Classic Detroit iron outpaces Dow Jones and the S&P 500
Click above for a high resolution gallery Shelby's personal '69 GT500
For those interested in the collector car market but who don't have deep enough pockets to afford some of these high prices, NADA Guides' research shows that the market has begun slowing in the last year and that even the lower-priced cars of $25,000 or less are increasing in value at a good clip.
Of course, Autoblog is not making any suggestions on how you should manage your money. If you are truly interested in getting in on the auction action, you may want to contact a professional. We imagine, though, that as time goes by, classic vehicles are only going to become rarer. Although new classics seem to sprout up all the time.
[Source: NADA Guides]
From Stocks to Big Blocks, Collector Car Appreciation Rates Outdistanced the S&P and Dow in Recent Years, according to NADAguides.com
COSTA MESA, Calif.-- The average increase of collector car values -- from February 2004 to February 2008 -- was 36 percent, more than double the S&P 500 Index increase and the Dow Jones Industrial Average increase of 16 percent respectively during that same time frame, according to a report released today. The report, developed by NADAguides.com (http://www.nadaguides.com/), a leading vehicle pricing and information website, evaluated close to 27,000 makes, models, model years and segments of collector cars, with some surprising findings.
The company found that collector cars valued at over $125,000 appreciated at a higher average rate than vehicles in any other pricing category -- a whopping 47 percent. Collector cars valued between $75,000 and $100,000 appreciated at the second highest rate of 45 percent, while vehicles valued between $25,000 and $50,000 appreciated at the third highest rate of 39 percent.
Most recently, the average appreciation rates of all vehicles on the NADAguides.com list were lower from 2007 to 2008, compared to those same vehicles' appreciation rates from 2006 to 2007.
The report also revealed that from 2004 to 2008, the top 25 collector cars with the greatest percentage increase in value were especially affordable, with 16 of the 25 valued at under $10,000. And yet, during this same timeframe, the average appreciation rate of these vehicles was an astonishing 370 percent.
"We found that, during this timeframe, collector car investors didn't need to spend a lot of money to get a great return on their investments," said Steve Ferguson, Classic Car Editor, NADAguides.com. "Of the nearly 27,000 vehicles we evaluated, close to 75 percent were priced at $25,000 or less, with those vehicles garnering an average appreciation rate of almost 35 percent."
Of the collector cars in the NADAguides.com report whose values appreciated more than 100 percent in the past four years, the company's editors found a large percentage were low volume, more obscure makes such as Citroen, Willys, Rover, Hillman, Metropolitan, Amphicar, Messerschmitt and Alfa-Romeo.
The company also noticed that the early 1970's American muscle car segment showed dramatic increases in values during this timeframe, with six vehicles in particular appreciating at some of the highest rates in the NADAguides.com collector car database.
Ferguson explained, "The growing popularity of '60s American muscle cars has caused their values to escalate significantly in recent years. As a result, collector car buyers are increasingly turning to '70's muscle cars as a more affordable yet comparable alternative."
Following are highlights.
1972 Chevrolet Nova 2-Dr Sedan
2004 Average Retail Price -- $2,500
2008 Average Retail Price -- $11,100
335% Increase
1970 Dodge Challenger R/T Hemi 426 2-Dr Hardtop
2004 Average Retail Price -- $44,200
2008 Average Retail Price -- $177,700
302% Increase
1974 Plymouth Cuda 2-Dr Hardtop
2004 Average Retail Price -- $7,400
2008 Average Retail Price -- $28,900
291% Increase
1970 Ford Mustang Boss 429 2-Dr Fastback
2004 Average Retail Price -- $55,000
2008 Average Retail Price -- $165,600
201% Increase
"When it comes to investing, there are always risks and the collector car market is no exception," said Ferguson. "Knowing how and when to invest in collector cars takes an intrinsic understanding of the marketplace. While the findings of our report are extremely interesting, we suggest consulting the advice of a certified financial expert before making any investment decisions."
Reader Comments (Page 1 of 1)
mk 6:13PM (3/28/2008)
Can you say inflation bubble?
You can't eat a classic muscle car. Some wouldn't even use it to go get something to eat, or use it to get to work to buy something to eat.
Luxury goods are by far the most economically elastic, due to being un-necessary.
fuel, food, and *basic* medications are the least elastic. And ironically (read: clandestinely purposefully) are the three things left out of the government's measure of urban inflation, and haven't been in the inflation numbers that have been reported for the last 7-8 years at least.
