The great thing about working in the classic car game is that everyday is a school day. I’m not exaggerating when I tell you that in our office the talk is invariably about classic cars and it never runs out. We spend most of the day either on the phone giving advice to buyers or speaking to sellers and we turn new stones over during a good proportion of those conversations. As I write this, Rob is on the phone discussing the purchase of a car with a client – a car that the seller has described as totally original and unrestored with a recent bare metal respray – Oh, how we laughed….
The lesson today came from a client who is a true enthusiast. He has one of his cars on sale-or-return with a dealer, or to be more precise, it has been for sale for the last four months and it hasn’t sold. To the surprise of our client, he got a call from the dealer who said that they needed to put the price of the car up. The first thing he thought, as did we, was why would you raise the price of a car that hadn’t sold? The answer according to the dealer was simple – the market has moved.
Now this triggered a few alarm bells with our customer, principally that, if it hadn’t sold at the existing price, how was it going to sell when it was even more expensive? Perhaps it was the fact that it was frighteningly cheap that was deterring buyers? Unconvinced and wanting to move the car on, the dealer made an offer to buy the car. Was that price the new market-adjusted price? You guessed it….
‘The problem with lowering prices is that it doesn’t look good – eagle-eyed forum stalkers start talking about bubbles bursting and let’s be honest, there can’t be many dealers who want to pull on the handbrake when we are travelling at this speed.’
This left a couple of unanswered questions. Has the market really moved on in the last four months? On this particular car the asking prices are rising, but the UK stock hasn’t changed enough to warrant significant price increases and there are still plenty of cars available so I’m going to go with the following answer – no. Question two – if a car isn’t selling at a certain price point, when is the appropriate time for a seller to lower the price? This must create a bit of a quandary for dealers – if you lower the price, it makes sense that everything else of a similar nature follows suit, but since when has sense had anything to do with a bull market.
The problem with lowering prices is that it doesn’t look good – eagle-eyed forum stalkers start talking about bubbles bursting and, let’s be honest, there can’t be many dealers who want to pull on the handbrake when we are travelling at this speed. The problem with not lowering prices is that they just keep on going up and everyone – dealers included – gets caught in a vicious circle of spiralling prices. Is the market moving? Not really, but it looks like it’s as stable as hell and all the while we are playing poker with ourselves and driving the prices up. I’d say it’s going to take some pretty heavy-duty ordnance to burst that bubble and we’ll continue to see prices creep stealthily upwards unless the next government decides to launch a tactical (or taxational) strike.