Taking the temperature of the market on the eve of the big auctions

Author F. Scott Fitzgerald noted, “The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.”

We will all need to keep that in mind as we consider where the monthly Hagerty Market Rating sits on the eve of the major January auctions. On the one hand, the rating dropped for a fourth consecutive month–something we haven’t seen in five years. On the other, its current value of 74.76 is still higher than any value prior to 2022.

The story gets clearer when we dig into the metrics that drive the rating (full explanation of what those are, here). Overall Auction Activity dropped 2.5 points to its lowest value of the year, dragged down primarily by a 5 point drop in median sale price—the fourth largest drop ever—to its lowest point since September 2020. The number of cars sold at auction is at an all-time high, but can no longer push the rating upward as it has been maxed-out at 100. It will likely back away from 100 in the coming months as the inflated sales volume from online auctions becomes normalized in the Market Rating's history. We also expect the growth itself to slow—cars listed at online-only auction companies has increased more than 50 percent each year for the last two years, but sooner or later, even the platforms that sell 24/7 will become saturated. That's especially true since in-person auctions have fully recovered from the pandemic closures and are now moving as much metal as ever.

Cars selling between private parties seem to be performing better than the auctions. Private sales activity is up slightly, with the average sale price outpacing inflation. The percentage of cars selling above insured value continues to hover just below 50 percent, at its fifth-highest value of all time.

The rating also takes into account the ratio of Hagerty customers calling to increase the value of their cars versus those calling to decrease. That ratio has dropped for both high end and mainstream classics but, after two years of growth, remains elevated. In other words, classic car owners perception of the market remains really strong, but isn't quite as bullish as it was earlier in 2022.

Overall vehicle values, as measured by the latest edition of the Hagerty Price Guide, are up over all . However, the Hagerty Hundred—the average #2 value for the 100 most-insured vehicles in the price guide—continues a downward trend, reaching its lowest point since August 2021. Optimism from our industry experts leading into January remains lukewarm—dropping to March 2021 levels.

It's worth stressing that our rating looks backward. It thus cannot take into account the scores of vehicles—many of them Corvettes, Mustangs, and other members of the Hagerty Hundred—that are rolling across blocks in Kissimmee and Scottsdale this month. The outcome of these auctions will be reflected in next month's Market Rating.

Yet the snapshot of the market at this moment, while in some ways contradictory, is quite clear: The pandemonium is over and the market has started to settle, with prices softening but still strong. Although we are no longer in a growth phase, we are not seeing a market inversion either.