The big collector car auctions in January in Arizona are considered by many to be an indicator of the state of the collector car market for the year to come. As with any market indicator, it is not always 100% correct, but if you follow the trends rather than the individual sale results, you’ll find that it’s remarkably accurate. And collector cars as a market, by definition, require both a buyer and seller.
But when the market is strong, as all indicators seem to indicate it is, it suddenly becomes a “sellers market.” This is great for one half of the collectors that comprise that market…the sellers. However, it makes it difficult for the other half of the market, the buyers. If you’re in the business of buying and selling classic cars, it really doesn’t matter. You may have to pay more to buy a car, but you will also be able to sell it for more. Not so for collectors who are looking to buy cars to drive and enjoy, or to add to their collections. For them, a strong market means only one thing: Higher prices. Since collectors tend to hold their cars for a much longer time than dealers, they are more susceptible to the vagaries of the market during the time that they own the car.
There was a time not so long ago when a 1957 Chevrolet Bel Air convertible was a blue chip investment. Prices didn’t fluctuate widely on an annual basis. Rather, they rose modestly but steadily, like clockwork.
This was the iconic American classic car and everybody aspired to own one. And a lot of collectors reached that goal. So did a lot of average working people for whom this car represented a significant portion of their retirement fund. There were lots of these cars in collections large and small. They remained in these collections, assuring that demand would always outpace supply. Until late 2008 that is, when the economy collapsed. Suddenly people who thought that they would own these cars long enough to leave them to their children found that they needed the cash. And slowly but surely the market became flooded with this great American icon in ever increasing numbers. At the same time the number of buyers with the disposable income to buy these cars dwindled. As expected, the result was a significant decrease in the value of these cars, which are now just starting to recover. As you can see, buying a collector can be risky if you intend to keep it for a period of time.
I tend to be like many other collectors in that I do not buy cars for myself with the intention of selling them right away. I drive most of them for a few years before selling, and some I keep much longer. This means that I have to be diligent in buying the right car at the right price.
Earlier this month I attended the Atlantic City Classic Car Show and Auction. This has typically been one of my favorite places to buy cars. Prices have always been reasonable, especially if you arrive early and are ready to buy. Cars that sell very early in the auction often sell at a substantial discount, and cars that trade hands privately in the car corral can often be had for a bargain. This is particularly true if a seller is motivated by a hand full of cash with which to shop for another car, or the opportunity to pack up and go home early.
This year was very different. The first day, which is usually the best for buying, came and went without a single opportunity to buy a car at a price that I considered a bargain. In previous years I’ve bought as many as five cars in the first hour. Cars, even average ones, were bringing very strong prices. Good for the sellers, bad for the buyers. The second day brought more of the same. I wasn’t able to buy anything. As the president might say “The state of the collector car market is good.” At least for the sellers.
I had to leave at the end of the second day and I was disappointed that I would be going home empty handed. I decided to take one more walk around the car corral. A little Yellow 1974 Dodge Dart Swinger caught my eye. I had walked past it a few times before but hadn’t given it a second glance. Now there was a crowd around it so I decided to take a closer look. It didn’t have a 340 engine, but it did have a 318. It also had a factory sunroof and factory air-conditioning. As I looked closer I realized that it was a very low mileage original car with the original build sheet documenting all of the factory options. The closer I looked, the better it looked. The price taped to the window was very fair and I was prepared to pay that price if necessary. But I was still after a bargain. I found the seller and explained to him that I was leaving the show and would be willing to pay him a price that was roughly 80% of his asking price. Much to my surprise he accepted. After a quick credit card transaction that was completed on his iPhone, I was the new owner.
The state of the collector car market may be strong, but if you’re ready to buy, bargains can still be had.