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    Administrator ucfbrett's Avatar
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    Default Interesting Story on Collector Cars

    Baby Boomers Created the Classic-Car Market—and Could Crash It – Feature – Car and Driver

    From the March 2014 Issue of Car and Driver
    A demographic shift looms: Some 76 million baby boomers will soon reach retirement age, crushing the health-care system and the social safety net with their massive numbers. But we have a greater concern: Who’s going to buy all their cars?

    “I think that boomers are taking a more practical approach to baggage. We want to lighten our loads sooner,” says Charlie Kuhn, a 52-year-old collector from the Chicago area. “Guys not much older than me are selling because their kids aren’t interested. I’m already thinking about downsizing.”

    The best estimates we have at the Hagerty Group, which sells classic-car insurance, peg the number of collector cars in the U.S. at roughly 5 million, of which 58 percent are owned by baby boomers, or those born from 1946 through 1964. Our data says that the median age of collector-car owners is 56 years. The oldest boomers are approaching 70, and their interest in the hobby is starting to wane. We won’t see a generation of similar size until the so-called millennials hit their peak earning years in a few decades. It’s questionable whether they will care about the cars of their grandfathers and great-grandfathers—or any cars, for that matter.

    Confusing the issue further is the fact that the collector-car market is surging right now. Last July, a 1954 Mercedes W196 racer crossed the block for $29.6 million, smashing the old record for a price paid at auction by more than $13 million. Then in August, a ’67 Ferrari 275 GTB/4-S NART Spyder took in $27.5 million, the highest price ever for a road car. However, for all those blue-blood auction results, and some hot niches within the hobby as a whole, there are far more examples of mundane Detroit iron sitting in the garages of graybeards. A vast majority of collector cars in the U.S. are, predictably, American—some 80 percent, according to Hagerty data. It’s this backbone of the hobby that is likely in trouble.

    We at Hagerty maintain a stock-market-style index for various sectors of the classic-car market. The one for 1950s American classics is precisely where it was in January 2010, indicating that demand for formerly appreciating blue chippers, such as the 1955–57 Chevrolet Bel Air, has likely peaked [see above]. Even the ’55–57 Thunderbird two-seaters—once considered the bluest of blue-chips—are struggling.

    “They’re astonishingly cheap now,” says Bob Lichty, a Canton, Ohio, dealer who’s been part of the classic-car industry for about 40 years. “The guys who wanted them new are starting to age out of the hobby. A ’60s ‘Bullet Bird’ convertible is easier to move now.”

    As we speculate about how the collector-car market might change in the next two decades, it’s helpful to consider some history. Car collecting traces its roots to the Great Depression, which extinguished grand American marques such as Auburn, Cord, and Duesenberg and ended the era of bespoke coachbuilding. Having saved western civilization during World War II, members of the Greatest Generation turned to saving America’s prewar automotive heritage. They realized with startling prescience that the “classic era,” as it became known, represented bygone automotive craftsmanship. They collected, preserved, and restored these cars and started clubs such as the Classic Car Club of America and the Antique Automobile Club of America. On the whole, the World War II generation was a good steward of the hobby it created, collecting the aspirational cars of its youth in a pattern that collectors have followed ever since.

    And so it went until the early 1970s, when the collector-car auction business began. Prices for prewar cars rose steadily until the late 1990s when they hit the wall, in part because of oversupply. As the Greatest Generation aged, they scaled back by selling off collections. And as more collectors began to die, the market for prewar cars dried up. The stagnant prices of ’50s American cars hint that history may be repeating itself.

    “As different generations age out, their cars do, too,” says dealer Lichty. “While the owners may die, the cars don’t. They don’t become worthless, but there’s a shift in the types of people who buy them and the types of collections where they go.” The Cadillac V-16s and Duesenbergs survived the shift from the World War II *generation just fine, Lichty explains, but 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.

