Ten soldiers lead wisely will beat a hundred without a head – Lamborghini Centenario
The global automotive industry is slowing down hard times. Car manufacturers in the US and the rest of the world are facing reduced demand. New car dealers offer discounts and better deals to attract car buyers while the used car dealers lower their prices in line with lower price structures for new cars. What are the consequences for the classic car segment?
In general, we can share the classic car segment in the space and high end category and it all goes down to affordable prices. For the intermediate classic car owner, the main obstacle maintains the maintenance and maintenance of classic cars and they require a lot of attention, maintenance costs and a permanent storage space. In a recession, do the owners have the ability to keep their cars? Are they being driven by difficult times to share one of their more valuable cash assets? There are many reasons why a classic will end up in the market, whether good or bad. We as humans can give all kinds of reasons to justify our cause. Let's examine the issue rationally.
The intermediate classic cars are generally much cheaper and include brands like Ford Mustang, Chevrolet Corvette, AMC, Austin and others. Such cars consist of brands that are popular with the masses and are produced in quantities that meet the demand when they were built. As years and decades go, parts from similar brands and models are cannibalized to keep the existing cars on the market. The Internet has let the traditional burden of purchasing difficult to find spare parts.
High-end classics would be models from automakers such as Aston Martin, Bentley, BMW, Ferrari, Jaguar, Lamborghini, Mercedes-Benz, Maserati and Rolls Royce. Admittedly, there is a potential overlap in the definition of middle and high end classics in the case of brands that also produced cars in bulk. We will not be in the definition of mid- and high-end classics here and leave it at the reader's own discretion.
It is generally true that high-end cars consolidate better conservation of value in bad times and high appreciation of value in good times. Requirements for such cars are not limited to the domestic market because the brands are known worldwide and the presence of such brands and models in many other countries. The global appeal means that market demand is not limited geographically and in combination with very limited availability for each brand and model, the recipe for high capital contributions for such cars. Secondly, at the time of production, demand for such cars is limited due to a combination of factors such as upper reach models, limited production models, limited demand for such models, and higher priced models. Fast winding 30-50 years later it becomes difficult to find parts on the internet, and some sellers resort to auctioning spare parts for the highest bidder. All of these factors are converted into higher intrinsic value and demand for such cars.
To view the preservation of the value of classic cars, take a look at the price for classic auction listed by RM Auctions below:
Top 10 world record for car auction
1 1961 Ferrari 250 GT SWB Cal Spyder R M May-08 $ 10,894,400
2 1931 Bugatti Royale Type 41 Christie's Nov-87 $ 9,800,000
3 1962 Ferrari 330 TRI / LM R M May-07 $ 9 281 250
4 1937 Mercedes-Benz 540 K Special Roadster R M Oct -07 $ 8,252,201
5 1937 Bugatti Type 57SC At alante Coupe Gooding & Co. Aug-08 $ 7,920,000
6 1929 Mercedes-Benz 38/250 SSK Bonhams Sep-04 $ 7,443,070
7 1904 Rolls-Royce 10hp Bonhams Dec-07 $ 7,254,290
8 1962 Ferrari 250 LM R M May 08 $ 6 979 000
9 1931 Bugatti Royale Typ 41 Kruse June 86 $ 6,500,000
10 1962 Ferrari 330 TRI / LM R M Aug-01 $ 6,490,000
Although most of us do not own such high value and sought after cars, we see continuous capital appreciation of our classic as the cars that age gracefully. Obviously, the mid-range will be affected by the economic situation, but for the sovereign rich as collectors of millions at their disposal, they will not have their cars in bad times. Losing a few million of their net worth is not gong to affect them and that explains why high-end classics are rarely affected by the current concern. The only effect that has been found so far is less utilization of advanced classics and lower intermediate class bidding.
In a new report from BBC News dated November 3, 2008, a high-profile auction was organized by RM Auctions in London, where as much as 30% of the classics were not sold or did not meet the minimum reserve. But it does attract a lot of attention with a 1965 Ferrari LM Berlinetta and a 1959 Ferrari 250 GT Tour de France Berlinetta sold for $ 2,226 million and McLaren F1 made £ 2.53 million. There are no shortages of buyers in the market but the timing must be perfect and the right car must present itself when the buyer comes along. When an opportunity presents itself, the market for such cars is supported by the unaffected wealthy individuals and they will not think twice about buying such cars as long as they are available in the market for sale and the price is right.
With the global downturn in the value of British and American currencies, the purchase of classic collectors around the world will further increase demand for such cars. For those who owned mid-range classics, this is a good time to look for rescue classic cars and parts for restoration work. For the advanced classics, the effect is minimal and any opportunities to acquire at lower prices mean that you add another artwork to an existing collection.