A Look Ahead at 2016: Experts weigh in

[Skwerl]

Interesting article by Edmond Saran here: Le Monde Edmond | Classic car market: Outlook for 2016

He asks a few experts for their assessment of the collector car market for the coming year. I'm not at all as knowledgeable as these guys, but their views seem on-point and realistic to me and reflect what I've observed lately myself.

I predicted that the classic car market would slightly weaken in 2015. Turns out I was not so wrong.

For 2016 I thought it would be interesting to the get the views of 4 leading experts in the classic car world. Here is their opinion on the classic car market for 2016. I will submit my own views in the end.

James Cottingham, DK Engineering – a leading Ferrari specialist in Europe:

2016: Modest expectations

For 2016 we will see some extremely rare and ultimate “blue-chip” motor cars coming out of long-term ownership; these continue to appreciate in value & break records. We have seen a number of new significant collectors joining the party over the last few years, their taste has matured and so have their ambitions! Meanwhile in the general classic car market we will continue to see strong sales but growth of these will maintain a steady/stable pace, the expectations of owners must match the market.

Simon Kidston, leading classic car broker, judge (pebble beach) commentator (villa D’Este, Mille Miglia) and collector:

2016: The Great Unknown

More than ever in recent years, collectors, professionals and onlookers look ahead to 2016 with uncertainty and, if they’re honest, a certain trepidation. Recent world events- political and economic- have done nothing to bolster confidence and serve to remind us how quickly established and accepted wisdom can change. I expect more sellers than buyers, and some exciting opportunities. But your BS detector will be working overtime to sniff out the gems from the shrapnel…


Marcel Massini, leading Ferrari historian and expert in vintage Ferrari:

Outlook 2016: All depends on economy and interest rates. We will see some very expensive top tier/high end Ferraris becoming available in early 2016. Only the very very best will do well, everything else is stabilizing.

Max Girardo, MD Europe RM Sotheby’s leading auctioneer:

My view on the market is that most cars have reached what I call their happy place. Prices are stabilizing in that I do not think that we will
see the same increases that we have seen in the last 5 years. I see this as very positive as a market that reacts to price fluctuations
is a healthy one.

And finally a collectors point of view:

The car auction houses have reported record sales again and some important cars have set new records. Even Kidstons Index K500 shows a 7.5% gain for the year so far. But these numbers are misleading. Look beneath it and the classic car market is clearly weakening. Let me explain.

The top end of the classic car market has held up well. Trophy cars like the Ferrari 250 SWB, the Aston Martin DB4 Zagato or rare Ferraris (like the 290MM that just sold for $28 at RMSothebys) have continued to sell at near record prices. But this does not make up the classic car market. The broader market has fared less well. What do I mean by that? I am talking 300SL Gullwings, roadsters, 246 Dino, Porsche 911 Targas, Porsche 356, Aston Martin DB4 and DB5 and Ferrari 275 GTBs. They have hardly shown any price growth at all for 2015.

There are several reasons why prices are stagnant.

1) Owner’s expectations. If there was one consistent theme throughout 2015, it was that the owners expectations of selling prices did not match the market prices. Owners of cars got greedy from a strong 2014 and set their price expectations very high. The auction houses did a bad job of curtailing these expectations. But since auctions houses wanted to secure good cars – they accepted the owners demands. Many cars had unrealistic expectations and buyers striked with many cars going unsold.

2) The second reason has to with diminishing returns. Prices have risen strongly over the past decade and as one expert rightly noted ‘trees do not grow to the sky. Not even for vintage Ferrari’. Sooner or later the price increases we have seen were bound to slow down.

So how I do I see the classic car market for 2016? Also how do the experts see it?

I see further weakness. To elaborate – I don’t really see a crash coming but rather stagnant to slightly falling prices. Exceptional and rare cars will continue to hold up better than the rest of the classic car market. I personally think that many investors- collectors are leveraged to the car market. When rates start rising in the US next year this will have adverse effects on prices. Maybe not so much in 2016 but in the coming few years. Nobody wants to admit it but exceptionally low rates for so many years was an invitation for collectors, investors and speculators to leverage themselves.

I think the party is over in the classic car world. Every year price increases of 20%+ that is over for the time being. Its time to fasten your seat belts. For the long term collector this could be a good opportunity.

Basic tl;dr is that they agree that perfect blue chip cars will stay strong and perhaps keep going up, but the vast majority of less-than-perfect cars that have flooded the market will stagnate or maybe even decline, as long as sellers and auction houses aren't too stubborn to recognize market conditions.

I thought it was interesting input and pertinent to many of our discussions here.

[KNS]

I hope prices do actually slow down and stabilize. If prices "weaken" a bit, I don't have a problem with that either.

[christiandk]

Just like the last 4 years prices will implode come springtime - people will realize that most 911 leak oil and that a Hyundai Coupe is faster and more reliable.

[techweenie]

Originally Posted by christiandk

Just like the last 4 years prices will implode come springtime - people will realize that most 911 leak oil and that a Hyundai Coupe is faster and more reliable.

Exactly. Plus, winter is coming.

[Matt Monson]

Originally Posted by techweenie

Exactly. Plus, winter is coming.

Tomorrow no less...

While the people consulted are experts in their fields they seem to be Ferrari centric. The Porsche and Ferrari markets have never been the same.

[McLovin]

I think there's no doubt that the market has at least slowed down, and for a lot of cars leveled out or declined.

I'd put most Porsches in that category. Esp. stuff like 78-89 Carreras, but even "regular" longhoods (average condition Ts and Es, etc.)

78-89 I'm most familiar with. There's been some sales this year that would have been higher last year. Like the 86 Carrera coupe that went for $26K on BaT last week.

And you see a lot of cars sitting now. People have tried to push the market for these past the $50K barrier, but it just didn't happen. You see those trying to get in the high 40s sitting on the cars forever now.

This is after several years of consistently increasing prices.

Even more blue chips things, like 50s speedsters, have had some lower sales this year.

For longhoods, they were obviously on fire for many years, with sellers constantly increasing prices and buyers paying, pushing the market higher. But now the market push has slowed down. A good example is the one owner green T coupe in the classifieds. The seller priced it ahead of the market at $99K, anticipating increasing prices, but it hasn't happened. So now the price keeps getting lowered, and even with that, no bites.

Anyone who has been around this for 30 years knows that there's no question prices for "normal" collector cars will drop, and significantly. It's not a matter of "if," only of "when."

("Normal" being relatively regular production cars like 911s, BMWs, etc., not Ferrari GTOs, etc.)