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Today's Classic-Car Market—and How They Could Crash It


nick8086
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Nick, thanks for posting that Car and Driver article from 2 years ago.

I believe it was written for that magazine's car fan who doesn't 

know a lot about antiques--perhaps their typical reader.

AACA members have heard most of it before, though

it did bring out a couple of points I didn't know.

 

Always take predictions of the future with some healthy skepticism.

They don't know the future, of course, and they admit it:

 

"As we speculate about how the collector-car market might change

in the next two decades, it's helpful to consider some history...."

 

And here's a statement with which AACA members will probably disagree,

since the club has plenty of car enthusiasts even older, who are very active:

 

"The oldest [baby] boomers are approaching 70, and their interest

in the hobby is starting to wane."

 

Now get your car out of the garage and prove them wrong!

Edited by John_S_in_Penna (see edit history)
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 If you are planning on retiring on the profits of your collection than there might be cause for concern.

 

 But if you are well enough to drive them, or even sit in a rocking chair and just admire them, keep them and enjoy them as long as you live.

 

 Let someone else worry about selling them!

 

 You might even be able to get some younger whippersnappers to drive you around with your blanket snugly wrapped around you!

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Guest AlCapone

Nick, thanks for posting that Car and Driver article from 2 years ago.

I believe it was written for that magazine's car fan who doesn't 

know a lot about antiques--perhaps their typical reader.

AACA members have heard most of it before, though

it did bring out a couple of points I didn't know.

 

Always take predictions of the future with some healthy skepticism.

They don't know the future, of course, and they admit it:

 

"As we speculate about how the collector-car market might change

in the next two decades, it's helpful to consider some history...."

 

And here's a statement with which AACA members will probably disagree,

since the club has plenty of car enthusiasts even older, who are very active:

 

"The oldest [baby] boomers are approaching 70, and their interest

in the hobby is starting to wane."

 

Now get your car out of the garage and prove them wrong!

John. Was your second last sentence referring to me ? I am 70 and I am a ( wane ) Wayne ( lol ) !

I continue to look for pre 1940 cars and I try to buy at least one every couple years. Have a great day my friend, Wayne. ( not wane )

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"The oldest [baby] boomers are approaching 70, and their interest in the hobby is starting to wane."

I resemble that remark but my interest is not waning, just spending too much time online and not enough wrenching. OTOH except when much younger and they were new, have not had much interest in pre-1963 (year GM went to alternators) cars. Ones that interested me went from new, to old, to antique (and the '93 I just bought will qualify for "antique" insurance next year). Guess I've never really been interested in Armstrong steering and crank open AC.

One big mistake that seems to be common is to lump "enthusiasts" with "collectors" (though my estate sale will probably be advertised in Hemmings). Personally I enjoy cars and prefer Q-ships & "odd". In 1970 my car of choice was a Buick Grand Sport (4 speed/AC) that won autocrosses. OTOH I took the NTM '93 GTP (47 built) to Cars and Coffee down in Celebration and found hoards of Ricers (including s RHD Skyline), a gaggle of Mustangs (late), two SAABs off in a corner. And one each Lambo, late Rolls or Bentley (didn't get close enough), Jag F, Aston 7, and a 65 Bonne 'vert. No-one noticed even with the "24 valve" fender trim.

Always liked gadgets, latest is a GPS-based HUD that sits on the dash (may be illegal in Cali). Are many that are OBD-II based but only two of my cars have OBD-II.

The other element is that many of my contemporaries are looking for hip replacements or desserts big enough for a family of four and the dog. Few think little of swapping out a set of tires or changing their oil (15 minutes in my drive that has a perfect slope, an hour to take somewhere...)

So topped out because there are no more garage spaces with a door. Besides now have three manuals and three automagics (and a Honda scooter I need to replace the throttle cable). Enough toys.

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John. Was your second last sentence referring to me ? I am 70 and I am a ( wane ) Wayne ( lol ) !

I continue to look for pre 1940 cars and I try to buy at least one every couple years. Have a great day my friend, Wayne. ( not wane )

 

Thankfully, that was their quotation, not mine.

No one should ever wane, Wayne!

 

One of our region members is 90 or 91, still active,

and he recently called me, enthused about bidding on

a Chrysler convertible at an upcoming auction.

