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.... Although if you follow BAT, you'd never know it. However, if the car market is correcting itself, a housing market correction can't be far behind.
They’re calling it the “Great Reset” in the commercial property sector. In the fine art world, they are using the term “contraction.” Here in the collector car world, we might just want to call it a “reality check” as prices for our beloved vehicles are coming back down to Earth after years of a historic run up.
Whatever you want to call it, certain asset classes are experiencing a market correction, reflecting greater economic factors and uncertainties. Collector cars are square in the middle of that mix with average sale prices at both live and online auctions down some 17% in October 2023 compared to October 2022, according to Classic.com. The pull back in average values followed an 18% drop in September 2023 in terms of year-over-year values. The same set of aggregate data released by Classic.com showed a sell-through rate of just 62% for October, a drop of four points from the prior year and significantly below the rates of 2019, 2020, and 2021.
Here at Hemmings Auctions, for vehicles sold at auction and via post-auction Make Offer listing, we have seen prices retract by 5% in the same period, though we have seen vehicles with what we considered market-correct reserves remain unsold. Our dedicated Auctions Research Specialists always look at the most recent activity to determine reserves. Even with research that is as up-to-the-minute as possible, auction success has proven more difficult in recent months. The net sell-through rate at Hemmings Auctions was 62% in October 2023 versus 68% in October 2022. Despite that decrease, overall sales via the platform increased 8%, given the higher overall volume of vehicles offered.
We spoke with Edward Lovett, the founder and CEO of U.K.-based The Collecting Group, which includes Collecting Cars, a global online auction platform with customers in Europe, Asia and Australia. Lovett described this softening of the market as “Rapid, aggressive and probably happening at a rate faster than sellers want to accept.” The Collecting Group also operates an auction for high-end watches, and like fine art and wine, that market has also softened, too.
Doug DeMuro, YouTube personality and founder of Cars & Bids, the online auction site that focuses on vehicles from the Eighties and newer, also weighed in on the subject. Via email, DeMuro told Hemmings, “The current market softening can best be described as a return to reality following three years of intense growth.” DeMuro, noting that “The overall enthusiast car market has remained very strong in 2023 relative to the pre-COVID era,” adds that the combined forces of increasing inventory and falling used-car retail prices have both led to the softening in the collector car market.
This past August at Monterey where the world comes to not only celebrate collector cars, but to buy the best of them, the five live auction events saw roughly 1,200 cars cross the block in total, an increase of 20% over 2022, but only 68% of cars sold, a drop of 10 percentage points from 2022. Similarly, overall sales of approximately $400 million showed a drop of 15% from the year prior.
With reduced sell-through rates, lower average prices, and shaky macroeconomic conditions, uncertainty has entered the market for both buyers and sellers. DeMuro wrote, “Due to higher interest rates and softer overall demand, we’ve seen some reluctance among sellers to list their cars in favor of waiting for a more favorable market.” When asked if Collecting Cars was encountering the same trepidation with buyers, Lovett responded, “Absolutely.”
We have what the finance guys call “alternative assets.” The “alternative” part comes because collector cars are not cash, equities like stocks, or fixed-income assets like bonds, all of which can usually be traded rapidly. Alternative assets like fine art, wine, coins, even real estate, are a bit more difficult to convert to cash when needed—but they still have significant value.
Like other assets, collector cars have taken a hit in the face of inflation, the rise in interest rates and the much lower availability of capital. Those factors, along with a massive rise in office vacancies following pandemic era work-from-home policies, have done a number on commercial real estate, with some analysts predicting a cratering of values as much as 40% in some cities by 2025.
As real estate remains one of the largest repositories of wealth in the U.S. and many other parts of the world, some collectors may be retreating from the vehicle market to protect those other assets. This same effect has reared its head in the world of fine art, which has had a similar run up in values as the collector-car market over the last 15 years. Christies, the world’s largest auction house by dollar volume, reported a 23% drop in revenues for the first half of 2023 versus the same period in 2022. The market for collecting wine has shown similar sobering results this year, with certain categories off by 10% in 2023, after several years of some very high returns. Sound familiar?
During The Great Recession of 2007 to 2009, most collector car values took a pretty big hit. The biggest factors then were an abrupt drop of more than 27% in the average home value in the U.S. which coincided with severe limitations on credit to just about everyone, ending the days of easy money. Some housing markets, of course, experienced far greater hits to home values. A significant increase in unemployment also removed many players from the market.
Part of the run up in values since that previous low came from the availability of capital at historically low rates for an extended period of time. Throw in several billions dollars in pandemic stimulus money doled out to private citizens and businesses alike over two different administrations in Washington and just about every asset class was awash in cash. Those days are long gone, and the dynamics of the collector car market have changed dramatically in just a few short years.
