Car enthusiasts celebrate the extremes. The fastest. The rarest. The most race wins. The most valuable. While most of us don’t have a vehicle in the garage that can make one of those claims, we’re nonetheless interested in the vehicles that do. The market for those vehicles should interest us too. The reason is simple: Vehicles at the top of the market often set the pace for those that follow.
This isn’t just vague “trickle down” theory—we have data to prove it. We examined some 3,500 vehicles in the Hagerty Price Guide from popular makes with vehicles ranging from $10K to $1M+ and see a clear trend: When the most valuable vehicles ($1 million+) from a brand have appreciated at least 10 percent year-over-year, less valuable ones from the same marque tend to appreciate about two years later. For instance, Porsches that crested the $1M+ level typically started appreciating the most in late 2013. At the other end of the Porsche value range, those models with a condition 1 value of less than $50K typically saw strong appreciation by early 2015 (or 1.4 years later). In some cases, the lag is longer—attainable cars from Mercedes-Benz took an average of 4.0 years to echo gains in the more expensive ones. Some were much shorter: The lag for Jaguars was just six months. But the trend is almost universal—the more valuable cars lead the way. The only outlier is Ford, which saw mid-market cars appreciate first (late 2014) and then more and less valuable Fords appreciated about two years later.
Correlation doesn’t necessarily mean causation—there are lots of reasons different cars appreciate at different times, including the differing ways in which the economy impacts high-net-worth people and everyone else.
Yet there are clear mechanisms by which high-end vehicles can drive up prices for those on the lower end. One is Principal of Substitution. If a $100K vehicle appreciated 10 percent or more in the past year and is now beyond a certain shopper’s budget, they might very well look for a similar car (a substitute) still within their price range and buy that instead. Naturally, appreciation for the lower-priced vehicle follows. This substitution effect can travel far down the chain—just ask folks in Oakland or Queens how real estate prices in San Francisco and Manhattan have impacted their rent.
To break it down further and demonstrate the spectrum of substitution from the top end of the market through the middle on down, it makes sense to share a few examples with specific cars. Given that Ferrari's average lag is closest to the average for all marques considered, we'll start there.
Since 2010, the 1964-68 Ferrari 275 GTB (current Condition #1 value: $2M) has appreciated at least 10 percent year-over-year many times, but 2010-2011 was the first period of notable appreciation, with an increase of 22 percent in one year. The less valuable but similarly collectible 1966-1968 Ferrari 330 GTC (currently $615,000 average condition 1 value) didn't start until the following year, when it gained 36%. Similarly, the 1968-1973 Ferrari 365 GTB/4 Daytona also begins to appreciate materially between 2011 and 2012. Further down the price scale, the 1992-2003 Ferrari 456 started to appreciate between 2014 and 2015, achieving an 11 percent increase.
Chevrolet's average lag of 3.0 years is also close to the overall average. Not many bow-tie cars have exceeded the seven-figure mark, but the 1967 L88 Corvette and the ultra-rare 1969 Corvette ZL1 (present condition 1 value of $3.1 million and $1.7 million, respectively) are a good place to start. The '67 L88 started to appreciate from 2012 to 2013, increasing 24 percent in that period. The '69 Corvette ZL1 saw its own 10 percent increase from 2011 to 2012. Heading a little lower on the Chevy Muscle price scale, the 1969 Camaro ZL1 first saw a material increase in value (24%) from 2013 to 2014 —after those monster Corvettes began their upward trajectories. Over the same period, the 1970 Chevrolet Chevelle SS 454 LS6 followed suit, appreciating 14 percent. Even lower on the price scale, cars like the 1969 Chevrolet Camaro SS Sport Coupe with the L48 350cid/350hp began appreciating between 2016-2017, landing itself a 10 percent increase.
The marque with deviant data in this exercise is Ford, which has almost no lag between the least valuable models and the most valuable ones. The reason could be simple: people in the market for a 1964-1969 GT40 are unlikely to substitute it with a Mustang or Thunderbird, so the top of the Ford market is somewhat detached from the middle and entry level. There does appear to be evidence that the Fords valued in the hundreds of thousands of dollars do appreciate ahead of those with less value, so the theory holds, albeit with less range.
Substitution and lagging appreciation only function when the market is ascendant, however. In a down market, there's less correlation: for some makes, including Ferrari and Chevrolet, the most valuable cars depreciate last. In contrast, makes such as Mercedes-Benz, Jaguar, and Ford, tend to see the most valuable cars depreciate first. As the opportunities for a substitute in a falling market are reversed (more desirable models are now available), the variation may instead reflect the differences in consistent (Ferrari) and more varied (Ford) model hierarchies.
