Data Dive

Does the car market correspond to the stock market?

by John Wiley
15 June 2022 2 min read
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Photo by Sandon Voelker

The stock market entered bear territory this week amid signs that inflation continues to accelerate and concerns that Federal Reserve measures to slow it will push the economy into recession. If history is any judge, the big dip in the markets will impact the collector car world. Exactly how that impact will be felt of course remains to be seen. We do, however, have a dataset that helps us make informed guesses—the 300SL repeat sale index.

Regular readers know we visit the 300SL index often. For those new to the party: we track 1954–1964 Mercedes-Benz 300SLs that have sold at least twice at auction, and use their sale prices to shine a light on various trends in the collector car market. Why 300SLs, specifically? In a word, consistency. They were desirable collectible cars back when R32 Skyline GT-Rs were but a glimmer in a Nissan product planner’s eyes and have never gone out of style. They were built in sufficient numbers that they come up for auction with relative frequency, but aren’t so common that new ones flood the market. Last but not least, 300SLs have easily traceable serial numbers—not a given on pre-1981 cars—which makes it easy to keep tabs on individual cars over time and to identify outliers that don’t belong in the index, such as the more expensive alloy-bodied cars. (Just to be clear, the recent 300 SLR sale doesn’t factor here.)

Because of the consistency of the index—and also perhaps because 300SL buyers are a knowledgable bunch—we generally find this index to be a step ahead of the rest of the collector car market. To wit, it started dipping in 2014, a time of rapid appreciation, but then stayed more or less flat through 2020 even as other segments took a dive. Amidst the latest surge in prices, the index has remained relatively flat even as other data showed things to be at an all time high. In other words, take away the excitement of rising collectibles and one-off blockbuster sales and you see a market that is actually pretty calm.

That doesn’t mean the index is imperturbable. Over the last 25 years, the 300SL index has generally echoed the undulations of the S&P 500 with the glaring exception of the period between 2010 and 2014, when collector cars (along with other tangible investments, like real estate) gained rapidly compared to the stock market.

At present, the 300SL Index seems to be dipping much like the S&P 500, albeit nowhere near as drastically.


Looking back at the 300SL index compared to the stock market helps us envision two possible scenarios should the gloomy economic news continue to pour in. One holds that people see the disappointing performance of the stock market as a reason (or at least an excuse) to pour more money into cars. That's largely what happened in the wake of the Great Recession. The other, more sobering possibility is that collectors get so badly burned and/or spooked by the stock market that they begin to sell their cars at lower prices.

Our prediction: both scenarios will come into play and will, for the most part, cancel each other out. Some collectors will need to sell under duress while others will see bear markets as a buying opportunity. The 300SL index, more than anything, shows the stability of the mature segments of the collector car market over the long run, and we expect that to continue no matter what bumps are on the road ahead.

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Comments

  • Henry Sokolski says:

    Ok but how well does your high end index work with bluer color collectors of muscle cars and Japanese collectibles? Your article would be far more persuasive and useful if there was some effort to Ko relate the top end metric that you’re using to the lower end of the collectible market where most of your subscribers reside.

  • Henry Sokolski says:

    Correlate not ko relate

  • Jg says:

    Comparing the 300SL to the S&P 500 seems to me like comparing a Caviar to Potato Chips. Wouldn’t it make more sense to index a model that’s more indicative of mass appeal like say, Corvette or the Porsche 911?

    • wdb says:

      (As usual the comments section seems glitchy.) I am attempting to reply to @Jg who suggested following 911s and/or Corvettes. They too have serial numbers, and they too can be tracked over time. I think such an index could help illuminate the other big mention so far, namely that high end collector cars such as the 300SL and ‘collectible’ cars like 911 Carreras are in different spheres of the enthusiast automobile market.

  • Paul D says:

    Like the article pointed out, there are two ways to view the collector car market in the face of what’s happening in the stock market, selling cause you have to and buying because you can. That’s not all that different if you are investing in the stock market. I see this as a buying opportunity in both markets and have been sitting on cash waiting for this dip. We’re not at the bottom yet, but I’ll be ready when I think prices in both markets have regained some sanity.

    • Steve says:

      I agree with you, Paul D
      I also see this an a positive opportunity for car lovers.
      I often search the history of bidders on BAT, and one can see clear indicators that people are collecting a deversifies portfolio of current trending vehicles. Once these cars show a negative growth there will be a rush to sell before the drop.
      I plan to buy something good and hold it for 5+ years.

