The Wiley Report

The market for modern classics isn't as wild as you think

by John Wiley
2 April 2021 4 min read
1990 Ferrari Testarossa. Photo by James Lipman

Vehicles built in the 1980s, 1990s, and 2000s have been the darlings of the collector car market in recent years. They appeal to new generations of enthusiasts, who are entering the market en masse, and have benefited hugely from the growth of online auctions. But how hot are these vehicles, really? Sure, modern classics seem to set new price records every week, but a handful of sales—no matter how buzz-worthy—aren’t sufficient data to judge an entire segment. To untangle the hype from real appreciation, we have built a repeat sales index for modern classics.

We’ve talked about repeat sales indices before at Insider. Our 300SL index, for instance, tracks Gullwings that have sold more than once. The chief benefit of looking at repeat sales, versus all sales, is that they provide an apples-to-apples glimpse at price changes. Looking at all sales, in contrast, can be misleading because cars of varying quality can come to market from one year to the next. Say, an exceptional example sells for an unprecedented price one month. Over the next several months, that remarkable price draws poorer quality examples of that same model to the market. If the prices they achieve are condition correct and lower than the first seminal example, did values for the model tank? No. But good luck parsing that unless you know the condition of every car that sold.

A handful of sales—no matter how buzz-worthy—aren’t sufficient data to judge an entire segment.

The Hagerty Price Guide accounts for this by providing four different values based on condition. A repeat sales index, though, dispenses with that variance almost entirely. Most collector cars (unlike new and used cars) don’t change condition dramatically from one sale to the next. That’s particularly true for modern classics, which are still less likely than older cars to get ground-up restorations between sales. And there are plenty of these transactions. (The oldest of our “modern” classics are approaching 40-years old and, consequently, plenty of them have been bought and sold at auction many times in the past twenty years.)

Building such an index is not without its challenges. The first being that we must define what is a modern classic. While there’s room for debate on any era of classics, older cars benefit from sheer seniority. (A ’53 Bel Air with a Stovebolt six is neither fast nor very valuable, but just about anyone who sees one drive down the road would identify it as a classic.) Newer cars demand a more discerning sniff test—we’ve included in the index vehicles that seem to excite enthusiasts. That doesn’t mean we only picked supercars. The index also includes affordable roadsters and practical sport sedans, as well as SUVs and hatchbacks. Just about every major automobile-producing country is on the list, except for France, which shows their absence from the North American market in past 25 years isn’t helping their collectability. Almost every engine configuration and location are present. Hybrids and electric vehicles are too new for this list, though.

Actually identifying vehicles that sold at least twice in the market is easy, since we can use the vehicle identification number (VIN). Modern classics, unlike those built before 1981, wear 17-digit VINs that uniquely specifies each vehicle. These 17-digit sequences also follow a consistent pattern, so when that Porsche VIN is mistakenly recorded as starting with WPO (oh), it can be fixed to read WP0 (zero).

This selection process yields a large dataset of some 835 matched transactions. Lots of data generally means better conclusions. We can more easily exclude questionable sales—say, a car sold multiple times by the same auction company in a short period—and those outliers that slip through have less impact on our results.

Our conclusion is, chiefly, that the market for modern classics isn’t as wild as it seems in the headlines. The past twenty years of the repeat sale index of modern classic vehicles, above, shows a run-up in the mid-2000s, followed by a long decline until late 2010, when the entire collector car market rebounded; a mostly steady performance over the last decade; and a rise beginning in 2019. This isn’t all that different than our index for muscle cars, thought to be a far more mature segment.

Modern classics that are of a known condition have enjoyed a solid and relatively predictable return.

In comparison, a 12-month trailing average price of those same types of modern vehicles—but not just those that have sold twice—races towards a jagged peak in 2015 then drops off. The big difference between the trailing average and the repeat sale index suggests some exceptional cars did sell for a lot—and only sold once. Other cars that have since been drawn to market haven’t sold for nearly as much, probably because they’re in poorer condition. However, cars that are of a known condition have enjoyed a solid and relatively predictable return over the same period.

You might read this as saying the market for modern classics isn’t quite as hot as headline sales might make it appear. That wouldn’t be completely wrong, but keep in mind that for most of us, slow and steady growth is a good thing. It means you can buy a modern classic, drive and enjoy it for several years, and be reasonably sure you’ll get what you paid and then some when it comes time to sell. In other words, the market for modern collectibles is growing up.

