Last week, I talked about things to look for in your next buy — specifically things relating to cosmetically and mechanically restored cars coming out of the Coronavirus era.
But as reader Jeff pointed out, there are some larger questions looming out there as well, so let’s take a minute to look at them.
“With all due respect, I’m wondering if you’re avoiding the elephant in the room. For most, ‘your next buy’ will be affected by math, economically speaking.
What will happen to the collector car industry going forward? Will my cars’ value return? Which ones? Will prices drop, fire sales? Are there opportunities to buy?
I’m just wondering what to do next?
Appreciate your thoughts & any feedback.”
There’s no arguing that math makes the world go ‘round, especially in the old car market. If you don’t have money, you won’t be buying cars. But fundamentally speaking, while troublesome math will be a factor for a lot of buyers, the collector car world will endure.
Old car buyers tend to have discretionary funds that allow for old car purchases, and right now, an old car is a fantastic thing to take up your time. We’ll probably see fewer first-time buyers in the short term due to reallocated discretionary funds (math), but I do expect to see some longtime owners swapping out one car for another. And after we come out the other side? The market will still be there, ready to grow back into health with the rest of America’s financial structure.
In the meantime, adaptation is the name of the game.
This week, Barrett-Jackson announced it’s hosting an online event in May, and other auction houses, such as RM Sotheby’s and EG Auctions, have already hosted and are hosting their own online events as well. From what I’ve seen in the results of those auctions, prices have been stable. Buyers and sellers are still coming together, if only remotely.
So to answer the first part of Jeff’s question, I think we’re already seeing what’s going to happen to the collector car industry going forward. It, like everything else, is figuring out a new way to continue on, and that will likely change how some of this business is done, even after things normalize out in the greater world. There may very well be more online platforms available to buyers and sellers from now on — or at least, better developed ones than we had before.
For now, you’ll still see online auctions bring good cars to market — maybe not in the huge numbers we could have expected in the past — but they’ll be for sale nonetheless. Watch the prices they bring.
Now, in terms of those prices? Will values that have fallen return? I think the resounding answer to that is it depends. What cars are we talking about? A 1970 Hemi ’Cuda has a different trajectory than a 1958 Edsel, for example. Condition plays a big role, too, just like before.
In the short term, it’s hard to predict what will change and how, but I do think that fallen numbers will bounce back more quickly for the cars that have done well in the past. Documented muscle, cars with great condition, that sort of thing. The fundamentals of what to buy have not changed.
What about flavor-of-the-month cars? I was all hot to buy a C10 or Fox Mustang before, several months stuck at home is just going to make me want one worse. As soon as I was financially and physically able, I’d be hunting. If demand drives prices, the limiting factor is how many of those people are out there, and what their financial status is right now. Prices here, if they fall, may take longer to rebound. In the meantime, there may be deals.
So yeah, there will be opportunities out there for buyers in the midst of any pricing downturn, just like there was for buyers in 2008 and 2009. The best advice? If you’re buying, only settle for the best example(s) you can find of the cars you really want.
One last thought: Consider the size of events we used to see prior to Coronavirus. No, I don’t mean how many cars bought and sold, I mean how many people walked into each Barrett-Jackson or Mecum auction. How many people were at Woodward Avenue or on the lawn at Pebble Beach?
These people care about cars, and the virus hasn’t changed that. Prices follow that interest, which should be reassuring. It may take a while for the old car world to bounce back to where it was before the virus changed our lives, but I don’t doubt that it will.