    Some baby boomers did embrace the classics of their parents’ era, rightfully recognizing them as objets d’art and pieces of history. This was helped by the sheer volume of boomers, enough to absorb the best collector cars extant while also preserving the cars of their own era. But we shouldn’t expect this phenomenon to be repeated. Not only has the sheer volume of collector cars grown, but the next generation in the line of succession, the so-called Generation X, isn’t as large or as enthusiastic as the boomers.

    Kuhn, the Chicago collector, says: “I own a ’34 Buick. It was built 28 years before I was born. I like it because my dad liked them. But our children aren’t developing an interest in collector cars. There are too many things going on to capture their attention: travel, sports, the internet, and social media.”

    One possibility is that the European market could absorb many of the boomers’ cars. Michael Sheehan, a Los Angeles–based Ferrari broker, says that “50 percent of my sales of 1950s and ’60s Ferraris are to European buyers.” Most of the cars go to England and are registered there, Sheehan explains, because the U.K. taxes historic cars at 5 percent, versus 30 percent for the EU. “Europeans are looking for places to park tax-free money, and collectible cars are a particularly wonderful place to do it.”

    But there are only so many cars that can go to Europe, where anti-car *sentiment and corresponding legislation continue to grow. And in China, where incomes are swelling, the government has banned all cars older than 15 years, making importation extremely difficult. Even if we can count on Europeans to absorb some of the boomers’ cars, outside of the curious Scandinavian predilection for Yank tanks, Europeans seem most interested in repatriating their own automotive heritage. For example, early Porsche 911s are white-hot right now.

    Tastes change, a fact that will likely also affect the hobby. While today’s collector-car market is dominated by mostly original cars and more-or-less accurate restorations, the future may be about restomods—old cars with modern equipment. Heretical as this may be to some, anecdotal evidence already suggests that restomod buyers tend to be younger, which makes sense. Gen Xers and millennials don’t work on their cars as much, with high-school shop classes having been largely eliminated just as computerized complexity made self-wrenching more difficult.

    The restomod market is already strong today thanks to the reliability that goes along with replacing 50-year-old guts with something newer. So, too, is the market for clean, complete cars ready to accept a crate engine and an automatic transmission. A declining number of drivers can even operate a manual, which brings up another likely change for the hobby: automatics getting the price premium over manuals.

    Car collecting as a pastime won’t fade away—horses still enjoy an enthusiastic following more than 100 years after being displaced by the car. But the hobby will certainly evolve. The internet continues to transform it, ameliorating the scarcity of parts, bringing owners together to share information, and increasing the supply of cars. Many of the old rules about what defines a collector car and the relative *values of different types are likely to be challenged. The Holy Grail or Hemi ’Cuda of the next generation may well come from abroad—an E30 BMW M3 or an Alex Zanardi–edition Acura NSX. One thing won’t change, however: The happiest people in the hobby are the ones who buy what they like first and let the market worry about return on investment.

    boomers-inline-2-2-photo-573918-s-original.jpg

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    RaceTape Ninja Force McCocken's Avatar
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    Interesting.

    I don't understand collector cars beyond an investment opportunity, and a risky one at that.

    I buy older cars to restore/modify them a bit and drive them for my enjoyment, not rolling to a public car meet and wiping it down with a diaper. That is behavior handed down from my car-enthusiast, racing parents. I understand younger generations not being interested in the collector car market, the Digital From Birth are the first to not aspire to owning a car. Also, just curious if the collector market took a hit from the mortgage debacle. I wonder how many Boomers were leveraged to the hilt on their homes to finance these sort of cars (HELOC, etc...)? Selling or liquidating a rare car in those instances would drive down the pricing, wouldn't it?
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    Administrator ucfbrett's Avatar
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    It most definitely took a hit. I distinctly remember watching a 1970 Sub Lime, convertible, four-speed Hemi Challenger go for a $1 million at a Barrett-Jackson in 2007. Two years later, you probably couldn't get a quarter of that.

    The potential or looming sell-off is what prompted the story, I think (it's also worth watching what happens to the stock market as more Boomers retire). The story also pointed out that what sits on the upper end of the market, Duesenbergs, Packards, Cords, etc. likely will remain strong, but the mid and lower-echelon stuff will change.

