Classic Car Collecting: A Worthy Investment?
With the continued economic recovery and Dow Jones achieving new heights in recent months, interest in the collector car hobby continues to be on the rise. Over the years, investors have found value in various segments of the collector car industry, but there is an inherent risk as trends change and the industry evolves. As many hold onto the nostalgia of their childhood dream cars, questions arise over how to get into the industry and whether or not it is a good investment.
“We had a very solid auction in January and the Hagerty Market Index, now at 64.73, increased in March for the third consecutive month, showing that the market continues to expand,” said Chairman and CEO of Barrett-Jackson, Craig Jackson. The expansion, Jackson says, is from a strong economy that is providing more disposable income for many that have always had a passion for cars. “I also think the tax breaks here have helped and, with consumer confidence high, you see a lot of liquidity and people coming in to buy the cars of their dreams that they really want to enjoy.”
The market growth, however, is not a blanket over the entire collector car industry. With the evolution of younger generations getting involved in the hobby, numerous trends have emerged that have seen values both rise and fall. “Certain areas at the top of the market, like ultra-rare European sports cars and prewar classics, are struggling because older generations are slowly leaving the market,” Jackson added. It’s a natural, cyclical change that also occurred in the 1990s, when Jackson took control of the company and shifted focus to muscle cars, which he says his generation grew up loving.
Now the same trend is happening with Gen Xers and Millennials, who have had a noticeable presence at the auctions of late. “Especially over the last year we have seen a steady growth of younger bidders and, as expected, we’re seeing an increased interest in the cars of their generations.” Performance cars of the 1970s and 1980s, like the Trans Am, Fox Body Mustang and Buick Grand National, have all seen a rise in value. At the 2018 Scottsdale Auction, Barrett-Jackson sold five Grand Nationals, including a 1987 Grand National GNX VIN 003 for $126,500.
That is not the only segment on the rise, though, as Resto-Mods – older vehicles with a classic look restored with new technology – are also a favorite among the next wave of collectors. Barrett-Jackson saw a 1958 Chevrolet Corvette Custom Convertible sell for a staggering $440,000 at Scottsdale, showing not just the strength of Resto-Mods, but the willingness of collectors to spend big money on them. “Corvettes are certainly among the most desirable of the Resto-Mod market. They continue to increase in value and we saw that in Scottsdale with 12 custom Corvettes each selling for over $100,000,” Jackson added.
Other emerging markets within the collector car industry also include modern supercars, providing the power, technology and look that checks the boxes for many collectors. In addition, Jackson added that many manufacturers are factoring in collectibility into their production plans, like the Ford GT and Shelby models, Chevrolet ZL1 Camaro and ZR1 Corvette, as well as the Dodge Demon and Hellcat, often offering a limited production and exclusive ownership to increase future value.
Also rising in the market are some Japanese imports, exotics from the 1970s and 1980s like Porsches, Ferraris and Lamborghinis, as well as SUVs and pickups, like a 1941 Dodge Power Wagon that sold in Scottsdale for $220,000. “Just like the baby boomers grew up in pickups and station wagons, which continue to be very popular, millennials have grown up with trucks and SUVs, that’s what they are comfortable in and one of the reasons that entire segment continues to grow.”
In just the last three years, Barrett-Jackson has seen a 55% increase in trucks and SUVs cross the block at its four annual auctions, including 76 at Scottsdale this year, up from 38 at Scottsdale in 2016. “Not only has the volume increased, but we’ve really seen some great custom work on trucks and SUVs recently, and we certainly see that trend continuing.”
But for many intrigued by cars or just entering the industry, the question remains if it is a good investment and what is a good starting point?
“The first thing a buyer needs to decide is how he or she wants to use the car,” said Jackson. “Don’t just buy a car for an investment, buy something you love and are passionate about. If you plan to drive the car every day, get something drivable, like a Resto-Mod. On the other hand, if you’re looking for a show car, you might be better going after a matching-numbers car that has been fully restored.”