And that's not especially unusual, since life and activity go hand in hand.

 

Another of our members celebrated his 80TH WEDDING ANNIVERSARY

with his wife before passing on last year at 101.

Edited by John_S_in_Penna (see edit history)
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Articles like this always seem to fail to take into account that the cars will continue to exist. There's not going to be a mass scrapping of every old car. As Billy wisely pointed out, prices will fall until someone else is interested enough to buy. All old cars will continue to live in garages with owners who love them, just at reduced prices.

 

The problem that we're going to see, and what will trigger many prognostications of the demise of the hobby, is the heirs holding on to the cars during that period when prices are falling. I have one guy who has a few cars his father left him and he comes by with one of them every now and then to see what I think about what they're worth. I tell him my honest opinion and he goes home frustrated because his father told them they were worth $100,000. Each. They're mildly interesting cars (a 1951 Ford woody wagon, and 1957 Thunderbird, and a 1950 Mercury convertible), but the restorations are at least 30 years old and they're a little rough around the edges. But since his father told him $100,000, that's where he's stuck. He's going to keep owning them until someone pays his price. He doesn't care about the cars, he has no attachment to them, and he doesn't use them beyond bringing them to my shop once in a while, but there's a number stuck in his head and nobody will ever talk him out of it.

 

So what will start happening is that the heirs get these cars and assume that the market is still going up, while it is actually going down as more such owners die off. There will be a large disconnect between current reality and past expectations, and these folks will refuse to sell the cars because they believe they're worth more, not less, and that in time, values will get even higher. How many of you already know someone with a car slowly rotting in a garage because the owner got it from a family member and either believes that it's worth more than it is or is planning on restoring it "someday?" That phenomenon will become more widespread and it'll be a rocky few years. But it will correct itself eventually. Prices on some cars will be lower, prices on other cars will be higher, but they will all find good homes, just as they always have. It's money that's contaminating the whole thing, not age.

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One point of view, and one that doesn't get what this is all about. The difference between someone who owns the car for its historical place in time and one who just sees it as inherently broken because you can't go 80 mph in modern rush hour traffic a vast difference, a different as religion. Look at the publication, and the mindset of their readers. They make money by telling their reader what they want to hear.  

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FROM the Article:"ordinary mid-1920s and ’30s cars, such as Buicks and Dodges, are stone cold right now. “They’re certainly not worthless, just hard to get rid of,” he says".

 

 

FROM this thread: "but they will all find good homes, just as they always have. It's money that's contaminating the whole thing, not age."

 

I don't think it is all due to "money" on those older prewar cars, instead, it is the fact that these cars can't be driven in modern traffic conditions without being stressed out.

 

They are geared poorly, so the motor is vibrating and screaming, trying to keep up with even secondary road speeds, and if a higher speed gear is installed, the motor runs out of power on normal hills, requiring a downshift to 2nd, and hugging the edge of the road at 30-35 mph.

 

so, they sit in a garage, with household stuff piled on them.

 

I've always liked/preferred early 30s cars, but I do know their severe limitations. ( I'm talking about the common cars that were sold to the masses, not the big higher speed luxury brands)

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The thing you will have to worry about in 0-to 10 years is the national debt. Many say the dollar cannot withstand 20+ trillion in the hole. When it crashes not just cars, but everything as we know it will change. Everything.

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I feel that the supply will begin out weigh the demand, true the cars will always be there providing there will still be gasoline, but it will be a buyers market, I had seen this in other hobbies. My father left me a MASSIVE collection of antique toys (about 10,000 pieces) when he passed away. Items he paid $600=$1000 for in the 80's don't even command 1/4 of that. Everything I place on Ebay sells and well over 50% goes to Europe. He tagged every item with where, when and how much he paid. From what I have found out many of those in that hobby are starting to pass away. They collection is part of an estate and selling it off quick to settle the estate is a common pattern. I am fortunate that I was an only child so I don't have any siblings breathing down my back to sell it off to get their cut.The market is flooded and the internet is making things easier to find, so now it is all about condition, I see the cars following the same pattern. Where the quality cars will command a price but the bottom will fall out on the average 20 footer, again cost of storage and siblings will contribute to dropping prices in the auto hobby

 

REMEMBER : all of us are one skipped heart beat away, or bad news from the Doctor from thinking about getting out of the hobby and selling off

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As far as the potential for an economic disaster is concerned I doubt the effects would be that rapid. The 2007 meltdown was bad, but wasn't a total "end of the world as we know it" event.  The Western nations have lots of chickens that may come home to roost, but I see things more likely ending up similar to many South American country's. That is 10 % or so of the population truly wealthy,a nearly non-existent  "middle class", and the rest of the population sinking slowly into true poverty.