    My guess is the stuff from the 30s, 40s and 50s will drop more than stuff from the 60s, which is the beginning of the modern era of the automobile. The story doesn't delve into historic race cars, but I'll be paying attention to that market too because there is a looming sell-off there, too.

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    The obituaries are often the best place to do some real bargain hunting.
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    Senior Member bellwilliam's Avatar
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    that article is more or less about American classics. market is limited to America.

    European classics have been going crazy in the past few years.

    don't forget just like late 80s, when Japanese were driving up all the classic car prices. now you have Chinese and Eastern Europeans doing the same thing (to a lesser effect, because Japan was/is a car crazed country, but there are more of the Chinese, so it is a wash).

    taste also changes....Paul Walker had such an effect on today's track crowds than I ever imagined......
    Last edited by bellwilliam; 03-05-2014 at 02:59 PM.
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    Well I know of two cars coming to market in SoCal soon that will be interesting to watch; an early 1973 Pantera and a 1962 Morgan +4 DHC both low mileage and one owner cars. The market for un-molested Panteras seems to have gone up over the past few years so I’m expecting that to do well; the Morgan even though rare might not do as well as projected…

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    Quote Originally Posted by bellwilliam View Post
    that article is more or less about American classics. market is limited to America.

    European classics have been going crazy in the past few years.

    don't forget just like late 80s, when Japanese were driving up all the classic car prices. now you have Chinese and Eastern Europeans doing the same thing (to a lesser effect, because Japan was/is a car crazed country, but there are more of the Chinese, so it is a wash).

    taste also changes....Paul Walker had such an effect on today's track crowds than I ever imagined......
    There are more and more Chinese collectors emerging that only want big American Iron from the 40’s, 50’s, & 60’s. Most are doing cheap restos and sending back overseas.

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    Brett -

    Thanks for finding that excellent article. I think the predictions are spot on and backed up by thoughtful analysis and data. I never really understood the prices that 1950s to 1970s American cars, and muscle cars in particular, bring at auction. They really aren't very good cars. I can see that market crashing. I wish there was a way to sell collector cars "short."

    I think William is right that the article is primarily about American cars. Try to buy an air-cooled 911 in nice condition today. And most 12-cylinder Ferraris built from the founding of the company to the early 1970s are 7-figure cars.

    I still think I can't lose money on my NSX. The most money I ever made on a collector car was a 1967 Fiat Dino Spyder (Google it). I bought it in 1981 for $7,250-, drove and enjoyed it for 7 years, and then sold it in 1988 for $38,000 when it was not running and had a broken rear axle.

    The most interesting trend to me is that kids today don't care about cars and aren't even in a hurry to get a driver's license. If they don't care about cars, they sure aren't going to be spending big money for collector cars when they get older.
    The deposed former Sheriff of trackHQ . . .

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    Senior Member bellwilliam's Avatar
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    Quote Originally Posted by suki101 View Post
    The market for un-molested Panteras seems to have gone up over the past few years
    because they all overheated or caught fire if left stock ?
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    Quote Originally Posted by Richard EVO View Post
    I still think I can't lose money on my NSX. The most money I ever made on a collector car was a 1967 Fiat Dino Spyder (Google it). I bought it in 1981 for $7,250-, drove and enjoyed it for 7 years, and then sold it in 1988 for $38,000 when it was not running and had a broken rear axle.
    nah, you lost money...as all the money you would of made if you've only kept it till now..........
    Last edited by bellwilliam; 03-06-2014 at 10:36 AM.
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    Quote Originally Posted by bellwilliam View Post
    because they all overheated or caught fire if left stock ?
    There is still a Pantera Club that runs a couple of track days a year at Big Willow. When they first started out, they only allowed Panteras at their events. Now, out of about 75 cars, there might be 2 Panteras.
    The deposed former Sheriff of trackHQ . . .

