouses full of cars and can quite happily sit on their hands for a year or more. Finally, the demographic of the muscle car buyers is pretty much getting a year older with every passing year. More and more are going to die, move to a nursing home or just ramp down their hobby activities as the days go on. Today’s 30 year olds are buy and large not itching for the chance to someday own an original ‘Cuda.

  • avatar
    KingElvis

    I agree: Classic supercars with numbers matching and a pricey resto SHOULD hold value better.

    It’s expecially in the ‘clone’ world that I think you’ll see these guys who’ve spent $10,000 on a Chevelle 300 to make it a ‘SS396′ take a huge hit.

    In the very long run, consider this: ‘

    The US has always ‘grandfathered’ old cars. You got a 1911 Ford? Hey, just make sure it’s in good working order and has license plates.

    Similarly, you’ll very likely be able to run your LS-6 Chevelle untill you’re too old to see because the Feds will continue with their grandfather policy for emissions and safety.

    If we really are heading into a period of electric cars, it’s quite possible that the vast nostalgia market – where you can theoretically buy every part for a ’57 Chevy – will continue on in good stead forever.

    Rock n’ Roll ( and the drive in car culture of Americana) really WILL never die.

  • avatar
    esldude

    In my experience, old cars are lagging economic indicators. The stock market is a leading indicator by something like 6 months.

    When the market for stock goes down, usually a bit later old car prices go up. I have always thought people in some number have taken money out of the market to by tangibles. The total size of the car market is limited so even a few doing that send prices up. Then usually when things improve, car prices don’t go down usually, they just get stuck with fewer changing hands for awhile.

    There will no doubt be a few ‘deals’ to be had when some guy needs cash in a hurry. But unless things get truly horrific, like Great Depression horrific, I expect cars to hold price till spring, and then go up some more. Till then, and maybe even then sales will be slow, but I think prices will go up, not down.

  • avatar
    Johnnybgoode

    Go ahead and put all your collectible muscle cars up for sale, I will garantee you that they will be bought and exported out of the country before you know it !

    There is a whole world of strong money out there, and when your economy comes out on top again (and of course it will) you will only be able to read about LS6 Chevelles and Shelby Mustangs in glossy magazines, ’cause you will have to travel to my side of the big pond to see one in real life.

    Just you wait til some of the newly rich chineese get a cravin for some Hemi Muscle, then you will see fighting at your garage doors !!

  • avatar
    Dave M.

    Not only that, but the people who actually want those old cars are starting to die off.

    Agreed. My FIL (mid-60′s) has a couple of Model A’s he restored….the market is much softer than it was 25 years ago when he bought them. Little interest in that many Model A collectors have died off.

    I love cars (especially the big, expressive coupes: Monte Carlo, Ford Elite) from the 70s. But if given a choice I’d buy a 2002ti, 912, or something funky like a Datsun 610.

  • avatar
    seabrjim

    I have been going to cars-on-line classic cars for sale for about 18 months. Yes they are dropping big time. But I’m still waiting another 9 months or so. Every week in the online newsletter they try to keep readers pumped up ala barrett jackson but to no avail. the price reduced section gets more desperate every friday.The guy who wanted $89,000 for the 69 coronet 440 convertible three months ago is down to $53,00 as of last week.It will be $30,000 by February.

  • avatar
    obbop

    Pert-near every night I shed a tear as i dift off to sleep.

    1975, it was. I saw the Plymouth Superbird for sale. A real one. Sure, the original 440 engine had blown and was replaced with a 383 but all esle was origninal. $1,800. But, being in the Navy I had no place to park or store it wnd no relatives with a place where I could store it.

    I KNEW it would go up in value but….

    Across town was a primo look-like-new 1971 ‘Cuda red convertible. 440 and a 4-speed with mucho options.

    Looked so fine!!!!!! Original. Clone stuff was rare back then. $2,600.

    Sniff.

    I wanted both. If only I had a kinfolk that had a farm with a barn or anything where I could have safely stored the critters as the years passed.

    Sniff.

  • avatar
    Turbo G

    Don’t forget that today’s high powered coupes and sedans outperform the musclecars of yesteryear by a large margin. In the 1980′s and early 90′s we were in a dark era of performance and many yearned for the muscle cars of the past. Now you can buy many a used car for 20-25k (Corvette, GTO , CTS-V, Mustang etc) that would lay waste to nearly any 60′s or 70′s musclecar in every metric with the exception of style…

  • avatar
    highrpm

    I read recently that the 50′s cars have been taking a huge hit on value lately, even before this recent problem with the economy. Apparently a large percentage of folks who want a ’57 Chevy are getting too old to want a toy car like that. This is similar to Sajeev’s story on the Model A.

