By on September 11, 2009

In a recent news article, RF stated: “…here’s another story where the web pulls the rug from under auto industry types seeking to hide the truth. We’ve been saying it forever (in Internet terms): the collector car market has collapsed. Well, duh. But the mainstream media and specialist press has both been happy to perpetuate the myth perpetuated by the auction houses that their business has been defying gravity. See? Cars are selling for phenomenal prices! Meanwhile, Hagerty’s CARS THAT MATTER is telling readers to pay attention to the men behind the curtain.” In truth, the men behind the curtains are not the market. They are middlemen. They extract a percentage from every participant they can find to witness their activities; Buyer, Seller, hell, even the gawkers have to pay to watch the show. The auction houses are, in ecological terms, parasites on the very market they claim to serve. Like any parasite their success has a tendency to cause harm to their host. These guys are tarted up used cars salesmen. That, and the recent transformation of the car auction into a three ring circus, is what is killing the auction companies, and it has absolutely nothing to do with the collector cars being sold.

All these moves created an artificial market bubble where some people were proven to be fools, easily separated from their money. It successfully convinced them that a machine mass-produced by the hundreds of thousands could have rarity based on factory options. They achieved this by wining, dining, and blinding those fools with the bright lights of live TV coverage. In an era where celebrity is valued above wisdom, why not go for fame and throw a few hundred grand at that Mopar?

Smelling blood in the water, and seeing the resulting feeding frenzy themselves, more parasites attach themselves to the market. Builders and restorers taking less-valued stock from that mass-production pool of used cars and create a host of dubious offerings for the auction block. “Resto-mods.” “Tribute” cars. “Continuation” cars. As a bonus, many of them even turn this activity into TV shows, attaching themselves to the celebrity culture.

Finally even the manufacturers themselves got into the game. Selling the first cars off the lines at auctions. Selling off their own collections. The final insult to both the auction houses and to their own lack of vision: Building retro-cars and selling straight to the consumer.

This whole collection of players created a market-within-a-market, and it inflated too far, too fast to sustain itself. That is what has collapsed. In a decade we might call it “The Muscle Car Bubble” or maybe “The Baby Boom Bubble.” Like all economic downturns a few of the “innocent” were harmed in the collapse, but mostly the damage, deservedly so, has been contained within the bubble’s sphere of influence.

The collector car market is, and always will be, healthy. Collector cars are not beanie babies or Pokémon cards. Automobiles have aesthetic appeal and genuine practical use. They have intrinsic value, both as a utilitarian object, and as a stylistic example of what happens when engineers and designers create something. Sir William Lyons, the man behind Jaguar, once said, “The car is the closest thing we will ever create to something that is alive.”

There is palpable inspiration and creativity expressed in the form of the automobile. People who love cars will always want, buy, and sell them. Private sales make up the vast majority of all collector car transactions, and the Internet is transforming that market from a local to a global phenomena accessible by anyone, anywhere. Car auctions are also dying for the same reason swap meets, car clubs, and buff-books are. You can browse the whole planet’s supply of cars, parts, and automobilia from your laptop or cell phone. On your schedule, at minimal cost. Craigslist has far more reach and power than Craig Jackson. Google will find what you want better than Gooding.

The Collector Car Market hasn’t collapsed. It merely sheds excess now and then when parasitic traders come in and inflate a bubble such as we’ve seen recently. There are top tier collector cars and there are pedestrian collector cars. Duesenbergs and Delahayes will always have value, as will ‘Cudas and Camaros. Only when the latter types start trading at prices near the former you have a market as artificial as testicles hanging off a truck.

Smart people and smart money were never in the bubble anyway. The market survives. Smart auction houses will even survive the stupidity of some of their brethren. Those that haven’t fallen into the trap of celebrity culture glitz will continue to bring buyers and sellers together for as long as there are titles to trade along with the hardware. What we are seeing is the deserving death of a small portion of the market. Couldn’t have happened to a more deserving bunch.

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26 Comments on “Editorial: Collector Car Market: The Sky Hasn’t Fallen; Just a Few Prices...”

  • avatar

    I always thought that the prices being fetched for “clone” car was getting crazy, and a lot of people were trying to sell cars privately for insane amounts of money because of what my friends and I called “the Barrett-Jackson effect”.

