Is this something we should discuss while snow keeps us inside? Price Increases

[Rolf-Dieter ✝︎]

- What is your opinion of the attached price increases over the past range of years (1997 to 2014 please refer to the Attachment)?

Have you seen similar cost increase over the years?

Do you increase your car insurance based on market trends?

The attached image is form Source; Motor Classic (Klassik) German Magazine

Translation; Wertsteigerung = Financial Appreciation

From what I understand the attached is based on average numbers (for the 230 SL).

1 Euro = 1.372 US (as of this thread issue).

The chart therefore (1997 to 2014) ranges $50.7K to $94.7K US (keep in mind prices in Europe are somewhat higher).

While it is true that our car(s) increase over time (based on conditions) it is my personal opinion that some of the trends out there are based upon Auction Sales and Dealers in Europe selling the cars to people with loads of cash some of the restored cars. I know there are categories of condition and prices in the Technical Manual as to condition classification verses price. I know in the end we all know what we paid for our car and what additional funds we spend to get the car to what it is today … in the end auctions bring whatever the highest bidder was willing to pay.

I’m wondering what you fellows might have seen in your favourite magazine on this subject and what your opinion on the matter is in general. While it is still wet and snowy outside (not for some folks in the warmer timezones ~grin~) I thought it would be a good opportunity to discuss and see what you saw, or think on this subject. So let’s talk about it,

[Cees Klumper]

As I am looking at a rainy day outside.

Just told my better half the other day that, based on the consistent asking prices for 280 SLs in Switzerland, my own SL has doubled in value since we bought it in 1999 (so right at the start of your graph). I've only done maintenance to it, no restoration or other major upgrade jn the 15 years we've owned it. So based on that it seems the trend is fairly accurate, at least in Switzerland.

[Flyair]

This trend is confirmed by most if not all sources, also shown elsewhere in this forum.

I think however, that if the trend is correctly reflected, there are always doubts regarding actual transactional process. I read an interview regarding another car make, that in most cases the prices taken in consideration were asked prices as presented by sellers in their announcements. However, when you look at the three posts that are currently offering two 250 and one 230, the levels are more or less matching the graph. 

As a side observation, I am quite surprised that the graph shows a steady increase in the period 2008-2011, which were the years of the economic downturn or even crisis in some countries. From what I noticed, prices were much more elastic than what the table shows. I bought my car in the US, but my shopping covered primarily Europe and my recollection is that 230 could be sourced at lower prices than that (to avoid any doubt, I am not speaking about the so called project cars, but rather about a car in good or very good condition).

Today, if we take a car sold by Brabus and another one out of those offered on our website, the graph will show an average of roughly 125 th Euro.


 

[ghenne]

I think it's supply and demand doing its usual thing.

On the demand side, a lot of guys who were 14 years old when the Pagoda came out are now old enough to buy the car of their teenage dreams. They're financially secure enough to buy one as a third car. Even at 50 years old, Pagodas are practical in modern driving conditions, making them a good toy.

With almost 50,000 made, there was never a shortage of Pagodas. But after this many years, condition varies widely. Pagodas were used until they broke, then repaired so they worked again with parts from Sears. Little thought was give to preserving them for the next century. Today, the supply of good, solid cars is small. Look at all the cars changing hands at high prices, despite significant needs.

The shortage of supply of solid cars is pulling neglected Pagodas out of garages and barns, but the high cost of restoration will keep the supply limited.

[Peter van Es]

I think this curve represents average-good cars. Really, really excellent cars have been on a different curve, I would imagine from around € 60K in 2001 to € 150-200K today (with some going even higher). Cars with lots of work were at around €20K in 2001 and are still at around € 30-35K in Europe today.

Peter


 

[paulr]

They are certainly going upwards

[Rothko]

What is this "snow" thing you write about?   It is 82 degrees and partly sunny in South Florida.

 

Mercedes isn't making new Pagodas (a real shame...)  "Peak Pagodas" has already occurred, probably in 1972, so the inevitable supply curve is downward.

I agree that supply/demand will continue to result in increased prices over the next 5-10 years.  A lot of baby boomers are entering retirement with time and money to burn, increasing demand.  The U.S. economy, and the world economy, looks to be doing well for the next few years.  Likewise, as time goes by, the supply of Pagodas will decrease (or might increase slightly as worn Pagodas are fixed up - but that also leads to increased prices as demand for parts rises). 