   The process is a extension of the process already in play in many Western nations. Inflation adjusted incomes in a general decline. the rich slowly but surely getting richer, aided by low tax rates. The middle class bearing a ever increasing tax {of all types} load ; with things like national debt's being a contributing factor. This factor combined with declining real income for many is over the long term the death knell for the middle class in nearly all Western countries. But I can see it as more of an evolution over years or decades rather than a sudden crash

  The wealthy will always battle on the auction floors for the Mercer racabouts, Model J's ,550 spiders , Gullwing's etc.  Its the other 90 % of collector cars that are as endangered as their generally "middle class" owners standard of living is endangered.

  Power and wealth are interchangeable attributes. The wealthy now have a great deal of power in many Western nations, power both politically and economically . There is no incentive for this group to return any of the power to the Middle class, and without at least something working in their favor the long term survival of the middle class is somewhat unlikely.

  The Middle class used to have power in their position in the labor market. The wealthy were as dependent on the middle class as was vice versa. Today almost limitless cheap, skilled labor is only an ocean away. What businessman wouldn't use his resources to their best advantage. The eventual outcome I have outlined is possibly just a matter of time.

 

Greg in Canada

Edited by 1912Staver (see edit history)
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This morning I had coffee with a couple of baby boomers. We figured it won't be long before Trump chooses Andrew Dice Clay as his vice presidential running mate. Then they are going to build a wall along the New York State border at Pennsylvania to keep the southern refugees of global warming from invading the north. A wall will work better than cops with shotguns like they used on the Okies at the California border.

 

I figure with that going on there should be some pretty good car deals over the next four decades and I still have the money I made when Regan was in office. My cardiologist and GP are encouraging me to plan on the long run, I'm shopping for a big commercial building to put the cars in.

 

I know you didn't see that two years ago in Car & Driver, but I'm claiming the accuracy is equal.

Bernie

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This point in the article I never knew--

and I think it's good news:

 

"And in China, where incomes are swelling, the 

government has banned all cars older than 15 years,

making importation extremely difficult."

 

I don't think collectors would be happy to

see their treasured antique cars go to Communist China!

(And actually, China has slowed down

since that article was written 2 years ago.)

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As has been a topic on one of the AACA forums within the last 6 months, a sizable Canadian collection of vintage cars was recently sold to a Chinese buyer.  Some sellers are choosy , some are only concerned that their price is met. Many auction sales are to unnamed buyers working thru agents.  China's growth  may have slowed down but they are still awash with cash. Just look at their global real estate buying spree which continues to this day.

 

Greg in Canada

Edited by 1912Staver (see edit history)
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As has been a topic on one of the AACA forums within the last 6 months, a sizable Canadian collection of vintage cars was recently sold to a Chinese buyer.  Some sellers are choosy , some are only concerned that their price is met. Many auction sales are to unnamed buyers working thru agents.  China's growth  may have slowed down but they are still awash with cash. Just look at their global real estate buying spree which continues to this day.

 

Greg in Canada

That's why they are buying gold like crazy, however benign Americans just coddle their savings not realizing when the crash comes this time it won't just be wall street, but their bank accounts will have evaporated wealth because the dollar will be worth NOTHING. Never mind, just keep piling on the borrowing with blinders on. Wait and see. How does this sound, " hey neighbor how about trading my Mustang for your loaf of bread? "

Edited by helfen (see edit history)
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My brother in-law lived in Brazil - when the hyper inflation hit he paid his rent with two grocery bags full of cash.

 

In the 70's the Mexican banks were paying crazy interest rates. One of our salesmen was down there dove hunting with some of the politicos and mentioned he was thinking of moving a substantial portion of his savings down there, They advised him not to do it because there was going to be a huge devaluation of the peso. Two weeks later the peso was devalued 64 per cent. The politicos had their money in the US when the trigger was pulled.

