There is no argument that the Corona Virus will have a negative effect on the U.S. Economy but the world-wide economy has also taken a big hit. Most classic cars and collector car dealers are considered small to medium sized businesses and are operating on a “by appointment only” basis.
Here in the St Louis, Missouri area we have five well known classic car and collector car dealers that fall under the definition of a “small business” as they have less than 250 employees. Many of these dealerships have been required to close their showrooms to the public and are only offering viewings by appointment only. Jon Faust the sales manager at the St Louis Car Museum told me “The museum itself is close to the general public as of last Monday. Vehicles for sale can be viewed by appointment only during our normal business hours and our service department is also still open by appointment only” Their hours of operation are 9 am to 6 pm weekdays and 10 am – 2 pm on Saturdays.
What I see as a small business owner is that the economy is going to take a hit and depending on how bad we get beat up will depend on how long we are shut down. It is going to take a hit because consumers are not able to go out and spend their money but also very soon, they likely will not have much money to spend until they are able to go back to work. Some restaurants and bars some are operating at half staff or corporations allowing their employees to work from home, these are the lucky ones. Some not so lucky ones are the “non-essential” businesses which have had to shutdown completely such as car washes, bakeries and many others.
While doom and gloom might be on the horizon for most in the stock market, the collector car market values will likely remain unimpacted for true collector cars. Phillip Metcalf at Hyman Ltd. says while the world economy has slowed down they are still selling cars everyday. This is what Phil had to say when I asked him. “In the past, the cars we sell at Hyman were largely unimpacted in economic downturns which is why they make such solid investments. I think buying volume will be down in the short term while we work through this uncertainty, but we have been selling cars!”
Now on to what I believe will happen to the classic car and collector car market values on the vehicles themselves. When buying volume goes down, values usually come up for that period. This is why it is time to buy but also time to hold and of course ALWAYS time to appraise!
- I think the values of classic car and collector cars is going to rise! Why is that? There will be much less of them being sold on the market. Now that does not necessarily mean you will be able to get your hands on one or you will not be able to negotiate the price down but the value of the car itself (without a sale) will be going up. How is that you ask? Because the REPLACEMENT value of your car will go up. It will be harder to get one, lower sales data online and people will be wanting to hold onto their investments. This means soon will be the time to get your car appraised and raise your insurance coverage. This information would likely be from the “asking prices” of the cars online but also what it would cost to rebuild or replace the car.
- Now if we were talking about the FAIR MARKET value of the vehicle (actual transnational data) you will likely start seeing a slight decline in the actual purchase prices of classic and collector cars over time. Many of times the fair market value is driven by the market data providers such as NADA, KBB, CCMR, and Hagerty. Dealers and sellers often look at these sources in order to price their vehicles in the market but they often also leave room for negotiation and in tough times, money talks. Jon Faust at the St. Louis Car Museum said “Many investors in the stock market saw significant losses, so those individuals who felt they had some discretionary income may not feel the same way now. With fewer confident buyers, we will likely see a depression in overall prices as sellers get more competitive”. When you start to see the fair market values drop, that is the time to PURCHASE.
- What if you own a collector car or classic car and just hold on to it? Just like if you owned stock and the market took a dive… HOLD on to it and buckle up for the ride. The values will come back over time but make sure you are insured and protected with an appraisal on file with your insurer. Jon also said “Another factor to consider is that, driving season is almost here for most of the country, so hopefully the excitement to get out of our houses for an old fashioned car cruise will excite the market once again. Only time will tell!”
We have a vast demographic when it comes to our clients here at TDT. We have the average “Joe” making a median income and then we also have the collectors and enthusiast bringing in the big bucks. Both of these demographics can easily be effected by the shutdown, it all depends on what type of business they are in, and everyone buys cars whether it is used, luxury or a collector car. We will 100% be here when you need us for a pre-purchase classic car or collector car inspection or appraisal. To assist you in these tough times we have lowered our prices by 25% that means our classic car and collector car inspection that was $400 is now $300 and you will still get the EXACT same inspection.
If you are considering a classic car or collector car purchase and need an inspection or if you currently own a classic or collector car and need some advice on value, please feel free to reach out to me anytime by calling 636-388-8378 or simply drop me an email to steve@testdrivetech.com