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    Quote Originally Posted by bellwilliam View Post
    because they all overheated or caught fire if left stock ?
    They were cheap enough for a while so poor man's Ferrari; take out the 351 and dump in some 600hp+ monster, paint it some ugly color and then go cruising for the ladies….it’s harder to find a good stock example.
    pantera1.jpg

    pantera.jpg

    PO was part of Pantera Club from about '75 on.

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    Quote Originally Posted by b3d3g1 View Post
    The obituaries are often the best place to do some real bargain hunting.
    "He is survived by his wife, two children, five grandchildren and one righteous car collection."

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    Administrator ucfbrett's Avatar
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    Quote Originally Posted by suki101 View Post
    They were cheap enough for a while so poor man's Ferrari; take out the 351 and dump in some 600hp+ monster, paint it some ugly color and then go cruising for the ladies….it’s harder to find a good stock example. PO was part of Pantera Club from about '75 on.
    My neighbor has a pretty nice one tucked away in his garage. It still has the Cleveland in it, but I have seem him drive it once in the six years we've been living here.

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    Administrator ucfbrett's Avatar
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    Quote Originally Posted by suki101 View Post
    There are more and more Chinese collectors emerging that only want big American Iron from the 40’s, 50’s, & 60’s. Most are doing cheap restos and sending back overseas.
    If they start buying the stuff from the 40s and 50s, that'd cover the dearth of interest here. I still think the stuff from the 60s is going to remain popular in the States, particularly because the dimensions and proportions aren't radically different from today's cars, and that you can find lots of aftermarket (rest-mod, pro touring) stuff to make their driving dynamics much better than when they were new.

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    Senior Member suki101's Avatar
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    Quote Originally Posted by ucfbrett View Post
    If they start buying the stuff from the 40s and 50s, that'd cover the dearth of interest here.
    They seem to be into the big finned sedans currently; Caddys, Desoto’s, Imperials…..I only know of one guy that collects a little bit of everything.

    Quote Originally Posted by ucfbrett View Post
    I still think the stuff from the 60s is going to remain popular in the States, particularly because the dimensions and proportions aren't radically different from today's cars, and that you can find lots of aftermarket (rest-mod, pro touring) stuff to make their driving dynamics much better than when they were new.
    Agreed; resto mods seem to translate better to the younger crowd as well....

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    Senior Member bellwilliam's Avatar
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    Quote Originally Posted by Richard EVO View Post
    The most money I ever made on a collector car was a 1967 Fiat Dino Spyder (Google it). I bought it in 1981 for $7,250-, drove and enjoyed it for 7 years, and then sold it in 1988 for $38,000 when it was not running and had a broken rear axle..
    you lucked out.
    according to Hagerty, it is worth $55k today for an average condition. yours weren't running and you sold it for $38k 25 years ago.
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    I paid $4500 for my 1970 911E targa in 1994 when I was in college. I still have that car.

    I have been trying to buy an FD rx7 this year. Prices seem to be skyrocketing with good cars being priced for ove $25K.
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    I don't ever remember when FDs were cheap. I know someone who got a decent one for $10k, but that's as close to a four-figure price as I've seen. $14k and up seems to be the norm, despite their iffy mechanicals.

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    The shop I'm a part owner in restores air-cooled Porsches, specializing in the '55-73 models.

    I foresee a problem in the future of selling 356As, Bs and Cs. The Pre-As will always have a market as rolling art, as they're more delicate with an air of being made by true artisans rather than by workers on an assembly line. They are not, however, great cars in the context that we see cars now.

    I do not, however, foresee a problem selling 911s. They're fast enough to keep up with modern traffic, well-braked enough to stop with modern traffic, and hang on tenaciously despite having skinny tires. Thanks to the efforts of Magnus Walker and Rauh Welt Begriff, early 911s are still hot enough for 17-year-olds to take more than a passing interest. Couple all of that with them being truly fun to drive as well as compact enough that you can really dial up the speed on real roads and I think they'll be popular for decades to come.

    The American stuff I never deal with, it's usually not worth taking in trade. Most of it drives like I'd imagine the inside of a pre-cleaning chitterling smells.
    Last edited by SOneThreeCoupe; 03-07-2014 at 08:25 AM.
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