 

Just a little historical reference - it happens.

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When Dad passed in 1986, to settle his estate I had to sell a stack of triple tax free municipal bonds that were paying 17%. Sold them at 20% over face. Not the most highly rated bonds but not junk either. Don't think hyper inflation can't happen here. When we went in business in 1979 we had to pay 15% interest on our start up money from the bank.

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As much as I like sound money and don't think

we'll see the hyperinflation of backward nations,

I do find this discussion interesting.

 

Here is a $100,000,000,000,000 bill from Zimbabwe

(formerly Rhodesia) from their high-inflation days not long ago.

I understand that it has the most zeros of any paper money issued.

 

Hungary around 1946 had worse inflation, but they

changed their money from pengos to mil-pengos to bil-pengos,

so the actual denomination on the bill wasn't incomprehensibly high.

post-91841-0-85133300-1457472928_thumb.j

Edited by John_S_in_Penna (see edit history)
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I used the word "They" - "They" were moderately high ranking officials in the Mexican government. They were high ranking enough to have their funds safe in US banks when the government devalued the peso.. You had to deal with the right people to be successful doing business in Mexico even in the 70's.
 

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And for more interest, here is a picture of what's said to be

the highest denomination banknote ever issued:  the

1946 Hungarian 1 milliard bil-pengo note.

 

A little explanation is in order:  for numbers above a million,

Europeans use a different numbering system.

So their "milliard" is 10 to the 9th power, or 1,000,000,000.

Their billion is different from the American billion, and is

10 to the 12th power, or 1,000,000,000,000.

 

Thus, this note is actually 1,000,000,000,000,000,000,000 pengo!

That is 1 sextillion pengo as Americans number it, and at the

end of their inflationary spiral, it was reportedly worth 12 U. S. cents.

 

One website gives an interesting history for those who'd like to learn a bit more:  

http://picturesdotnews.com/2014/04/17/the-worst-case-of-hyperinflation-in-history

 

 

post-91841-0-96802400-1457493557_thumb.j

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Well we keep winning the wars just now they are economic (really started in the 30s).

What could kill the hobby: a bug that escapes and eats all of the oil. And then we'd convert to alcohol.

More likely is a lowering of the octane, increase in ethanol, and elimination of premium.

Am concerned about the inflation that we don't have (and should, under 5% is stagnation) but is just paper and "not worth a continental" has not returned. Yet. Did take advantage of a 3% (fixed) mortgage.

Personally like my AC so oldest in my herd is a 1970 (which has passed 45 years old) but all have no problem meeting and exceeding modern traffic. All but one at over 20 mpg. Is an even split between manuals and automagics. Hard part is adding Hands Free and an aux input to an older radio.

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People often have things to worry about--

And the future of the hobby often arrests their attention.

 

But all the seemingly gloomy scenarios rarely come to pass.

Take note of them, work to prevent them, but don't let them demoralize you!

This is still a decent economy, and a fun hobby, and there are 

many thousands of fellow car fans to enjoy it with.

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As I mentioned in a previous post the reality for many middle class wage earners over the last 25 years or so is a inflation adjusted decrease in income. Mr. Padgett is correct in saying interest rates as low at the present and an inflation rate of less than 5 % is a sign of a troubled economy. Bigger trouble for our household budget ; and our hobby car spending is year after year pay increases of 1 or 2 % less than real world inflation. Even if your pay only lags inflation by 1 % or so; not an uncommon feature of many middle class incomes, over 20 years you have lost 20 % off the top of your buying power. That's probably most of the money a middle class car guy spent on his hobby 20 years ago. These days after all the basics are paid for there is precious little left over for hobbies. The basic costs of life , food, shelter, energy, etc . nearly never go down in terms of real world, inflation adjusted $. But for many households a shrinking inflation adjusted  pay cheque is a fact of life that there is no way to dodge.

