The Hagerty Market Rating has now decreased for six consecutive months. The 1.5-point downturn this month is the largest drop since April 2020.
This sober outlook might seem out of whack with the record results at The Amelia Island auctions earlier this month. The technical reason is that those sales won't be reflected in the rating until next month. Yet the fuller answer is that our Market Rating measures something broader than the performance of any one auction or a specific segment. It looks at prices for cars at various price levels, activity on both the private and public market, and macro-economic indicators, and industry sentiment in order to understand the momentum, or "heat," of the entire classic car market. (You can find a detailed explanation of what the rating measures and how it's calculated here.)
All metrics used in the Market Rating decreased this month, aside from our macroeconomic indicators thanks to a slight bump in the S&P 500. This is the first time in over five years that 13 of the 14 individual metrics decreased.
Perhaps most striking is that the inflation-adjusted median sales price dropped two points, to its lowest value since August 2020. This reflects both a calming in appreciation and the persistence of inflation, which rose six percent year over year in February. The upshot is that prices have reset to pre-pandemic-boom levels.
The Hagerty Hundred Index, a weighted average of values for the 100 most-insured vehicles by Hagerty that are published in the Hagerty Price Guide, shows a similar trend. During the pandemic boom, the Hagerty Hundred Index jumped up more than 20 points in a little over a year, then abruptly plummeted in the autumn of 2022. The 2.4-point drop this month continued the steep decline and erased most of the value gains made during the pandemic. Inflation adjusted values for the Hagerty Hundred have returned to pre-pandemic levels, a positive for enthusiasts but bad news for speculators.
The glass-half-full take on that is that collector cars have by and large "floated" with inflation—as one might expect of a hard asset. It's also worth noting that many collector car shoppers, particularly for popular mainstream cars, will welcome a return to normalcy.
In contrast, the Blue Chip Index, which consists of the average #2 condition value of the Mercedes Gullwing and its 24 closest peers, has held steady, dropping only slightly during the last three years.
Despite its protracted slide, the Market Rating is is still higher than any point before 2022—including the peak of the last decade. Though the market's retraced its steps in several key elements, The Amelia auctions, which did not factor into this month's rating, clearly illustrate the current reality of the collector car market: cars sold very well—more than 44 brought at least $1 million—and the "best of the best" brought record prices, but on the whole bidding wasn't frenzied and sellers didn't seem desperate to let their cars go at any price. In other words, a rational, healthy market.