I’m a classic car expert – here’s why prices won’t fall after recent surge

Read what some classic car enthusiasts write online and you’ll come to one conclusion: prices are backwards.

Sell-through rates at auctions – when a car changes hands after a successful winning bid – have also fallen over the past 12 months and advertised values ​​have fallen.

The obvious synopsis would be that the market bubble has burst after thriving through Covid and beyond.

But is that really the case? Money guest writer and classic car expert John Mayhead explains it all.

Data from the Hagerty Price Guide, the main classic car valuation website in the United Kingdom, confirms a decline in the sector.

Across the 2,851 different classic car models analyzed, average values ​​are currently at 86 percent of where they were in June 2020.

And its ‘market rating’, which tracks insured values, dealer prices and auction results, is down 13 points from its all-time high in June 2022.

But there are three important words from the paragraph above that hint at the truth: The ‘all-time high’ was there for a reason: Covid.

People stayed home, realized that life was short and some decided to buy the classic they had always wanted.

John Mayhead is This is Money’s guest classic car writer and the man following the market for a job as an editor at the Hagerty Price Guide.

It was like a thousand midlife crises happened all at once.

Demand increased, some people paid more than expected to get the car they wanted, and sellers responded by raising their prices.

For a while, buyers played along.

Then, real life – and the cost of living crisis – hit home. Bills rose, mortgage rates rose, and gas prices skyrocketed.

Buyers began to be much more careful with their money, auction prices fell, and dealers reported that buyers were looking, but not buying.

As a result, prices began to drop.

This has impacted the upper end of the market the most, with seven-figure models from iconic high-performance brands, Ferrari and Chevrolet, falling the most.

The biggest flop – in financial terms – of the last 12 months is the Ferrari 365 Spider, which has lost £750,000 of its value since 2023, with values ​​now reduced to just over £2.5 million (a drop of 22 per cent ).

The one that has fallen in price the most in the last 12 months has been the Ferrari 365 California, losing almost a quarter of its value last year, losing £725,000. This 1967 example shown in the photo had a guide price of between $4 million and $4.5 million at RM Sotheby’s Miami auction in March, but it did not sell.

Classic car values ​​have soared since Covid first hit. Demand increased, some people paid more than expected to get the car they wanted, and sellers responded by raising their prices.

It’s a very familiar story that we’ve seen before.

In the late 1980s and early 1990s, there was another explosion in the value of some classic cars fueled by a prosperous, deregulated City of London that was awash in cash.

Back then, the models available were the Jaguar E-Type and the Ferrari Daytona, and prices for these shot up to sometimes ten times their original price almost overnight.

The stock market crash on Black Wednesday in September 1992 put an end to this: classic cars were easy to buy, but when times were tough, that meant they were the first to go, sometimes at fire sale prices.

Prices fell, almost instantly, below where they had been in the first place.

That was a bubble that burst.

But what we are seeing now in the classic car market is not.

When the cost of living crisis hit home, classic car buyers began to show more caution. As a result, prices began to drop.

“For some models, the post-pandemic boom was neither realistic nor sustainable, and deep down, most enthusiasts knew it,” explains John.

The classic car market is better informed than ever. That’s why John says another accident like the one seen in the early 1990s is unlikely.

Today, it is a mature and much better informed market, built on an £18bn industry supporting homeowners through events, clubs, catering and storage.

Resources like the Hagerty Price Guide give owners an insider’s look at what their car is really worth, and the Internet makes it easy to do research and compare deals.

No, what we are seeing now is some parts of the market correcting and realigning back to a healthy state.

For some models, the post-pandemic boom was neither realistic nor sustainable, and deep down, most enthusiasts knew it.

Values ​​overall in the Hagerty Price Guide fell 1 percent last quarter, but only 40 percent of cars actually fell in price; 13 percent increased and the rest remained static.

What’s more, of the ten biggest droppers, the cheapest is still worth more than £1.4 million, a drop that will have no effect on the value of your usual, everyday classic and probably says more about exchange rates than any other stuff.

So, in short, collectors have nothing to worry about.

Many enthusiasts will tell you that the best way to maintain a classic car is to drive it regularly, and in the long run, that can maintain its value.

Plus, you’ll get the benefit of owning and driving such a wonderful vintage machine and all the health benefits of connecting with like-minded enthusiasts.

That has to be a good thing.