Here at Hemmings Auctions, we had 24% more listings in September than a year ago, and 29% more vehicles sold via the service. The rise in both listings and sales suggests that the overall market for collector cars has grown, with newer, younger individuals joining the hobby, and trusting online auctions, which have seen the highest growth rates. DeMuro noted that “Values of truly special cars from the 1980s through the 2000s seem to be flat or even growing, despite market conditions swinging in the other direction – cars like the Ferrari F40 or Lamborghini Countach have remained high as young people are ‘aging in’ to these vehicles and pursuing them, even with a slower overall market.”
Secondly, given the massive overall increase in collector car values since 2008, even a 20% correction is relatively small compared to that run up for many models, though the uncertainty of the economy as a whole is poised to possibly show a deeper retraction in the months to come. Still, values for many cars went up by a factor of two to three times, or even more, from the bottoming out 15 years ago. Your collector car still has value, even as an alternative asset on your balance sheet. It has a long way to go to zero. DeMuro considers the changes in the market to be not so much a contraction but “a return to reality following three years of intense growth.” He also added that he sees the market “more returning to a traditional pace of depreciation and regular supply and demand.” With new-car inventory slowly returning to normal, “flipping” in-demand news cars is a lot harder in the second half of 2023 than it was in the first half of 2022.
Another thing to consider is that not all cars and not all segments are created equal. While highly pedigreed muscle machines like factory-original Hemi cars appear to be holding strong, the more common fare with a 383 or 440 have already started retreating in value. Likewise, there are some more modern collectibles from the 1990s and 2000s that are just in their ascendancy.
It's 2023 and we live in a great time when it comes to staying informed. There are many tools available online to get the latest read on the value of your collector car. You can search for sold listings on Hemmings, which will show all vehicles sold via Hemmings Auctions and Hemmings Make Offer. Filters allow you to narrow the search by make, model, year and more. There are other sites like Classic.com, which will also readily show sold listings so that you can see more details behind the numbers. With Hemmings Valuations, we do the research for you, preparing a personalized market value report for your vehicle.
Markets are ultimately unpredictable, so we can’t tell you when this correction will end, but we will continue to monitor the situation and report the current conditions for the value of collector cars, both on the Hemmings Marketplace and market as a whole.
They’re calling it the “Great Reset” in the commercial property sector. In the fine art world, they are using the term “contraction.” Here in the collector car world, we might just want to call it a “reality check” as prices for our beloved vehicles are coming back down to Earth after years of a historic run up.
Whatever you want to call it, certain asset classes are experiencing a market correction, reflecting greater economic factors and uncertainties. Collector cars are square in the middle of that mix with average sale prices at both live and online auctions down some 17% in October 2023 compared to October 2022, according to Classic.com. The pull back in average values followed an 18% drop in September 2023 in terms of year-over-year values. The same set of aggregate data released by Classic.com showed a sell-through rate of just 62% for October, a drop of four points from the prior year and significantly below the rates of 2019, 2020, and 2021.
Here at Hemmings Auctions, for vehicles sold at auction and via post-auction Make Offer listing, we have seen prices retract by 5% in the same period, though we have seen vehicles with what we considered market-correct reserves remain unsold. Our dedicated Auctions Research Specialists always look at the most recent activity to determine reserves. Even with research that is as up-to-the-minute as possible, auction success has proven more difficult in recent months. The net sell-through rate at Hemmings Auctions was 62% in October 2023 versus 68% in October 2022. Despite that decrease, overall sales via the platform increased 8%, given the higher overall volume of vehicles offered.
We spoke with Edward Lovett, the founder and CEO of U.K.-based The Collecting Group, which includes Collecting Cars, a global online auction platform with customers in Europe, Asia and Australia. Lovett described this softening of the market as “Rapid, aggressive and probably happening at a rate faster than sellers want to accept.” The Collecting Group also operates an auction for high-end watches, and like fine art and wine, that market has also softened, too.
Doug DeMuro, YouTube personality and founder of Cars & Bids, the online auction site that focuses on vehicles from the Eighties and newer, also weighed in on the subject. Via email, DeMuro told Hemmings, “The current market softening can best be described as a return to reality following three years of intense growth.” DeMuro, noting that “The overall enthusiast car market has remained very strong in 2023 relative to the pre-COVID era,” adds that the combined forces of increasing inventory and falling used-car retail prices have both led to the softening in the collector car market.
This past August at Monterey where the world comes to not only celebrate collector cars, but to buy the best of them, the five live auction events saw roughly 1,200 cars cross the block in total, an increase of 20% over 2022, but only 68% of cars sold, a drop of 10 percentage points from 2022. Similarly, overall sales of approximately $400 million showed a drop of 15% from the year prior.
With reduced sell-through rates, lower average prices, and shaky macroeconomic conditions, uncertainty has entered the market for both buyers and sellers. DeMuro wrote, “Due to higher interest rates and softer overall demand, we’ve seen some reluctance among sellers to list their cars in favor of waiting for a more favorable market.” When asked if Collecting Cars was encountering the same trepidation with buyers, Lovett responded, “Absolutely.”
