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Wall St. Journal article on troubles in the classic car market


1935Packard

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<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">While many in the collecting business say there will always be enough wealthy people who want vintage cars, others fear the market could be headed for a repeat of its last crash in 1989, when <span style="font-weight: bold">speculators who had no particular interest in vintage cars </span>drove a steep, if fleeting, run-up in prices. Today, more of the buyers are car lovers, but <span style="font-weight: bold">speculation underpins their motives </span>as well.

"The love of cars <span style="font-weight: bold">never outweighs the love of money</span>," Mr. Gooding says.</div></div>

This last paragraph says it all. I think it's an overdue market correction.

Then again I was raised to believe that flamboyance and ostentation are always the height of bad taste and shallow values.

I am frankly quite tired of investors and speculators screwing up markets.

I Timothy 6:10 for those who care to read.

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Glenn,

The problem in my opinon, has always been verification of market correction. With most economic factors, we have statistics to gauge change.

With automobile value, to my knowledge, we don't have institutions that want to admit they are taking less for cars. We might get a "macro" figure from the Arizona Big House auctions but I doubt it. [i.e. overall sales down 5 per cent or such]

The old car hobby has never had a way to track success or failure of sales like the new and used car business does. We all wonder, many times out loud, who pays an old car dealer $75,000 for a 1969 GTO or $80,000 for a restored fifties cruiser. they are not about to tell us that in fact that GTO sold for $45,000 or such, and still represented a 30% profit margin.

The trickle down is - as we know - the back yard pull outs of junk on ebay that the seller has placed an astronomical reserve on it "because I saw one go for $100,000 in Arizona.

Again, no sale or a quiet sale that is not recognized. So no way to tell realistically if prices will be corrected ro if the old car market will stay the proverbial man clasping his hands over his ears going 'lalalalalala' not wanting to hear the bad news.

I wish just once, just once, Hemmings would undertake a multi month, ersatz year, survey of ACTUAL sales including those silly dealers, and post the (what would be) eye opening results in an article in Hemmings and/or Hemmings Classic Car.

But again, that defeats their personal agenda, and I get that - that if they (sort of) critisize their own customers (dealers and individual marketers) then they might lose the aura that cars sell for posted amounts or satisfactory deals.

What's a fair profit margin for a rare painting, a bottle of vintage wine or a nice old car?

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I have had several "journalists" call this office in regards to similar stories. The last one ended up scrapping her entire story. Interesting that they did not bring up the sale of the 10.8 million dollar Ferrari!

I guess my gripe is that so much of what you read good or bad is slanted to prove the writers supposition and then taken by the general population as fact.

The recent scam pulled off by political satirists on YouTube proved that many nationally known reporters do a terrible job of researching the entire story.

Certainly some segments of the population view cars as only an investment but I disagree with Mr. Gooding's final comment completely. Unless I am the only guy in the world who has knowingly paid too much for a car or who has invested more than a car is worth doing a restoration! smirk.gif I sure hope he was misquoted!

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BJM,

I tend to disagree, actually. First, auction prices are public and widely found online. Hemmings has their auction reviews in which they say whether cars were well bought or not; that's a pretty good way to learn the market. In particular, watch the cars at auction bought by dealers: chances are pretty good that the auction prices of that car were under market. Second, price guides sell best when they are accurate, so price guides try their best to get it right (although some are better than others). Third, I would think that there's a half way decent way of finding out how much the dealers are bending on prices: Call them, express interest in a particular car, and ask how much wiggle room they have in the price of a particular car.

It's true that there are a lot of advertisements out there for cars that are WAY overpriced. But I tend to think that's because the realistically priced cars sell quickly and their advertisements are taken offline while the advertisements for very high prices seem to stick around a lot longer.

My 2 cents, anyway.

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I agree with many of your points. But, the dealers and many individual sellersare offering their cars for over the book prices, sighting those infamous auctions.

And I know from watching eaby auctions that most reserves are not met. So how do we know the "correction" in the market?

For Wall Street, every night they say the Dow Jones was down 58 points or 6% loss. In other words, statistics are almost instant.

But for the dealers and trades magazines and auction houses, it is not in their interest to give these statistics. So we never have a good picture of value increases and decreases. Finally, I think the price guides are slow to adjust, and as far as I know, they do not include a trend section. (For instance a + / - in back of the prices.

