nick8086

Car Prices

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It's easy, if you own it and are thinking of selling it hasn't gone up a nickel in the 20 years you have owned it.

If it is a car you are thinking of buying it had tripled in price in less than 5 years.

It sure seems to work this way for me.

 Greg in Canada

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1 hour ago, mike6024 said:

The value of inoperable Audi 5000's is declining.

I donated  it to a church.. It was a 1978 Audi.. It is the only car I got a speeding ticket in it doing 120mph..back in 1986..

Any one 40 or younger  has not had the fun to see Inflation.

 

Will Inflation  make the car worth more over time or sink in the next 5 years.?

 

Cars are  a Hobby.. I had better luck buying real estate..only if you know what you are doing..

 

Inflation  - means to me you will pay more for goods and services..  You may cut back on your hobby's..   

 

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Edited by nick8086 (see edit history)

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I have been able to avoid the higher prices of parts by buying on line.  I like to buy from my local suppliers to keep them in business but it seems like lately they are more and more unable to compete.  Now when I research part coast (on line vs local) it is getting to be 30-50% more expensive local.  Maybe I am just getting old, but pretty sure I have not gotten a 30-50% raise in the last 5 years so maybe I am on to something.... but they keep saying inflation is low?

 

PS I only buy from domestic sources...from the old cars I drive, most likely overstock parts... I had a hard time finding a gas cap for may 1977 ford...crazy world.

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This is a massively complex question, and answers to it could take pages and pages. And then, others would find much to disagree with, and the back-and-forth would then take many more pages. 

 

For example, the word "inflation" is a very broad term, and there are many variables. Certain controlled inflation is not so bad. Runaway inflation is really tough on the economy. "Stagflation" can be devastating. 

 

What effect will any of the above have on the car market? Depends on the effect on the general economy of the world. IF the economy is very healthy, and people have lots of discretionary income, they will buy things they really want...like fun vehicles, for instance. IF the economy is suffering badly, and people are worried about their financial survival, they will cease buying anything they don't absolutely need. Period. 

 

The above is my attempt to avoid those long, tedious, and very-debatable pages of economic theory, as I mentioned above. Cheers! 

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Lump sums it up correctly more or less. The publicly announced" inflation rate" is usually based on a "basket" of things usually purchased by individuals, fuel, housing, retail goods, utilities, insurance products, etc, etc. As such it is only one measure of economic activity. A more important factor is the overall performance of the economy, i.e. employment rates, wage rates, stock market performance, as well as age demographics, global issues etc. Government agencies like the Central Bank, try to balance the Country's economic growth and the National inflation rate by doing such things as adjusting the Prime Interest Rate, or stimulating the economy thru infrastructure spending (or starting a war!) In regard to inflation and  the car market, it usually only affects new vehicles which are built in today's environment and thus affected by prevailing wage rates, retails goods prices, is the buying public doing well, etc. Used cars, even very old ones have always been priced based on simple supply and demand. When the economy is performing well, demand for old cars goes up. When the economy is doing poorly supply of old cars goes up. 

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On ‎4‎/‎2‎/‎2018 at 11:00 PM, 1912Staver said:

It's easy, if you own it and are thinking of selling it hasn't gone up a nickel in the 20 years you have owned it.

If it is a car you are thinking of buying it had tripled in price in less than 5 years.

It sure seems to work this way for me.

 Greg in Canada

 

Tough question Nick, unfortunately my personal experience is mostly like Staver’s above.

 

Seriously though I would say antiques and collectibles do not track the same way as regular consumer goods.  Regular inflation would probably most directly affect the cost of services and supplies like paint and chrome--those prices are up substantially over the years.  New parts and new reproductions too.      

 

Lump and Gunsmoke’s theory above about discretionary income is the bigger factor as far as cars and used parts IMO.  Those will always be at the whims of supply and demand and what the market will bear.  Many hobbyists are sitting on barns and garages with cars and parts bought in the 1980s and 1990s.  In that 20-30 years some items are now worth more, some the same, some less due to supply and demand and changing tastes.  There is no universal rule about that when it comes to old stuff, it is all subjective.  The bottom line is that a given item is worth today what someone will pay for it today and what the seller will accept today.  Anything else is speculation or (often) wishful thinking, Todd C    

 

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As our segment of the hobby gets old, and dies demand is bound to go down. It's not so much the fluctuations in the economy, but the changes in the hobby itself, that will rule. IMO old cars are a very poor long term investment. Buy cars because you like them, and try to keep them separate from your investment portfolio. That way you don't have to worry about a flat-line collector car market. 

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Utilities are good investments. A Public Service Commission, or the like, regulates about an 8 to 10% profit and most offer to automatically reinvest the dividends. I sold a 1970 Buick Wildcat with a bad transmission in 1982 for $200. I bought ten shares of the local utility for something like $160. It has done well, better than keeping the Buick. I did learn not to take cash into Merrill Lynch to buy stock. They had to raid the coffee club to make change.

 

To succeed in old car investments you have to make your money at the time of purchase. Skillful use of your buying power is the key "asset", not so much the car. Project zero increase after the purchase. Buy with your heart, not your head. Buying with your head can negate the enjoyment of your purchase.

 

Keep it discretionary. Almost like picking a wife. A discretionary choice should be preferable to a choice of necessity. When I was young, my Grandfather told me he never made good investments, but he paid $2 for a marriage license and got $10,000 worth of BS thrown in for nothing. That was in the early 1950's. Plug that into your inflation calculator!

 

Bernie

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So let's say in 1990 you purchased your dream vehicle for $10,000 and then life got in the way. It has been parked in barn for the last 18 years. Inflation now says it is worth - are you ready? - $20,702. 

 

Inflation 18 years.xlsx

 

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4 hours ago, Wheelmang said:

So let's say in 1990 you purchased your dream vehicle for $10,000 and then life got in the way. It has been parked in barn for the last 18 years. Inflation now says it is worth - are you ready? - $20,702. 

 

Inflation 18 years.xlsx

 

 

Actually  inflation says the money you spent 18 years ago will now buy $20,702.00 worth of goods or services today. Your dream car may have changed upward or downward or even remained at roughly $10,000.00. Some cars will increase in value faster than inflation, and some will sink like stones over your hypothetical 18 years.

 

Greg in Canada

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Absolutely right, Staver. 

 

Keep in mind that some cars catch the eye of lots of hobbyists, and others get more-or-less ignored. The age of a vehicle has little to do with value. Value is ONLY determined by supply and demand. Of course, "supply" gets affected by time, and so age can affect the supply. But demand-versus-supply is the key. How many units exist, and how many people really want them? 

 

 

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