MAY 20th 2015

Edward Legge ‑ Strange Goings On

Strange things are afoot. If you’ve read Macbeth (or did you miss that day at school?) then you’ll know what I mean. In Act 2 scene 4 Ross and an old man discuss the unnatural goings on in Macbeth’s kingdom:

“Threescore and ten I can remember well,

Within the volume of which time I have seen

Hours dreadful and things strange, but this sore night

Hath trifled former knowings.”

You’ll be wondering where this is all going but the above words translate roughly into modern English as ‘Things have got really weird’ and although I’m not threescore and ten there are certainly strange goings on in the classic car world at the moment.

At the beginning of 2014 we predicted that classic car price increases would slow down by the end of the year and that values would begin to plateau across many segments. Our predictions turned out to be correct and I have to admit that if you had visited our office at the turn of the year you would almost certainly have heard the phrase “I told you so” on more than one occasion, probably accompanied by a slightly smug, knowing look. As we headed into the new year the market looked set for a subtle correction, widely believed by industry experts to be in the best interests of the market, and this was confirmed at the Arizona and Paris auctions where generally speaking cars weren’t being sold for what was expected (if you exclude the sale of the Baillon Collection). The classic car roller coaster seemed to be pulling into the sidings to let us all catch our breath.

‘Experts aren’t quite so positive about the market’s health – dealers are struggling to get the cars they want to sell and stock is building up.’

Since March classic sales have been steady, as have auction results, but recent reports from some of the classic car indexes indicate that the market is rallying – again. The Historic Automobile Group (HAGI) reported a new all-time high in April, the first time they have recorded any gains since September 2014, and the Hagerty Market Rating Index (which is specific to the North American market) reports strong private sale activity and price increases particularly in the affordable classic sector; which many are expecting to be the break-out sector in classic cars this year. What kept the increases in check?

Experts aren’t quite so positive about the market’s health – dealers are struggling to get the cars they want to sell and stock is building up. If reports and the conversations we have with dealers are anything to go by, the UK automotive sector has seen a pre-election, pre-half term, bank-holiday weekend lull in activity. Dealers aren’t very good at waiting patiently for phones to ring and customers to walk through the door, or indeed keeping a quiet spell under their hats, so you can bet your bottom dollar that people aren’t breaking the showroom doors down right now.

‘As any witch will tell you – double bubbles cause toil and trouble.’

So – showroom and auction activity is steady, but not breaking any records, but the car indexes are rising. Google’s data shows that search activity for classic cars in the UK is at a ten year high, as are the advertised prices for just about any Ferrari you can think of, even when stock isn’t turning that fast. There is also no doubt that there has been a significant shift in the cars that people are interested in over the last six to nine months and I can report that the growth area in classic car finance besides affordable classics is in the big stuff – £500,000+. Curiouser and curiouser….

It has been noted by the eagle-eyed in some recent auctions that speculators are buying up ex-dealer stock and this could be the explanation for the rises in value of indices that you can be pretty sure are mainly used by speculators and investors – so they could find themselves in a very vicious circle. Does it mean that something is rotten in the state of Denmark? I don’t think so, but if I was a gambling man I would definitely be hedging my bets right now because – as any witch will tell you – double bubbles cause toil and trouble.

Share this