Have fun with your moth-balled classic shelby when you are wondering if you will have to sell it for a month's worth of groceries; after the fed realizes they have grenaded the value of the dollar, and jacks interest rates way back up, after hitting near zero, and dumping millions of excess dollars on the market. ;-)
Funny what people think are good investments, or good reasons to leverage their wealth in non-essential goods.
Reply
Speedzzter 6:41PM (3/28/2008)
There is certainly a "boom and bust" cycle to the muscle car market. But the prices never fall to as low as they once were.
And the price trends for desirable performance and muscle cars will skyrocket as the clamp-down in Corporate Average Fuel Economy bloats the price and cuts the performance of new cars. Already, high prices are causing many to miss out on the "Second Supercar Era." http://speedzzter.blogspot.com/2007/04/missing-second-supercar-era-its-old.html
Reply
Travis 10:22AM (3/29/2008)
As Beenie Babies, internet stocks, house values and the the US currency shows us, just b/c something *hasn't* fallen off a cliff price-wise, doesn't mean that it *won't*. These cars are only worth what people are willing to pay for them, and if that interest dries up, value will go down. For anybody who thinks differently, I got a 600 square foot condo in Cali that I'm trying to give away for *only* $1.2m...
MajorGeek 10:25PM (3/28/2008)
LOL, MK, this is an auto enthusiast website still, right? I always wonder when I see a post like yours why you would even be here if a car to you is a transportation device nothing more, in which case moving closer to work and walking would be awesome.
Cars, as we all know, are a bad investment, they lose money as soon as you buy them and depreciate over time. This is discussing the value of a collector car over time. I dont know anyone who buys a car as an investment. Not one. We buy them because we love them, and because we can. Each of my cars has a special place in my memories for me. In reality, you would be suprised how careful your average "rich" person is because they know it can all end tommorow, which is why when you see them buying at Barrett Jackson, they arent spending the last of their savings, but rather money they are comfortable parting with. In most cases. Usually they make sure we have enough money in the bank so we dont starve when push comes to shove.
The real problem is people buying goods they cant afford on credit to look cool. I know LOTS of those.
Reply
mk 2:01AM (3/29/2008)
Most of the time I would say you are right. And some of that is hyperbole.
It just seems like these prices are a little outrageous for OLD cars that probably are to highly prized to be actually used. They become personal museum exhibits, and expensive ones at that. If classic car values, being elastic, go DOWN the way they have gone up, there is no way to get much of that wealth back.
But you could have a million bucks in the bank, and if the dollar is worth less than a penny in real buying power due to inflation spike, it doesn't do you as much good.
the thing is, that I have a feeling some of those people spending hundreds of thousands of dollars on classic cars, are also still in debt on their houses, because mortgages are just so common, and debt is so easy. What happens when banks start falling, and calling loans in? What happens when property values dip below the mortgage principle, and people realize they are upside down when they never thought they would be.
I hope people buy these things in a completely solvent positions, but I wouldn't bet on it.
I am all for being enthusiastic about cars, and having daily drivers that are fun to drive, and affordable to own. But owning a museum piece while you are otherwise leveraged, not a great idea. And the potential exists to lose it all anyway, for pennies on the dollar compared to the purchase price of the home and the museum car.
There were a lot of Deusenbergs liquidated in 1929 and 1930, and throughout the great depression. The Deusenberg company didn't even survive it.
Enjoying what you can afford is GREAT. Buying toys while still in debt, even a mortgage, is a stupid, but all-too-common move.
apearlman 10:52PM (3/28/2008)
Really? I'm rebalancing my 401(k) entirely in muscle cars as soon as the market opens on Monday.
Let's all recognize the tricks that can be done when you choose the right start-end dates. For example, here is a completely true statement:
"From 2000 to 2008 (February to February), stuffing $20,000 into a jar on your kitchen counter and leaving it there for 8 years would yield greater returns (0%) than if you had invested it in the S&P 500 index (-1.1%)."
That's right... sometimes the stock market goes down. Personally, I'm still waiting for my '92 civic to become collectible and I'll retire early.
Reply
Karl Nichols 1:08AM (3/29/2008)
Right on as usual!
Keep up the good work!
Karl Nichols
www.NickIndex.com
Reply
Mike 1:57PM (3/29/2008)
"...collectible cars in general increased in value at an average rate of 36 percent. Sounds like a good rate of return to us!"
A 36 percent increase over 4 years is only equal to a 7.99% annual rate of return. Given the high volatility of the classic car market, that doesn't sound like a very good rate of return to me.
Reply
John 3:33PM (3/30/2008)
I smell another 1991 coming in the collector car market. Waiting for the bottom to drop out.
Reply