    Expect something like this with the muscle cars in a decade. They look nice enough, but really they aren’t that fast and they were never that reliable or durable. They were pretty much run-of-the-mill cheap cars with big engines, built with 60′s technology and manufacturing know-how.

  • avatar
    golden2husky

    Turbo G: I would expect today’s performance cars – and not quite performance cars – to be better in every regard considering the 40 years of improvements. But that makes no difference. Most people buy these cars because they impart a sense of what life was like when things were simpler, and it reminds them of their youth. Others buy them because they enjoy an unadulterated mechanical experience – a vehicle that can be worked on without wondering why a pesky misfire code keeps appearing. This market is not going to go away. As others have posted, the lower quality cars will suffer, but the best vehicles will still command high prices because the stock of cars is very limited. The will always be enough rich people to find homes for such a small amount of cars.

    Chuckgoolsbee: Don’t be such a snob by ridiculing people paying “Ferrari” money for GTO’s. A vehicle is worth what somebody is willing to pay for it, period. Is a baseball player worth a few million a year for a stupid game while a cancer research scientist gets paid under $100K? The sad answer is yes, because that is what society and the market has determined to be their relative worth. It is no different for cars, or anything else for that matter.

    Highrpm: Musclecars, compared to other cars of that era, were not particularly unreliable. Some exhibited engine failure or drivetrain problems but that was more due to the extreme abuse they received than being poorly designed. For those who were weaned on cars of the 90′s and up, any car from the sixties is going to feel pretty damn crude – and that goes for the foreign ones, too.

  • avatar
    geeber

    What people forget is that Europeans and the Asians love old American cars, too. I work at the Carlisle Events shows, and attend the big Antique Automobile Club of America (AACA) meet in Hershey (the 2008 meet is this weekend) every years.

    Plenty of foreigners are eager to snap up old American iron (which makes me chuckle at the posters here who look down upon 1950s and 1960s Detroit iron as crude and unsophisticated compared to those “superior” foreign cars – someone needs to tell this to the Europeans eagerly paying good money for old American cars).

    Even if more Americans can’t afford these cars, or are forced to sell because of economic reverses, there is still a very big overseas market for these cars. So don’t think that you will be getting that mint 1970 Plymouth Road Runner with the 440 Six-Pack for about $15,000 any time soon…

  • avatar
    no_slushbox

    geeber

    I’m not sure what a mint 1970 Plymouth Road Runner with the 440 Six-Pack was selling for during the peak, but I’m guessing it was more than $30K.

    I think we will see some of the cars that were selling for $30K during the peak selling for $15K.

    I would not be at all surprized to see prices on muscle cars falling on average 50% from their early 2000s peak.

    Europe and Asia are having economic problems as severe, if not worse, than ours.

  • avatar
    M20E30

    While somewhat depressing, I can see a positve side to this. I tend to prefer cars from the 1980′s/Early 1990′s, and they are already worthless as it is, which means they will even depreicate furhter. I can wait for my 5000$ 930!

  • avatar
    Landcrusher

    Justin,

    The expensive toy market is in terrible shape. I can’t get anywhere near the price for my airplane that I would have a couple years ago, and planes over four years old have traditionally appreciated. (I say 2 years ago because threatened FAA fee changes along with fuel and income tax rule changes actually gave us a whack even before this downturn.)

    I say we toy owners need a bailout from Washington. Hell, the light plane manufacturers have started layoffs already. This is about jobs! If recreational luxuries like collectible cars, nice boats, and light aircraft become worthless the owners won’t be buying anymore upgrades or trading up. There will be LOTS of closed businesses and thousands of lost jobs.

    Ya, where da hell is OUR bail out!

    sarcasm


Back to TopLeave a Reply

You must be logged in to post a comment.

Subscribe without commenting

Recent Comments

New Car Research

Get a Free Dealer Quote

Staff

  • Authors

  • Brendan McAleer, Canada
  • Marcelo De Vasconcellos, Brazil
  • Matthias Gasnier, Australia
  • J & J Sutherland, Canada
  • Tycho de Feyter, China
  • W. Christian 'Mental' Ward, Abu Dhabi
  • Mark Stevenson, Canada
  • Faisal Ali Khan, India