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What the Heck’s Going On with Classic Cars?

by Wolf Richter, Wolf Street:

The asset class of Beautiful Machines heads south.

Prices of collector cars fell again, according to the April report by Hagerty, which specializes in insuring vintage automobiles. After a tremendous price surge that peaked in 2015, they’ve been ratcheting their way down ever so slowly. But it adds up after a while.

The “Hagerty Market Rating Index” – which tracks the “heat” of the market – fell 0.33 points to 66.65 in April. The index, which is adjusted for inflation, is now down 7.4% from its all-time high of 71.99 in May 2015. Here are more clues from Hagerty’s report:

The number of owners expressing the belief that the values of their vehicles are rising continues to fall. The number is at its lowest since November 2013 for owners of mainstream vehicles and at its lowest since May 2012 for owners of high-end vehicles.

Expert sentiment dropped for the first time since November. Market observers have cited that many cars with prior auction results have been changing hands for less money than in the past.

Then there is the price-based “Hagerty Market Index.” It fell 1.44 points to 161.06 in April, down 10.8% year-over-year, and down 13.3% from its all-time high in September 2015 (185.86).

The Hagerty Market Index, which is adjusted for inflation and is based on changes in dollars and volume of the market, fell about 20% during the Great Recession, then surged 75% on an inflation-adjusted basis to its peak in September 2015. Since then, it has been heading back down. It has now fallen nearly 25 points from its peak, exceeding its point decline during the Financial Crisis:

The data includes the results from the collectible automobile auction on Amelia Island off the coast of Florida on March 10-12. The auction had been hyped with the usual fanfare to stir up the animal spirits’ desire for beautiful machines.

“In recent years the Amelia Island Auctions have quickly emerged as a significant indicator for the public auctions segment of the classic car market,” Jonathan Klinger, the spokesman for Hagerty, told Bloomberg before the auction. “It is no longer just Arizona auctions in January and Monterey in August that matter.”

The auction was going to be hot. Bloomberg:

According to Hagerty predictions, the final cull will be $135 million to $140 million among all five auction companies that will sell there this year (RM Sotheby’s, Gooding & Co., Bonhams, Hollywood Wheels, and Motostalgia).

Read More @ WolfStreet.com

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