    OTOH, I bought my ’66 Chrysler convertible about 3 years ago. I had been shopping for one for over a year. I was okay with one that was showing its age a bit, but still a running, driving car with mostly original parts. At the time, most people selling these were asking $10-15k. I got mine for $9000. It was a rust-free California car but was a Newport, not a 300, and was a very low-optioned example. Since the recession, I’ve seen a few well-optioned ’66 300 convertibles on eBay and the max bid was considerably less than what I paid. Some of these didn’t meet the reserve and sell.

    Fullsize Chryslers never really skyrocketed in value because they’ve never been that popular in the collector market, except to strange people like me. The fact that even these “pedestrian” cars are dropping in price tells me that most of the collector car market is stalling.

  • avatar

    Thank you for this, Chuck. I’ve always said that the collector car market is doing just fine, mostly because I never believed the dog and pony shows on TV reflected anything other than a cult of personality that few cared for.

    Granted, there were some nice “non-69 Camaro” cars going through the block, and the ones that didn’t make it past the editing room are the ones that are doing just fine.

    I found it funny that they’d always go to commercial when the car I wanted to see drove up to the line…

  • avatar

    The collector car market is, and always will be, healthy.

    The problem is that many people equate a healthy collector car market with “getting my asking price for this particular car.”

    The simple fact is that EVERYTHING has been overpriced, and we are due for a massive correction.

    I’ll be very curious to see what the asking prices are at Fall Carlisle and Hershey this year.

    Car auctions are also dying for the same reason swap meets, car clubs, and buff-books are. You can browse the whole planet’s supply of cars, parts, and automobilia from your laptop or cell phone.

    I shed no tears for the death of over-hyped car auctions, but cars (not to mention parts and automobilia) are still something that I want to touch and see before buying. I’ve known too many people who were burned by something that they bought via the internet.

  • avatar

    Every time I happen to stumble across the Metchum action show on TV I just can’t believe what I’m seeing. People paying insane prices for mass produced, re-painted muscle cars (with the rare, optional stick-slip-shifter) that were not particularly well built in the first place, can only be driven in a straight line, don’t stop and require a fuel tanker to follow them if you take one for a ride. Not to mention my wife’s Legacy LGT would blow them into the weeds, even with her driving and she wouldn’t even know she was racing.

  • avatar

    I’m not sure I buy the intrinsic value argument. Collector cars are subject to the laws of supply and demand just like anything else. As cars get old, the supply dwindles. There never were that many hemi Cudas, and there are way fewer now.

    Old cars are not utilitarian, except for oddballs like me who like to find nice old sedans to use as drivers. They are expensive toys. Someday, the economy will come back and car lovers will have some more disposable income that they feel secure in spending on an old car to reclaim lost youth. Later baby boomers are approaching or just past 50, so muscle cars have a way to go before interest will start to fall off.

    When I was a kid, rich guys collected Duesenbergs, Packards and 16 cylinder Cadillacs. Regular people collected Model As and early Ford V8s. As with muscle cars today, the rarest and most desirable cars were the most expensive. Restorers put sidemount tires and rumble seats in cars that were not built with them, or bought roadster bodies to slap on what used to be a lowly 2 door sedan. Just like the tribute cars of today. Now, these 30s and 40s cars have flattened out (even before the current recession). 50s cars are next to flatten and start a slow deflation.

    Baby boomers (and I am one) have always done everything to excess, and when they got into old cars, they did it bigger than ever before. The most sought after got bid to dizzying heights. The market has softened. But it will be back. And when people with lots of money decide that they just have to have that rare muscle car, they will pay what they have to pay to get it.

    I will stick with Mike and those big C body mopars and get all the enjoyment for just a little of the money.

  • avatar

    The best collector cars tend to change hands privately and quietly. With the exception of a few superstar cars (Shelby Coupe, anyone?) the best way to get a good Classic is to join the marque club for a couple of years and discretely let owners of cars you like that you are interested.

  • avatar

    Instead of all that rusty junk, I am more interested in modern day classics. Maybe I should buy an NSX while it’s still possible.

