Data Dive

Is the market as hot as we think?

by John Wiley
11 February 2022 2 min read
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Photo by Sandon Voelker

Many market watchers and participants have been amazed about how hot the collector car market has been since the pandemic began. Auction results have exceeded expectations. The Hagerty Price Guide has seen broad appreciation. Everything from Ferrari F40s and Porsche Carrera GTs to Mitsubishi 3000GTs seems to be hot.

Of course, the natural question that comes with a market that’s going up is, “When will it go down?” When do people decide that they’re spending at an unsustainable rate? When do speculators become the driving force? When do new entrants to the market get turned off?

By one metric, that may already be happening.

Longtime readers will remember our 300SL Index. Newcomers can learn more here. The TL;DR version is that by looking at repeat sales of the venerable 300SL, we get a snapshot of the market that’s free of the “noise” of big one-off sales. (As we’ve noted before, bidders in the seven-figure-and-up bracket are willing to pay a premium for cars that haven’t changed hands in many years.) The index is less volatile because it doesn’t contain the less desirable examples that are hard to sell, but it also excludes the highly original long-term owner cars, as well as alloy-body cars like the one that just set a record.

That reduced volatility makes it a bit easier to see turning points. Such as peaks in 2000 for the dot-com boom, a February 2008 peak before the financial crisis, and a more recent peak in late 2012. More relevant today, though, is the post-pandemic bump. It’s there, but only at a moderate level. The index suggests that it’s less significant than one might think judging solely by average sale price and, more important, that the market is already cooling.

Of course, any single indicator is just that—a single indicator. We at Insider look at lots of indicators, many of which say the market still has the pedal to the metal. Yet it is precisely in such times that it's important not to disregard flickering warning lights.

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Comments

  • David Gunn says:

    I would love to see the same for the 275GTB; I would expect that it shows the same general trend.

  • Scott says:

    It used to be the stick market drops the collector car market would grow.

    Today the market is not sure what it is doing as inflation is up but the market is ip.

    If the Fed increases interest we could see some cars benefit again.

    But will younger investors go to cars like the older ones did. Most have so many other interest today.

  • John Ehle says:

    Auction results from the month of January disagree with this article. And I just read another Hagerty article yesterday that contradicted this one, citing 300SL values, no less. I agree that what goes up just come down, but investor types could go in on cars even more as an inflation hedge before the market comes down. It doesn’t seem like the market is ready to cool yet. The problem for those of us who don’t buy cars as investments, but rather for enjoyment, is that we’re less inclined to buy during an overheated market. Then again, maybe we’re the bellwether for the decline in the market.

  • Dantheman says:

    You should have reference cars at different price points. The C2 Corvette (choose a body style and an engine size) and plot their value through time. Same with C3’s (since they are cheaper). As C3’s are increasing they might be a good barometer of lower price points. And C2’s would be an indicator of the $50k to ? market.

  • Al Cantara says:

    Certain cars & market segments north of $1 million may be softening however the sub-$500-ish segment seems to be on fire. I don’t believe this single, perhaps softening 300SL data means anything regarding the health of the overall market.

  • Al Cantara says:

    Correction: sub $500k-ish segment

  • Steve says:

    I don’t believe this analysis provides an accurate view of the health of the collector car market at all. Attempting to gauge the value of the market based on one particular vehicle, that is in the higher end of the market, and a car that is of small sales volume due to it was a small production volume vehicle, is a flawed strategy. I mean, did you look at Kissimmee in particular, and BJ Scottsdale? At Mecum, it wasn’t just one market segment, or one particular nameplate, everything there was selling for BIG money. And BJ Scottsdale provided similar activity as well. As I’ve often said, the market trends up and down, but not all nameplates and segments trend in the same curve. From what I’ve seen so far in 2022, my previous thoughts can go right out the window. And predicting the market health/activity by analyzing ONE MAKE AND MODEL is too small of a sample to provide any kind of accuracy.

  • Russellbaird says:

    Pandemic times and a new generation of interest make it difficult to forecast trends. “Live for today”seems to be the driving force! Go for it!!!

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