  • Bruce Healey says:

    This quest to find a correlation between car prices and equity markets are rather pointless IMHO. Take the article above. Your index fails to take into consideration the passage of time, the aging of both vehicle and potential buyers etc. classic vehicles are a luxury item and also under pressure from environmentalists and electrification. I believe there will always be a market for them as long as people who are alive remember them when new. After that interest – as defined by the number of people willing to pay for them – drops sharply. As a luxury item interest waxes and wanes as the economy expands and contracts. When the economy contracts smart money flows in to make smart buys.

    • mike kibler says:

      i don’t have time to review all the comments but i didn’t see anything about the cost to own a 300sl. i would think to keep/store/insure/stable an investor owned 300sl would cost minimum of $30k to $50k annually unless you turn it into a business like Jay Leno.

  • william phillips says:

    Hopefully we as a united country will expel the current insanity thinking from our current government leadership, and both markets will recover. After the recession that is unstoppable and inbound.

    • Coop says:

      And you contributed to this “Comment” section how? Not to mention predicting another one of those “9 out of the last 5 recessions”, too.

  • Bruce Ehrmann says:

    It is a bit dangerous to make sweeping and important financial predictions based on a single parameter, a single car.

  • PDH says:

    All I got out of this article is that the price could go up or down. Since most people that are insured by Hagerty don’t have the liquid assets to buy a 300SL not sure it has helped me much. I would like to see some sort of forecast in the $75K to $150K range in a drive-able car, not a $1,000,000 automobile ( would love to be able to afford and store an SL)

  • Rick L. says:

    As in the movie “A Wonderful Life”, Jimmy Stewart exclaims during a bank rush, “Potter isn’t selling he is buying”, markets go up and down. Those that have the means will buy if, and that is a big if the market opportunities warrant. As the stock market is a long term and has proven through years up more than down. Those that panic always inevitably lose more money than they make and really should not be in a market for investment purposes. That is why you should buy what you like for what it is and not for speculative purposes if you are afraid to lose money.

  • Jim Mclean says:

    Hagerty should hire real economists to do this work. A few sales does not indicate a market and sales of extremely expensive cars does not indicate the general market.

    • John Wiley says:

      Compiling 300+ repeat sales spanning 31 years is more than a few sales. Also, just as an index like the S&P 500 does not represent the entire economy, the 300 SL Index does not represent the entire car market, but it can provide a useful perspective.

  • G Delfium says:

    Evaluating the entire market on the basis of one multi-million dollar car that only a sliver of the world’s population can afford is questionable logic.

  • Ron Sanderson says:

    Is Hargerty’s SLR collector the same as the median point for car collectors in today’s market?

  • Greg B says:

    I could be wrong but I think most of us are more interested in what a Ford or Chevy is doing in the market

  • Ramsey Potts says:

    As always, Mr. Wiley, well done and done well! I genuinely appreciate your never ceasing research and your cerebral analysis! When I saw the article title I expected one outcome but came away with a different perspective!

    • Markus says:

      The market is made with two steams.

      1. People spending money on things they want.

      2. International investment in anything of value.

      Once the investor walk away from classic cars the whole market will return to normal.

      However, this rush is saving many car that would have gon to scrap

  • David J Stark says:

    I echo some of the comments as to how well the 300SL relates to a forecast of collector car values. Interesting what is seen in this high end car. But I feel that its applicability to what most collectors own may not be in question. To this study I suggest you add
    1. Some demographists on the owners. Some look at their carts as an investment or something to look at Some are active drivers who get a thrill out of the feel of the steering wheel on the open road. And most are probably somewhere in the middle. All are driven by different economic forces and emotions.
    2. Study the values of several levels and types of collector cars. Again looking for some common aspects but represent different value ranges say $10-30K, $30-60K, $60-100K, etc. Also types like Muscle Cars, 60s convertibles, Hot Rods, Pre war originals, and such trying to group various types
    Economics are influenced by so many factors hard to capture all I know
    This might be an interesting topic for academia. Say a thesis topic?
    But thank you for sharing the 300SL story. Always enjoy reading

  • Robert W says:

    As the collector car market continues mature, it’s clear to me there are two different markets: “investment vehicles” and “collector vehicles” and I think the industry is ready to separate the two and make clear distinctions. In 1967, no one bought the last ‘67 corvette or a 435hp 427 and tucked it away with all the paperwork because some day it would be worth hundred of thousands. Likewise, we didn’t buy those same cars in the 80’s for that reason either. You bought that 427 and drove it. True, maybe no rain or freezing days, but it was driven.
    Gullwings, any 60’s Ferrari, L88 corvettes — or even new Ford GT or special edition (you name it) ARE tucked away now, only driven for exceptionally rare events SPECIFICALLY to preserve its value.