  • avatar

    @ brapoza : Yeah Mechum is one of the circus’s on TV. Some way overpriced $250K+ corvettes and such. Sometimes what they say “A rare option for this car” will only fetch $50K or so. If it’s so rare, why only $50k & Mechum has to convince the seller to take the reserve off. At least Mechum gives me a chance to see that there were some fugly colors back then.
    A local auto museum seller, Volo, seems overpriced every time I look at their site.
    It can be much cheaper to make a clone or your own specs and have fun with it than buy an original and knock %50 off it’ alleged value by driving it around.

  • avatar

    It successfully convinced them that a machine mass-produced by the hundreds of thousands could have rarity based on factory options.

    Is option rarity on Detroit metal really any different from the luxury marques’ customization/personalization/bespoke programs? The Hermes edition of the Veyron coast $900K more than the ‘standard’ model. Rarity is a relative thing. There are indeed people out that that collect all six “special edition” Michael Jordan Gatorade bottles.

    They may build Veyrons and Enzos differently than Hyundai Sonatas, the cars may be hand assembled, but those high end cars are still made with industrial tooling and processes. The 399 Enzos built could have been scaled up to double or triple that number. The Enzos and Veyrons are a manufactured rarity in both senses of the phrase.

    Whether it’s tulips or two door coupes, speculative bubbles distract us from realities of collecting. To collectors, rarity is indeed an important factor, so if you already are a collector of Camaros, you can appreciate the value of a particularly rare Camaro.

    Obviously, a particularly rare Camaro is nowhere as rare, and ultimately as valuable, as a Dusenberg or Delahaye, but the Camaro’s option sheet makes it a more collectible Camaro.

    BTW, just for argument’s sake, I’m guessing that a Mark Donahue raced, Sunoco liveried, Roger Penske owned Camaro might be much rarer than an average Dusenberg.

    I once had the opportunity to ask George Gruen, the famous Nashville guitar dealer and appraiser, if Leo Fender ever thought his guitars would be collected like Cremona violins. Gruen said the old Telecasters and Strats that are now worth tens of thousands of dollars were put together by immigrant Mexican women on an assembly line, and that Fender never dreamed they’d be collectible.

    Even stuff that’s made on assembly lines ends up being rare. Stuff wears out, breaks or gets thrown out like your mom did with your baseball cards.

    When your dealing with anything collectible, factors other than intrinsic value come into play. Rarity is one factor, but other factors and emotional appeal can override rarity. Look at muscle cars. Mopars like ‘Cudas and Challengers get sillier money than more common Mustangs, Camaros and Firebirds. Javelins and AMXs, though, are rarer yet than the Mopar muscle cars but don’t fetch as much money. AMC will always be the Rodney Dangerfield of automakers.

    Hey, collectors are nuts. Selling to collectors can be fun because if you can spin it as a)relevant to their collection, b)somehow different, and c)not widely available, you stand a good chance of making a sale.

    Option or build sheet rarity helps with b & c.

  • avatar
    Martin Schwoerer

    If you want to invest in something that has intrinsic value, then buy art work or collectable books or antiques or something else that doesn’t require costly service on a regular basis.

    Buying cars as an investment is (imho) baloney, fun as it may be. Every time there is a boom, “experts” claim the long-term return on investment is great, but as far as I know, these experts get all silent once the boom is over.

    Chuck may be right: if you’re going to buy an old car, now (that the boom is over) is the right time. But why buy an old car at all? As Russel Bulgin said, there is one thing you can count on old cars to do: they let you down.

  • avatar

    I see a classic car as like a gold coin. You hold, keep it safe, take it out into the sun on occasion to view it’s beauty and rarity, and never in a rush to sell it. One never knows what tomorrow may bring so what is the rush?

    I’m bound to inherit a very rare, numbers matching classic. I plan on babying it as has been done since the car was originally purchased from the dealer. Now I don’t have kids, so I won’t have anyone to pass it down to, so when the time comes I’ll take my time to find it the proper home so that someone else can take it out into the sun on occasion and appreciate it.

  • avatar

    One of the most lucid and on-the-mark articles that have been written on the topic. Point after point is dead on.

    Copy and save it locally. The next time you are thinking of buying a vehicle out of the norm, take it out and read it over and over until every point sinks in.

