Lower prices of classic cars and “investment” in a slow economy

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Classic cars have enjoyed a solid decade, with prices rising significantly from 2010 as economic growth accelerated and asset prices rose across the board.

However, after a dizzying period of rising prices, the vintage car market is cooling down due to a combination of falling demand and sluggish economic growth, as many of the world’s major economies fall into recession as a result. of the coronavirus.

Classic cars were one of the main asset classes from 2015 to 2018, with research indicating that popular brands of classic cars have generated an incredible 28% annual return – significantly superior to many stock market indices and other investment assets.

Many cars peaked in value from 2016 to 2017, with the price of highly sought after vehicles doubling or tripling as the demand for investment vehicles increased.

Today, however, prices are falling, with many experts saying a market downturn is potentially here to stay, as economic downturns affect a market that was already facing a drastically reduced level of demand.

In an article published by Car, several vintage car experts shared their thoughts on how the vintage car market may change over the coming months. An expert noted that the prices of some cars were down 30-40% compared to the period 2014 and 2015.

Another noted that despite the falling prices, customer interest in many classic cars is on the rise, with more people visiting classic car listings and looking at vehicles available for sale.

Industry experts and analysts have pointed out several reasons for the fall in prices beyond weak economic activity. Many point out that years of growth in the vintage car market has left the prices too high and the market oversaturated.

Hagerty data released a 2019 Bloomberg item showed that demand for very expensive vintage cars, including those priced at US $ 500,000 and over, has declined from record highs in 2016 and 2017. Prices have also fallen for more affordable classic cars .

However, part of the classic car market that had continued to grow was affordable cars, including those popular with Millennials and Gen X collectors – audiences that previously weren’t major buyers.

Cars such as the Volkswagen Golf GTI and many Japanese import vehicles from the 1990s, which have largely escaped the public of older car collectors, remain in demand despite a downturn in the market as a whole.

Popular sports and vintage cars of the 1980s – a decade that had previously not been seen by collectors as a major period for vintage cars – had also seen a modest but steady increase in value from 2010 to a peak in 2017. Many remain valuable today. despite the slow decline in prices.

Other cars that have retained their value include iconic cars, like the Aston Martin DB5 and other vehicles popularized by the media. Many of these vehicles are valued at several million pounds and are attractive to the most ambitious and demanding collectors.

Of course, classic cars aren’t the only assets to have suffered during the coronavirus pandemic and its economic fallout. Other luxury goods, such as high-end jewelry and fashion, often see their demand and value drop as consumers become more frugal and limit their spending.

Despite the fall in prices, many vintage car enthusiasts, collectors and investors are confident in the future, especially with the economy gradually returning to normal after a period of severe contraction.

For others, the drop in prices is more of an opportunity than a crisis – a chance to buy an iconic vehicle and expand their collection, all at a price significantly lower than there was one, two. or three years.

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