    Let’s be smart and start tracking “hot rods”, “collector” (enthusiast cars) differently. Will they appreciate – sure but is this class of cars the primary purpose? No. It’s the experience and enjoyment of being driven. That is the index I’m interested in.

  • Jim Rosenthal says:

    Interesting article, but the implied and presumptive casting of Hagerty Inc as an observational party in all this is not wholly accurate. Hagerty has more than one reason to want the collector car market to remain active and accelerating- your insurance business, your concours properties, just to name two. A declining collector car market will cut into Hagerty’s business and no doubt profits as well. I also don’t think that the sales trends of a collector car of which they made three thousand sixty plus years ago has much if anything to do with what will happen in the collector car market going forward.

    My outlook on this is gloomier. I think most car enthusiasts can afford one or two cars in addition to their daily drivers, and, given the striking enthusiasm for automobiles on the part of many, owning a collector vehicle(s) may well require some sacrifices. As discretionary income drops, due to a more and more expensive cost of basic living necessities, at some point the budget for collector cars and their maintenance will dwindle enough that the vehicle(s) may have to be sold. This inflection point of ‘not enough income to keep my collector vehicle’ will differ from one household to another, but it’s coming sooner or later for most of us.

    I suspect it may not be coming at all for the owners of 300SLs. These are very valuable cars which are agreed everywhere to be a blue-chip item. People who can afford a car worth 1.5 million dollars in its basic form are likely to be able to hang on to it, despite some financial reverses. (they may even make out well- someone has to) It’s the folks far below them on the collector car totem pole who situations will change.

    I agree with the fellow who mentioned Corvettes. There are many more collectors of those than there are owners of 300SLs, and data points from those folks, if you can acquire them, might tell you something about where our hobby may go in the next few years. But there is plenty of suffering to go around, and expensive fuel will be the tip of a very big iceberg.

    • Jerry says:

      I don’t agree with this statement:
      “My outlook on this is gloomier. I think most car enthusiasts can afford one or two cars in addition to their daily drivers, and, given the striking enthusiasm for automobiles on the part of many, owning a collector vehicle(s) may well require some sacrifices. As discretionary income drops, due to a more and more expensive cost of basic living necessities, at some point the budget for collector cars and their maintenance will dwindle enough that the vehicle(s) may have to be sold. This inflection point of ‘not enough income to keep my collector vehicle’ will differ from one household to another, but it’s coming sooner or later for most of us.”

      Most people who own collector car(s) own them free and clear, so they are not cutting into income. Insurance is cheap, and they are not costing anything more than that. If someone doesn’t have money for gas, they may let the car sit or drive it much less, but I don’t see how having a collector car sitting in your garage is going to be a big drain on your discretionary income, or force you to make choices. And real car lovers have never worried about getting out what they have put in. It’s always been a labor of love. I don’t plan on selling any of my cars. Will I lose potential profit if the market goes soft? Probably, but I don’t care.

      • Jason Geater says:

        The collector car market – like all other markets of speculative, risk assets – have been greatly inflated due to the relentless Quantitative Easing program of the Federal Reserve (the failing MMT experiment). We are now in the early stages of the reversal of that liquidity (falling asset prices) during this Quantitive Tightening (eg. higher interest rates, balance sheet reduction) cycle.

        If you think of a continuum of risk assets, on one end you have the “highly liquid” assets – stocks, bonds, future, etc. – which can be converted to cash in milliseconds. On the other side of the continuum, you have the “highly illiquid” assets – art, real estate, watches, and collector cars etc. – which not only are difficult to dispose of in a good economic environment, but become even more illiquid as conditions in the economy deteriorate. We have never raised interest rates during an economic slowdown.

        Thus, there is substantial time lag on the illiquid side. It will take many months (years) before we see the effects of this QT cycle hit these illiquid asset classes. Housing is the most obvious place where this liquidity came to rest, but it’s also present in the aforementioned asset classes. Watches are equally as absurd, with some basic Pateks selling at 3x their values from 2019… completely unsustainable.