What factors are at play in this market correction?
It's easy to fashion the collector car world as a hobby. In fact, we frequently use the term and many of us here at Hemmings consider having fun with our vehicles as genuinely our favorite pastime. The relative stability and even growth of the monetary value of our cars makes enjoying the hobby a little easier: Buy an old car, drive it, enter it in events, and then sell it without worrying too much about depreciation.We have what the finance guys call “alternative assets.” The “alternative” part comes because collector cars are not cash, equities like stocks, or fixed-income assets like bonds, all of which can usually be traded rapidly. Alternative assets like fine art, wine, coins, even real estate, are a bit more difficult to convert to cash when needed—but they still have significant value.
Like other assets, collector cars have taken a hit in the face of inflation, the rise in interest rates and the much lower availability of capital. Those factors, along with a massive rise in office vacancies following pandemic era work-from-home policies, have done a number on commercial real estate, with some analysts predicting a cratering of values as much as 40% in some cities by 2025.
As real estate remains one of the largest repositories of wealth in the U.S. and many other parts of the world, some collectors may be retreating from the vehicle market to protect those other assets. This same effect has reared its head in the world of fine art, which has had a similar run up in values as the collector-car market over the last 15 years. Christies, the world’s largest auction house by dollar volume, reported a 23% drop in revenues for the first half of 2023 versus the same period in 2022. The market for collecting wine has shown similar sobering results this year, with certain categories off by 10% in 2023, after several years of some very high returns. Sound familiar?
During The Great Recession of 2007 to 2009, most collector car values took a pretty big hit. The biggest factors then were an abrupt drop of more than 27% in the average home value in the U.S. which coincided with severe limitations on credit to just about everyone, ending the days of easy money. Some housing markets, of course, experienced far greater hits to home values. A significant increase in unemployment also removed many players from the market.
Part of the run up in values since that previous low came from the availability of capital at historically low rates for an extended period of time. Throw in several billions dollars in pandemic stimulus money doled out to private citizens and businesses alike over two different administrations in Washington and just about every asset class was awash in cash. Those days are long gone, and the dynamics of the collector car market have changed dramatically in just a few short years.
What should a car collector do in this volatile market?
First of all, not all the news is bad. Overall sales volume is up for the year. Classic.com’s monthly market reports have shown a consistent growth in the total number of cars to be auctioned in both live events and online nearly every month this year. Though October did show a 1.9% drop in that volume compared to October 2022 as well as an 8% drop in cars sold, the total volume of listed cars was 90% greater than the same month in 2020, with total sold listings 52% higher.Here at Hemmings Auctions, we had 24% more listings in September than a year ago, and 29% more vehicles sold via the service. The rise in both listings and sales suggests that the overall market for collector cars has grown, with newer, younger individuals joining the hobby, and trusting online auctions, which have seen the highest growth rates. DeMuro noted that “Values of truly special cars from the 1980s through the 2000s seem to be flat or even growing, despite market conditions swinging in the other direction – cars like the Ferrari F40 or Lamborghini Countach have remained high as young people are ‘aging in’ to these vehicles and pursuing them, even with a slower overall market.”
Secondly, given the massive overall increase in collector car values since 2008, even a 20% correction is relatively small compared to that run up for many models, though the uncertainty of the economy as a whole is poised to possibly show a deeper retraction in the months to come. Still, values for many cars went up by a factor of two to three times, or even more, from the bottoming out 15 years ago. Your collector car still has value, even as an alternative asset on your balance sheet. It has a long way to go to zero. DeMuro considers the changes in the market to be not so much a contraction but “a return to reality following three years of intense growth.” He also added that he sees the market “more returning to a traditional pace of depreciation and regular supply and demand.” With new-car inventory slowly returning to normal, “flipping” in-demand news cars is a lot harder in the second half of 2023 than it was in the first half of 2022.
Another thing to consider is that not all cars and not all segments are created equal. While highly pedigreed muscle machines like factory-original Hemi cars appear to be holding strong, the more common fare with a 383 or 440 have already started retreating in value. Likewise, there are some more modern collectibles from the 1990s and 2000s that are just in their ascendancy.
It's 2023 and we live in a great time when it comes to staying informed. There are many tools available online to get the latest read on the value of your collector car. You can search for sold listings on Hemmings, which will show all vehicles sold via Hemmings Auctions and Hemmings Make Offer. Filters allow you to narrow the search by make, model, year and more. There are other sites like Classic.com, which will also readily show sold listings so that you can see more details behind the numbers. With Hemmings Valuations, we do the research for you, preparing a personalized market value report for your vehicle.
Markets are ultimately unpredictable, so we can’t tell you when this correction will end, but we will continue to monitor the situation and report the current conditions for the value of collector cars, both on the Hemmings Marketplace and market as a whole.
