building up vintage car bubble?

[Flyair]

Not a fresh subject, but the current levels leave me in a speechless meditation mode...

It seems to me that besides derivatives or real estate bubbles that have shaken our world, there is a modest yet quite acute vintage car bubble building up.

Not a big discovery after all, but my sentiment got stronger after looking at the add shown below.

Other examples are obviously legion and you could quote many of them

I am not sure however whether we should be too happy that we have one or more of those cars, or rather concerned because this deeply disturbs and distords the true picture, making - among other things - the prices of spares going north. I mean Grand North...

[stickandrudderman]

I recently had a customer in with a two year  old GL. He was very interested in the pagodas that were there at the time and after some conversation he revealed that he worked in banking and that all of his spare income was spent on classic cars that he simply locked away in a barn in the country and never drove. He was of the opinion that they are the best investment going. Interestingly, he thought the pagoda was a bit to "low end" for him but he didn't reveal what cars he was buying.

[Flyair]

Stick,
your story started almost as if it was me, a GL (OK mine is 3y old), banker, etc. Unfortunately, here the resemblance ends. This guy demonstrated that he was damn right in selecting vintage cars as investment assets, assuming that his story was genuine.
Just wonder how much must be his insurance bill to cover all that treasures

[GGR]

Just wonder how much must be his insurance bill to cover all that treasures

That's the thing. Here is an article saying that vintage cars are doing better than art: http://news.artnet.com/market/vintage-cars-overtake-art-on-luxury-asset-racetrack-82247?utm_campaign=artnetnews&utm_source=082114daily&utm_medium=email

However, I wonder if this is still true once insurance, garage and maintenance are factored in.

[Cees Klumper]

I tend to see this trend as a healthy sign of economic recovery. Maybe this is already clear generally (I don't follow much news these days) but something that is after all a luxury item bouncing up like this should be a good indicator of 'consumer confidence' and disposable income levels?

[dseretakis]

There may be a classic car bubble emerging but I don't think that pagodas will be significantly impacted if it bursts. Unlike certain Ferraris and early Porsche 911s which have experienced truly staggering value increases, the pagoda has undergone a very healthy but not absurd value increase.

[Alan Smithee]

I agree - when the bubble bursts - and it will - you don't have to be old to have seen it happen before - I think the 911 will fall harder than the Pagodas.  Their rise has indeed been short and steep, they are more expensive to maintain, not as nice for the average person to drive, and there are just so many out there.  If things start to go pear-shaped with the collector car market, I can see people dumping their 911s en-masse.  Average Pagodas will take it on the chin, too.

[kampala]

Interesting twist on vintage car investment / ownership   


http://www.telegraph.co.uk/motoring/classiccars/10830299/Investors-sought-to-cash-in-on-rising-classic-car-values.html

[dseretakis]

That is fascinating! Testament to the uselessness of the stock market!

[JamesL]

I tend to see this trend as a healthy sign of economic recovery. Maybe this is already clear generally (I don't follow much news these days) but something that is after all a luxury item bouncing up like this should be a good indicator of 'consumer confidence' and disposable income levels?

Cees, REALLY?

Every central bank is printing money like it's going out of fashion. The world's stock markets are at an all time high and high end property in places like Geneva, London (ie, relatively "safe havens") is through the roof. Those that have money have a lot of it and are finding places to park it outside a bank which may go belly up/be part of a bail-in at any time.
Those that don't have money are seeing prices rise, incomes not rising as fast and declining disposable incomes - as well as continued uncertainty about future employment. Things are better than they were in 2008-11 for sure but living in London but having family outside it and it's still not great/widespread: One small uptick on mortgage rates and it's going to get messy for many.
I don't see classic car prices rising as they are as a sign of a healthy economy.

[Cees Klumper]

Gee James!  Well, I stick to my analysis. Who knows!

[stickandrudderman]

I'm with James on this one.
A three bed terraced house in the street where my premises are just sold for £975000 and every commercial premises that comes on the market that might suit my needs is £1,000,000 plus.
I just don't understand where this money is coming from.

[Flyair]

That's the thing. Here is an article saying that vintage cars are doing better than art. However, I wonder if this is still true once insurance, garage and maintenance are factored in.

GGR
Good point, but art is/should also be insured and appraised, which eats money as well.

Obviously, an art collector may chose ro leave his collection uninsured, running the disk of nasty surprised one day...

[Alan Smithee]

Interestingly, Hagerty's 280SL valuation dropped this month for the first time in almost 4 years (#3 and #4 cars; #2 are flat, with only #1 still increasing).

They also show the Porsche Carrera 3.2 flat (cars of all condition) after a 4 year run-up.

Is the bubble fully inflated, or are we just taking a breath before exhaling into it further?
 

 

[Jkalplus1]

I think you are right. People I know who have real money are increasing their holdings of "real" things of value, like property, and various "objects" like art and, yes, cars. Let's say the bubble stops going up, can you really see our cars losing half their present value in a few years? Mercedes is more of a blue chip kind of brand with generally slow but consistent appreciation over time. There may be sharp drops, but I very much doubt it will be significant over time.

And a classic car is more fun to own than a stock portfolio. Non-car people ask to see my car at house parties, they smile and admire the old car as I give the tour and have a smile plastered the whole time when I give little rides.  I am sure you have had similar experiences. You cannot do that with stocks!
Jerome

[ghenne]

We've been in an odd situation of expanding money supply, low growth, low interest rates and low inflation for a while. At some point, it has to adjust. When it does, hard assets are going to look much better than cash.

On the other hand, when everybody is wondering if we're in a bubble, don't worry: we are in a bubble.

[Frank Mallory]

A lot. a LOT of money, CASH, coming in from China these days. The statistic on home sales in the U.S. that are "all cash" sales (no financing) is huge: 43%.

[jaymanek]

Certainly true here in the UK. The Chinese are buying up property here like no tomorrow... All cash too as they dont believe in loans.