Comments

  • Kevin Mattoni says:

    I have watched what modern classics do for quite some time since I own several. If a car from the 80s or 90s is of high quality, the prices have increased substantially. Look at BAT prices. I own Mercedes 560sec and SL, BMW 635 and M cars, all have increased notably. Watch the prices for an early Porsche Boxster and even the 996 chassis 911 as they start there climb. Mercedes AMG and V12 cars which were avoided in the past due to maintenance costs are increasing and desired by a wider market compared to just 18 months ago. I think this will continue because the cars are available, can be maintained and driven, and have terrific performance for today’s real driving opportunities.

  • Maestro1 says:

    I think the Market is overheated and full of herd lust, especially with regard to auctions. I think we’ll see a correction. And frankly, there’s a lot of bidders with more money than brains. Anyone can spend their money anyway they want but the repercussion is that it makes it difficult on everybody else. I am a collector, and active in the Hobby. Unless there’s more time and money spent on getting people into the Hobby there won’t be one.

  • Rick S says:

    I think the “market” is being chased by “investors” who are anticipating some major inflation to occur over the next few years. It is just like the stock market and real estate market. The cars are just “commodities” .

  • Hilton says:

    I keep 2-3 cars and buy/ sell 2-3 a year to feed my habbit .
    1.Cheap money is driving prices up. Guys and Gals paying 2 % on there mortgage
    And 84 month terms on the SUV free up some cash for toys.
    2. The TV shows are using them a lot.
    3. Hopefully they will learn how to maintain them and purchase affordable insurance so they can afford to hold them through tough times. Thus minimizing the correction that will come.

  • chrlsful says:

    AND just like the market some think they can time it (predict). It is true in neither. They can be an investment but…what will happen w/time? That model falls out of favor, some other unpredictable. It used to be house were investments. Now?
    That is not to say you can’t devise ways to cover your investment. The article hasa few good-uns. But would you buy something like a car for this. Hopefully U R buying something you know well, would enjoy using, etc. That’s where the benefits accrue. I don’t wanna porsche, Ford GT, etc (would not mind a MB [123] 300TD wagon). Just got into this too late to buy that particular 1. Get what you like, know, have interest in. Drive it. I hafta get the affordable ones, bring them back to life, drive “for free” awhile. But I like the work, free ride – till the nxt one calls me to purchase. These speculators (among other changes) have really forced me into a different MO. ‘Everything’ is just sky hi now~

  • Jim Rosenthal says:

    I’m with Maestro1, and I think the term “herd lust” is particularly apropos. While friends of mine are making a killing selling these cars, it isn’t going to last, and when the proverbial music stops, a lot of people are going to find themselves with rather ordinary cars for which they paid astounding sums. (I’m thinking of the 107 SL I drove and passed up on BaT which sold for twice what I would have paid for it.) It may be a good time to sell, but unless you are extraordinarily adept at sniffing out bargains and good deals, it isn’t a good time to buy. BaT especially, as much as I enjoy it, has become a very good place to sell, but not such a great place to buy.

    Given that a lot of these cars are rather complex devices with multiple systems and potential failure points, I’m a bit puzzled as to why we haven’t begun to hear stories about pricey cars bought sight unseen which turned out to be a huge disappointment to their angry new owners. I suspect those events are happening and will become public knowledge in the near future.

  • Rudy Samsel says:

    Bring a Trailer continues to drive most of the insane prices for these cars, but the problem is, as you alluded to in this article, is that tracking the same exact car can reveal very different results. A prime example is this Concours-quality and award-winning 1988 BMW 535i (https://www.guyswithrides.com/2021/04/01/fooled-by-bring-a-trailer-1988-bmw-535i-two-year-20k-depreciation/) that sold on Bring a Trailer in December 2017 for $50,000 (plus $2,500 buyer premium). Fast forward to March of 2020 at Amelia Island (the last event before COVID, so that was not a factor) at No Reserve that hammered for $34,000 (plus the 10% buyer’s premium = $38,000). Since the seller did not have a repeat auction on BaT for their car (have you noticed how many repeat auctions the site entertains these days?), it’s likely not a stretch to believe BaT likely would not accept $50K as the new reserve price for the car. Consequently, this same BMW sold at a much more market-appropriate price outside of the BaT “bubble.” We’re also convinced the two-minute end-of-auction rule BaT uses is fueling many bidders into feeling the Winner’s Curse once the dust settles.

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