    Take the article with you when you go to that speciality car dealer who offers to put you on an incredable pedistal if only you’d buy this here particular two tons of iron and plastic.

  • avatar

    This is old news. I’ve watched this market parallel the real estate market since the 70’s. I sell as soon as I see the real estate market slip. It’s always worked since there is a lag time between dirt going first and then iron. I’ve always referred to it as the dirt and iron theory when explaining this to investors. As far as Barrett Jackson goes, it’s like watching a program with Wall Street brokers, and Bernie Maddof as the auctioneer.

  • avatar

    Rising tides lift all boats, and prices did indeed rise (and fall) across the board in the last car bubble. Blue chip collectables however have largely been unaffected. If you have the wherewithal to buy a Duesenberg, a Bugatti (one driven or seen by Veyron, not named after him), a vintage Ferrari, a 300sl, etc. Their prices have been completely unaffected by the recent bubble. If you were buying or selling cars outside the American iron bubble; sports cars, 80s cars, old European or Japanese cars, anything pre-war, the bubble had ZERO impact on you at all.

    As for old cars letting you down? Of course they will and if you ask any old car driver they will tell you that is part of the charm. My summer vacation was a west-coast trip (Seattle to LA, and back) with my sons in our old Jaguar. The Jag’s starter, which has always been finicky when hot, gave up the ghost in Southern California and we push-started the car all the way home. Was that a “let down”? In a way yes. But I wager it will be the exclamation point on the memory of the trip for my kids. Had we taken the same trip in a modern car, it would not have been nearly as fun. Perhaps that should be my next article: The Joys Of Being Let Down By Old Cars.

    And yes, I fixed it once we returned home.


  • avatar

    All assets, including classic cars were inflated by the credit bubble. Lots of people could write a check out of their HELOC no questions asked (such as myself) and buy their dream classic car. Without the easy money, many people are locked out of the market. But as long as people want a particular car, there will be a market for them. As long as I live, I will own a late ’70’s Lincoln, and they are not getting easier to find. That being said, there is no post war American car, new or used, that is worth over $100,000.00 in my opinion.

  • avatar

    An excellent and long overdue article!

  • avatar

    I knew there had to be a car with a schnoz even more goofy than those on the latest Mazdas. I wonder if a Mazda 3 will be worth something in 50 years, too?

  • avatar

    mpresley :
    September 11th, 2009 at 5:56 pm

    I knew there had to be a car with a schnoz even more goofy than those on the latest Mazdas. I wonder if a Mazda 3 will be worth something in 50 years, too?


    Tooooooooooo many of them. Try a RX-7. Some of them are still in running condition.

  • avatar
    Martin Schwoerer

    Chuck, I respect and admire you, but I have not so much admiration for the idea that there is something good, maybe even something joyful, about a car that lets you down.

    Unless you are one of those guys who can find something joyous in collecting flies eyes or learning Basque.

    Really, life is too short for this. You get in your car, you start the engine, you want to get to where you want to get. The trip is an adventure, and anything the car decides it needs to do on the side is not a part of the adventure, it is an unwelcome divergence as joyful as when a child has a toothache or a spouse goes through a quarterly bout of eccentricity.

    Humans, no mammals, no even plants have their worthy tempers, their moods and periods of reflectivity that can cause you to slow down and think about what it all means. But a car, it’s just a tool, you take it out of the box, you use it, and you put it back into the box, that’s all. If your wrench is getting old and slippery, you don’t throw it away, but neither do you try to spend quality time with your kids and the wrench, trying to tighten bolts it’s no longer able to grip, I’d say.

  • avatar
    Andy D

    I dont buy ’em , just appreciate and admire the old iron. My daily drivers are ’88s, but no where near collectables. The Vintage show at Limerock was the berries. Old cars are brokered and middled, just like any other artwork.

  • avatar

    Cars are to big to be really collectible. What happens with cars is that people buy their youth as jpcavanaugh said. Problem is people die so cars from before the buyers youth are simply not sought after which you see with the prices for pre war cars which did nothing during the boom. And the same will happen with cars from the sixties in 20 years time.