        Furthermore, there are some other comments that insinuate that “the wealthy” are not impacted by macro events. This is a folly. There are significant carrying costs of owning classic vehicles, not limited to storage, insurance, security, and maintenance, which need to be factored into the investment thesis. That will affect absolute returns, and will force (even the wealthy) to dispose of underperforming assets. People who are buying this level of auto are not buying it simply for the emotional benefits as someone who is buying a 60s Mustang to revisit their youth.

        Finally, anyone who buys into the premise of this article (eg. someone talking their book) that the collector car market will escape unscathed, I’ve got some great beachfront real estate I bought from George Strait himself in Arizona.

  • WHS says:

    I have owned two 300 SLS’s (Gullwing and Roadster) since 2005 and the return has been terrific since that time. But what’s more important I have preserved two pieces of history for others to enjoy. But I bought the cars because I loved them not to make money. It is a hidden benefit if you buy something you love and it appreciates over time.

    As the story goes “you didn’t pay to much you just bought to early” if the value goes down.

    Always love to read someone else’s point of view. Keep up the good work.

    • George Engle says:

      I would love to own a 300 SL, but due to income settled for a 1979 450SL. Doubt if I will see much appreciation, but really enjoy driving top down. 😏

  • Nielen Stander says:

    One needs more data points than those provided by the super expensive SL. The margin of error here is incredibly large to the point of being meaningless. Porsche 911 might be more appropriate.

    • John Wiley says:

      As Porsche 911s only really became collectible in the past ten years, the data to analyze a long-term repeat sale index of 911s does not yet exist.

  • David McAuliffe says:

    Dip? Really? I think we’re experiencing something much more than a “dip.” Just saying.

  • Bill Sundin says:

    Point taken on the high value and low number of data points on 300SLs but they have the most critical element required, consistency of those data points. Neither Corvettes nor 911s have any consistency whatsoever, and those promoting them would fight to the death over which of the infinite variations to track: a standard, no frills, lowest HP with automatic and vinyl interior? A pace car? Big Block? Any mods permitted? Won’t find a lot of mods or other variations among 300SLs, just a coupe and convertible (and only one of those variations for each year). Fords, Chevys, Muscle Cars? Would that be a basic coupe, one modified for drag racing, a convertible with a Hemi worth $1M, or a Dodge Daytona? Thus the 300SLs: they’re pretty much all alike, adjusted only for condition, and thus trackable economically. The value may be higher than your sub-market, but the trends will probably track reasonably well.

  • Phillip Coombs says:

    I think it is folly for Hagerty to make these kinds of comments. It is more that they think they have to publish some ink. Instead, their comments influence more than they should. Rather than
    Making guess work prophecies they should just report the market facts.

  • Cobra Cobretti says:

    LOL “Insanity from current administration”. Wow, do you not remember the abissmal state the ornange menace left this country in? Remember him, that one who thought is was OK to sacrifice American lives, in order to save the economy he inherited, from President Obama, who also happen to inherit an economy in turmoil, from the previous REPUBLICAN president!. To say nothing of the destruction the racist pos reagan (that cocaine dealer, probably being the worst president in history, if not a tie, with the orange menace)has done to the country, also saved by a democrat. Do you see the pattern yet??? or must we go back to this vicious cycle of republican’s destroying the economy, and raising the debt, beyond imagination. $7 TRILLION BY THE ORANGE MENACE. Also made learn where the inflation came from, to say nothing of it being world wide.

  • pdmracing says:

    Hey Hagerty , we dont come here for political nonsense but to escape it

  • pdmracing says:

    During the Great Recession of 2008 High end cars became like currency , traded in private sales all over the world. I am sure some were laundering $$, hiding it from the tax man or a BK trustee. In any case the values may have suffered but not for long. People like tangibles, especially people with money to protect. At the end of 2012 I was offered a very well documented car , that IF I purchased it, it would have doubled my $$ in a mater of months. The regular car lover tastes were already changing prior to the pandemic. in 2019 50’s cars were nowhere, 69 Camaros were converging closer to the 67 & 68’s in price , even Hagertys own market insights were showing a downward trend for those eras. Who knew that people would be spending 80k for a 301 powered trans am? I was buying very nice ones with that powerplant for 10k or under. The influx of new money into the market & the lockdowns spured online sites like BAT to crazy heights. It also introduces a new younger buyer that may not be the traditional collector but they are a bright beacon for the future, the Radwood movement. The 80 to 2000 malaise era cars are now the rage with a great enthusiastic following. This is the collector of the future and should be nurtured by all . As we all know, once you get a taste , you always want something more & different !

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