With a fresh load of classics just off the boat and heading straight into the auctions our phones have been busy. Hungry buyers are looking for cars and left-hand drive cars seem to be becoming all the rage because – according to some people at least – LHD is a ‘global market’. This seems to be partially true at least, given the number of left-hookers that are finding their way into the UK.
Let’s take a look at the life-cycle of one of these cars. Imagine you are a Ferrari 355 living a quiet life somewhere in Spain. Then one fine day your owner receives word that an auction house in Britain is looking for cars to sell and that the potential returns could be considerable because cars like this are selling for big bucks in the UK. You haven’t been driven for a while because things weren’t like they used to be, the economy is still in first gear, fuel is expensive and servicing – don’t even mention the cost. Anyhow, your owner could do with the money so he decides to take a punt and consign you to the auction.
After a lengthy trip to the UK on a transporter loaded with other automotive immigrants, your documentation – at least what is left of it – is checked and a brand new CV is professionally written to help ease you into the UK market. A good wash and brush up, some professional photos and before you know it you are in the saleroom with people poking around you, trying to figure out if they should take you home.
On the day of the sale there is a lot of interest in you and all the other fresh blood and, although you are not ideally suited to life in the UK, potential buyers don’t really care because where else can they buy similar merchandise? You and the rest of the imports are snapped up and you leave the next day to begin your new life in a car showroom.
Now there is absolutely nothing wrong with making money out of cars, but think about the number of people who take a cut along the way.
OK – maybe not quite how it happens, but consider why a true classic car enthusiast would try and sell their pride and joy, a thousand miles from home, in a foreign country where he doesn’t really know the first thing about the vagaries of the local market and what might happen to their car. The answer of course is money.
Now there is absolutely nothing wrong with making money out of cars, but think about the number of people who take a cut along the way: The transport company, taxman, auction house (from both buyer and seller), the dealer who ultimately buys the car and, finally, the punter, who buys it and expects the value to go up. It’s anyone’s guess what margin gets clocked up on the journey from the incumbent owner to the next person with their name on the V5, but it has got to be somewhere between 30 and 50% hasn’t it? And we wonder why prices keep going up…
What are these foreign cars doing to the UK classic car market? Around 35-40% of all cars going to auction have the steering wheel on the wrong side – if LHD has a global market how come so many are ending up here in the UK? One thing I can tell you – if prices start to ‘correct’, LHD cars won’t be the flavour of the month for long.
Edward Legge is Director of Commercial Development at Classic and Sports Finance.