  • avatar

    EXCELLENT article. Right on target. I was involved in the muscle car market about 15 years ago (or at least knew the prices), which seemed to be ‘about’ right at that time – IMO. You only received top dollar for the ‘truly’ rare car, and those dollars were reasonable. $30-$40 grand could get you something VERY special. Nice run-of-the-mill muscle cars could be had $5-$15 grand. After I sold my ’69 Vette, I stopped following the market and focused on newer performance cars. Fast forward 12 years later watching TV during one of these auctions. WTF!!!! I could not believe what people were paying for mass produced muscle. More money that brains, that’s for sure. I knew this market HAD to crash, at least for the run-of-the-mill stuff. That being said, the truly rare cars will always have demand.

    It’s all about getting in at the right time, and with the right car. In 2001 I was looking for a toy that I though would hold its value. The three cars I selected were the Toyota Supra Turbo (last generation), an early 90’s Acura NSX, and a 1996-1998 Viper GTS. At that time, I found three low mile examples (20K). 1993 Red Supra Twin Turbo was $19,000, 1992 black NSX was $25,000, and a 1998 Silver/Blue Viper GTS (I’ll never tell, but MUCH more than others). I eventually selected the Viper, but all three would have been great picks as far as holding value. I still think the NSX and Viper are VERY STRONG buys in today’s market, especially if you plan to keep the car for 10 years. As long as you can find cheap/reasonable insurance, as both cars are fairly reliable + cheap to maintain compared to others in class. Especially if you can turn a wrench to do the basic stuff.

    BTW – Cheap early S2000 would be a great buy right now….

  • avatar

    The people who bought old cars because they loved the car instead of as an “investment grade addition to their financial portfolio” were scarcely hurt by this bubble.

    The true old car enthusiast doesn’t see $$$ signs when he looks at an old car, but the car itself and the pleasure of owning it, the memories it brings back, or what it represents.

    This happened in the 80s as well. The specualtors took the beating and the car lovers continued right along, pretty much unphased.

    BTW: JPCavanaugh: personally I would find a low optioned Newport convertible more interesting than a loaded up 300. You expect that with a 300, people always chase those. You made a sensible choice. Chances are the Neports have all been chewed up along the way to provide parts for 300s.
    You scored, even though you may have depreciated a bit.

    But then: you’re in for the love of it, not the profit.Your intention was to enjoy the car, not flip it, correct ? You’re still riding in style!!!!

  • avatar

    When will people learn cars just aren’t an investment. A passion, a hobby, but definitely not an investment. Remember what your Daddy told you.
    “Son if its got tits or tires its gonna cost you money and heartache.”

  • avatar

    Did anyone ever notice that many of the very same cars are being auctioned off on Barrett Jackson year after year ? These are not car collectors , but car investors – buying each others cars , keeping them one year , then putting them up for auction again to drive prices in the collector car market up . These are the very parasites the article mentions , more money than brains indeed !

  • avatar

    @Martin Schwoerer: Some people “get it”, like Mr.Goolsbee and I. Others don’t. You just don’t have the right attitude to appreciate the old car ownership experience. Most problems encountered en route are inconveniences, but if you’re familiar with your car and carry some basic tools, you’ll almost never actually get stranded on the side of the road. I haven’t yet.

    @DweezilSFV: I think the last part of your comment was actually directed at me. It would be nice if my ‘vert had some rare options than our other 66’s don’t, since my wife has capped the number of cars I’m allowed to buy. The lack of options was one reason the car was in my pricepoint at the time though, so I can’t complain too much. Ironically, now that I have all the gremlins worked out of it, she’s put more miles on the ‘vert than I have this year.

    @Zombo: I’ve read that a lot of the guys that buy and sell cars at big auctions like BJ only deal in that market, so they’re in their own little bubble. A few people make big money at BJ by tracking down and buying excellent rare cars through private sale then bringing them to BJ.

    On another angle to the prices that low-production muscle cars were going for til recently, some guy paid a whopping sum for a documented ’71 Hemi Cuda convertible a few years ago. When interviewed, he was asked if he felt he overpaid for the car. He explained that that car was one of the benchmarks for all E-body (Cuda and Challenger) prices, and his garage already contained a number of Hemi and 440 6-pack E-bodies, which had instantly increased in value because of the new benchmark price. Interesting POV; I hope he sold a couple of them while the market of was hot.

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