  Put it this way , 30 years ago I earned slightly less than 1/2 of my present wage.  A house in my local area is now more than 10 X  and up, the price it was 30 years ago. A gallon of milk about 5 x the price, a gallon of automotive paint well over 10 x . Quite a few of the hobby  cars I was interested in now sell for 5 -  10 times the average price of 30 years ago. And so on over the vast majority of monthly purchases. Is it any surprise my hobby spending is a substantialy smaller percentage of my income than it was 30 years ago. If I live for another 20 years and the difference in income tracks on a similar line I will simply have 0 $ in my hobby budget at the end of those 20 years. And that fact when applied to many of the middle class car guys that are in roughly the same boat I am in is what poses the threat to the hobby as a whole.

 

Greg in Canada

Edited by 1912Staver (see edit history)
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I believe that expectations play a role as large, or larger than, inflation. The average cost of monthly bills for cell phones, internet access, cable tv and other entertainment expenses comes close to the cost of a car payment or even a mortgage payment, especially if teens are present. None of those things were considerations 30 years ago.

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Agree, that average person has little chance to get started but would they want to. Keep in mind that 1992 cars are 25 years old and for insurance purposes qualify as antiques.

 

Further the hobby price is strangely skewed, first where I live there is no rust to deal with unless it came from up north. Second I paid about 2/3 as much for the '93 DOHC/5 speed GP as I did for a new 1967 Camaro (327/4-speed/AC) with no adjustment for inflation- dollars are the same. Took it out shopping and for Trivia tonight and needed the AC. (True, will probably double the purchase price making it the way I want) . OTOH I do not have a 70" 4k TV & have to make do with an older 55" 1080 but is enough.

 

Similarly my new portable computer has a 2.4GHz CPU, 8GB memory, and a 250GB SSD & was 1/10 the price I paid for a 4.77 MHz dual floppy luggable with 256k memory in 1983.

 

Bottom line, it all depends on what you want. To start from ground zero is difficult. If also trying to "keep up with the Joneses" moreso (I have never had as much house as calculations say I could afford & here homes are about 3X what they sold for 30 years ago, not 10X.

 

To be honest I do not need this much house but duplicating the garage space would be difficult.

 

Will admit there were a number of changes I made to reduce costs anticipating retirement but sounds like you live in a much higher cost of living area than I do.

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LOL. You Stay right here Bernie and wait for the Wall and the Heat to come. I do believe I'll move south and take in some of that Global Warming. Dandy Dave! 

 

This morning I had coffee with a couple of baby boomers. We figured it won't be long before Trump chooses Andrew Dice Clay as his vice presidential running mate. Then they are going to build a wall along the New York State border at Pennsylvania to keep the southern refugees of global warming from invading the north. A wall will work better than cops with shotguns like they used on the Okies at the California border.

 

I figure with that going on there should be some pretty good car deals over the next four decades and I still have the money I made when Regan was in office. My cardiologist and GP are encouraging me to plan on the long run, I'm shopping for a big commercial building to put the cars in.

 

I know you didn't see that two years ago in Car & Driver, but I'm claiming the accuracy is equal.

Bernie

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I do in fact live in a very high cost of living area. Our residential housing market has been ranked #3 least affordable in the world in several credible studies.  Other locations have higher house prices but offset with higher average incomes. Here in the Vancouver B.C. Canada area we have the perfect storm of realitively low wages and sky high housing  {and generally high prices on lots of other things as well}. Collector cars often end up reasonably cheap here , but who has the disposable income to take advantage?

  But not to dwell on my particularly  situation, the principal of middle class wages not quite keeping up with inflation adjusted cost of living is a factor in many middle class households, not just those who live in a high cost area. And if the trend continues for long enough : by many accounts since the mid 1980's for quite a few, it will ultimately be the deciding factor in many middle class households if a hobby car will or will not be a justifiable expense.

  As far as expectations go you wouldn't find things all that much different in my house today than 30 years ago. No cable , Netflix etc. My wife's employer provides her with a cellphone, my teenaged son has finally managed to convince my wife a cell is almost as important as food, so he was just given one on a very basic plan that is discounted thru her employer. I have no cell. And no a whole bunch of other things in order to still spend 300-400 a month on my project car. It doesn't accomplish much these days.

Greg in Canada

Edited by 1912Staver (see edit history)
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Guest Skyking

At 70 years old yesterday, the only thing I'm paying attention to right now is this next election! It's proving to be the most important one in my lifetime!

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