We're sometimes asked why we pay such close attention to top-flight cars when the majority of enthusiasts have more accessible collector rides. Aside from geeking out about the rare and important cars that are historically relevant to the car hobby writ large, the value trajectories of those at the top of the market give us critical insight into the performance of the market as a whole. Lagging appreciation and substitution are just two facets of how these cars influence our hobby.
Nice to have the data to support what we observe and rationalize in our own minds. At the other end of the spectrum some cars that logic might dictate will eventually come into their own once their bigger siblings take off don’t get their day. I thought years ago for instance LT1 Corvettes would rise when the big blocks blew past the $100k mark and hit $150k before stalling and dropping back. That was a car Duntuv had an affinity for and it was a well balanced drivers car. Never really caught on which was good for enthusiasts to afford.
And there was this anomaly when Ferrari Dinos were out pacing Daytona’s. There was no logic I could wrap my brain around to explain that emergence. The best I could come up with is new money entered the market and thought the Dino was cute and relatable ignoring the race history and performance on the 365 GTB, which seasoned collectors look for.
Good article, have to think about the logic but it shows the trends. Scott points out some interesting gaps. The 70 LT1 May be the most obvious one. A great engine made the Vette and Z28 the best balanced cars across the line up. Zora loves the high revving, high HP and torque, all in a lighter package than a BB. Should be $200,000+ for a top flite car. You can get a Vette for less than 100 and a Z for less than 60. Go figure?
John, thank you, I have been forecasting a correction in the market for months now. I don’t buy the top of the market in price, e.g. Ferraris and so on, but I am active in the 20K-45K range. The prices have been going down at least in my area (the Left Coast) for about 5 months now. I also think we’re in a recession now, even though no one wants to talk about it. And the reason for the drop in prices in my range and experience is primarily fear; the general circulation media is hysterical and has lost its balance. The result is that people are very uneasy and selling because they think disaster is lingering on the horizon (it isn’t).
To the reader that directly contacted me with several questions and observations about this article, I’ll hopefully add some clarification.
I tend to avoid explaining in detail the methodology because I’m not working on cures for insomnia. However, the risk is always that the conclusions appear to be drawn from shallow research. In this example, the conclusions were drawn from some 46,000 price guide vehicle values from the years 2010 through the present. Annual year-over-year changes that exceeded 10% for any given period were flagged. The vehicles were also sorted by make (Ferrari/Chevrolet/Ford …) and by price bucket. Obviously, a vehicle’s bucket will change over time as it appreciates or depreciates, so the all-time maximum price guide value was used to assign the vehicle to a bucket. The assumption being that once a vehicle is $1 million, it will always be one and or has always had the characteristics that make it one. Notably, it doesn’t change the direction of the lag or size if the price bucket is assigned at the beginning of the period (January 2010).
Consequently, the lags appearing in the chart are not drawn from a couple of examples such as the Ferrari 275 GTB vs 330 GTC, nor the Corvette L88 vs. Camaro ZL1. The lags are based on average changes over 6,500 observations. The vehicle examples are illustrative – albeit imperfect – examples of the phenomenon.
The second concern of the commenter was that the market for ZL1 and L88 Corvettes and Camaros is thin and thus that Hagerty Price Guide values for these vehicles are suspect. In our maintenance of the price guide, we do typically start with auctions. However, for vehicles which rarely appear at auction, we rely on our network of market experts who are buying and selling these vehicles in the private market. Consequently, just because one hasn’t sold at auction in a couple of years, doesn’t mean you should doubt the Hagerty Price Guide values.
I have a ’69 Mustang base convertible. I’ve owned it for 24 years and it has won 33 awards in that time. I took a look at your valuation tool in the face of the obscene increase in the value of vintage vehicles to be sure that the agreed value of my policy ($25K) was adequate. Your valuation tool told me that a #2 car is worth $36.5K in today’s market. My son then sent me an ad from a local special interest car dealership that was advertising a very nice but not original version of my car for over $58K. Theirs was bright Candy Apple red with an incorrect 351W and mine is Meadowlark Yellow with the original 302. I bumped my policy to your number.
Ken, glad you found an appropriate value for your vehicle using the Hagerty Valuation Tools.
Wow! I’m glad I’ll never have to worry about appreciating or depreciating values of six or seven digit valued automobiles! I’ll just drive what I have, and enjoy the time I spend with what I like and value.
The big buck cars do bring up the lower tiers up as one can still say I have a “insert car here” even if it is the lesser trims. Problem is on some cars the lesser trims have gone up to the point that I will not buy.
More and more seems the “love of old cars” seems to be $$$, $$$, $$$.
Sad.