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It's natural economics that the values of cars will go up and down. But lets look at this objectivily.

As is case with the Ferrari that Sheehan points out in the article, there were only 120 produced and 4 came to sale in one year. The sale prices were 1.5 million and between 1 and 1.1 million for two others and the one in the article failed to sell. While the Dayton Spyder is a highly coveted Ferrari, the fact is that it is a Ferrari of limited built numbers, and four were offered this year. It shouldn't surprise anyone that one of the four failed to sell and that the market may have moved slightly downward, although the article points out that the change in average selling price of the car has only been reduced 1% since 2006, that seems in line to me. The article also fails to give us enough information to show the conditions of the vehicles offered for sale or what provenance one may (or may not) have had over the other three.

Moving on to the cars at the bottom of the WSJ's bar chart, these cars are cars that routinely show up at auction and are cars that the prices of which have been driven up by enumerable reasons, not the least of which is speculation. With that said however, good quality examples command high prices and always will. Looking at the Barrett-Jackson catalog for this January's auction, I don't see too many extemely desirable cars being consigned. I think collectors are holding back which means that less desirable cars or the auction whore (cars that show up at several auctions, time after time) will be what is reflected in the final sale totals. Therefore the final sales totals won't be actually reflective of the market becuase the collectors are not buying and selling the same types of cars (quality desirable cars) that they were from 2004-early2008.

I concur with you Steve regarding Mr. Goodling's last comment, you are not alone in over paying for a car that you "must" have or putting more into a restoration than the vehicle will ever be "worth." But then again, isn't "worth" what we are discussing!

Thats enough rambling I suppose!

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Bryan,

Interesting comments as well. This is one of my favorite topics in the old car hobby. I am a definite cheapskate when it comes to buying and I don't usually make money on cars I eventually sell.

I don't begrudge folks making money on cars they have restored and decided to sell. I don't like the old car dealers, I'll just be honest. If you restore a car and sell it fine - or run across a rare barn find like that Pontiac race car that was posted here about two weeks back. (I would love to have been that guy but am not jealous)

But these dealers get my goat, and the big 401k's and flow of money from baby boomers trying to relive their dreams fuel the ever higher prices of the dealers. The baby boomers want instant gratification for working their whole lives and plunk down inflated prices for trendy cars like Impalas and muscle cars, and shoebox Chevys while thousands of cars go unrestored. Their wives would freak if they brought home a "project" and put it in that nice suburban home's garage. So would the neighbors and neighborhood association.

The dealers rely on the inflated values in the price guides and point a big finger at those when the (previously) monied baby boomer comes into inspect the car of his dreams. When the buyer says then why are you asking $30,000 more then that price guide price, then either the price is lowered to a still inflated price guide price or the "gotta have it" mentailty takes over.

have you ever seen the faces of some of those buyers at the auctions on the SPEED channel? They have that deer caught in the headlights look of 'what have I just done' buying a gussied up muscle car that might have had a celebrity pedigree or a bidder they just had to beat.

The guy that purchased the Mercury in the Wall Street Journal article is a prime example. Nice car, but I raised an eyebrow at what he paid for it, and he said that was down from a previous appraisal value.

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BJM,

I believe Keith Martin's "Sports Car Market" annual price guide does actually contain the % up or % down change from the previous year. But then it doesn't cover every car, so that may or may not be helpful.

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Excuse me if I and a lot of others like me don't jump off a building because some piece of foreign metal does not get 1.5 million. Somehow I just can't relate to that kind of money. Nor can I relate to 4.5 million for a hemi cuda convertible. In my opinion there is a lot more in that car...... well I won't go any further on that. In any event I have 3 cars for sale and have had for a while and while I would love to get 6 digits for any one of them or for all of them, but the reality is it won't happen. I will be lucky to get low 4 digits for them. It really galls me though to watch the RM auction or BJ auction and then go out and see some piece of junk that is creeping into the environment and it has a 5 digit price tag on it and the owners says "well I saw one go at an auction for over $500.000 so I'm only asking a fraction of that".

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<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: AlK</div><div class="ubbcode-body">Nor can I relate to 4.5 million for a hemi cuda convertible. In my opinion there is a lot more in that car...... well I won't go any further on that. </div></div>

Are you talking about under the seats and behind the hub caps?

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