[KevinC]

Here in the US, guides like NADA and Hagerty are based on actual sales not asking prices. And when I say actual sales, whether its to a junkyard or at a collector car auction, its recorded and averaged in.  While the Economic Downturn did affect many buyers, "investors/collectors" with real money were looking for ways to invest their cash outside of traditional channels (stocks, etc.). So the guys that paid $500k for 300SL's in 2008 are now selling them for over $1M. It only stands to reason that "related" vehicles like 190SL's and our cars of course were simply dragged along for the ride.

   

[simonarn]

What is wrong with this plan. You sell your house and rent it back from the buyer. You take the cash and buy a couple of Pagodas (or more if you can) You leave the Pagodas to your kids in your will. They get an inheritance that`s increasing in value and don`t pay inheritance tax on. Then they sell them later on when you`ve passed on, and buy your old house
back.

[iftykhan]

Completely agree with you Ghenne with regards to supply and demand.
When I first started looking for a pagoda a few years back, there were quite a few for sale.
Now, hardly anything comes up, especially private sale vehicles.

[Rolf-Dieter ✝︎]

I was luckey I guess when I found my "Blue Tornado" at a private car collector since my neighbour knew him for 35 years and he only coolected American cars from the 50s and 60s (he had 18 all together). The Pagoda was his wife's and she gave it back to him as part of a deforce settlement.

There is a funny story to this I like to share with you folks ...

When I returned his special collector Historical Licence Plates to him about 8 weeks after we made the deal (my special plates took that long to arrive) he asked me into his house and we got comfortable on the dining room table when he said

"Dieter you gave me the downpayment now where is the rest of the money?"

I said to myself Oh my God the fellow has lost his memory or has early dementia (after all he is 85 anything can happen).

He looked dead serious when he said it got up from the table and started mombeling  I know I put it someplace here and he started looking for something.

I felt at this point that I needed to say something and replied (while he kept looking) "You named your price I paid you cash and we do have a bill of sale that we both signed"

He returned to the table and mumbled "I cannot find it" and then went on "Do you still have your car?" of course I do I replied he went on "I saw a car being sold at an auction for $68,000- just like yours"

and then with a smile he said "That is why I ask where is the rest of the money adding I left a lot of money on the table"

I simply told him (after taking a deep breath knowing he has not lost his memory) ... "You named your price and I paid it a deal is a deal"

I added, "I have strickt instructions from my daughter not to sell the Blue Tornado as a matter of fact she told me once I told her that I purchased a Pagoda, Dad she said of all the cars you purchased in the past 20 years this is actually the first time you purchased one that will increase in value"

We both had a good laugh at the end.

That I got a good private deal I knew after seeing the car the first time in March 2013 then researching facts here on this fine forum before making my final inspection in May 2013 before writing a cheque for the asking price. Private deals are hard to find as iftykhan pointed out, I guess I was lucky after waiting all those years.

[stickandrudderman]

The sudden spike in 2007/2008 is when the global recession started. People with money in the bank decided that classic cars were a safer option and that has driven the price up. Savvy people have also cottoned on to the fact that classic cars are an excellent mechanism for avoiding inheritance tax. In the UK at least, one can buy a car and register it in your child's name. It doesn't mean that you own it because the official document that the DVLA issue is not proof of ownership but in practice it is commonly accepted as such. When vehicles change hands here the only document that is relied upon is the registration document; no-one ever bothers with an actual legal document that determines ownership.
Hence, if you die the day after you registered a classic car in your child's name, the child will automatically assume ownership with no questions asked.

And, despite the fact that prices are apparently high, buyers are still few and far between.

[Bonnyboy]

I'm getting a bit off topic here but in Canada,  most savy car guys I know leave their (trustworthy) kids with signed transfer of ownership documents so that in the event of their death the child had 30 days from date of death to transfer ownership of said vehicle.   The document is signed and filled in (or not), just not dated, so who is to say that it was signed on the day it was signed.  The insurance people don't really care.  Just leave a copy of your valid drivers license so that they can confirm singature if they need.