2007 brought solid gains amid sharp contracts. So what lies ahead in 2008?

Despite a roller-coaster stock market, high oil prices and the decreasing value of the dollar, the past year saw solid gains for the collector car world. It was a year of sharp contrasts: Christie’s, one of the world’s premier auction houses, closed its motorcar division, while other auction houses expanded the number and size of their venues. Of particular note is Barrett-Jackson’s announcement of a Las Vegas auction in 2008, while Gooding & Company expanded into the January Scottsdale/Phoenix auction market. Russo and Steele also announced a winter Florida auction. RM Auctions added sales in London; Maranello, Italy; and Hershey, Pennsylvania.

At Barrett-Jackson’s January 2007 Scottsdale Auction, everybody in the business took notice when “Carroll Shelby’s Personal” 1966 Shelby Cobra 427 Supersnake sold for a mind-boggling $5.5 million. Other premium cars did very well, too. The feared market correction never really came, although great cars increased their value, while clones and questionable cars languished.

The year 2007 might be recorded as the year in which the “barn find” became codified, both in our language and as a potential choice for a collector vehicle. “I see more cars being kept in original condition,” says Donnie Gould, an RM Auctions motorcar specialist. “They are becoming much more important, as there are less original cars out there. Having a car in original condition puts variety into a collection, just like having a number of different marques represented.”

The addition of a survivor class at Pebble Beach (Concours d’Elegance) now has people searching for exceptional unrestored cars. At its inaugural Hershey sale, RM sold a totally unrestored 1911 Oldsmobile Limited for a substantial $1.65 million. Perhaps even more importantly, the car was the headliner for the October event, and its sale is still being talked about in magazines and on blog sites.

Even venerable concours such as Pebble Beach showed their ability to surprise by recognizing Harry Yeaggy’s 1935 Duesenberg SJ Special, later known as the “Mormon Meteor,” as Best of Show – becoming the first racing-class car in Pebble Beach history to take top honors.

WHAT DOES THE FUTURE HOLD?

Amid the changes and challenges, overall it’s been an extended period of smooth sailing in the collector car market and for most hobbyists. However, storm clouds change from year to year. For 2007, they took the form of proposed legislation that would have limited older car usage and enjoyment, as well as repercussions from the weakening economy. Continued bumpiness in the stock market might prove to be a factor, but its long-term effect is yet unknown.

Will online catalogs and auctions replace swap meets, because of their availability, ease of use, payment and shipping flexibility? For those of us who have experienced the thrill of finding an “unobtanium” part at a swap meet, it might be tough to believe. But shopping in pajamas, using a credit card and overnight delivery certainly has piqued the interest of many collectors.

Service organizations, professional societies and social clubs are aware of the challenges the 35-and-under age group presents. They are not “joiners” – their social networking is largely done online rather than in person. This dynamic presents an interesting dilemma for car clubs large and small. The question remains, will the next generation organize and show up at automotive events?

But for now car collecting continues to be a family affair for most of us. The next generation of car collectors also seems to be less interested in the “get out and get under” aspect of old car ownership, perhaps presenting ample opportunities for younger people bitten by the old car bug to develop skills as specialized mechanics or restorers. Attending shows and riding in old cars remains a popular pastime for many of the next generation of car guys.

FUELING CHANGE

Hobbyists remain concerned about the effects of ethanol-blended fuels and reformulated oils in their collector vehicles. Like the removal of lead additives from pump gasoline a generation ago, perhaps these issues will turn out to have relatively little effect on the hobby. This remains an issue and a concern where the jury is still out, although the effects will be understood as a result of an ongoing study Hagerty has commissioned at Kettering University in Flint, Michigan.

A recent hobby survey administered by Hagerty reports that the cost of gasoline and the price of gas were less important last year than in 2006. In fact, 55.2 percent reported that high gas prices were not at all important to their usage of their collector vehicles.

Charlie Stitzer, a collector car owner in Richmond, Virginia, agrees with the survey’s finding. “I’m not happy about the increase in gas prices, as it adds to my commuting cost and overall budget,” he says. “But for my hobby cars, gas is a very small fraction and it’s worth the money.”

For the higher-end collectible cars, the continued slide in the value of the dollar vs. the Euro, Pound and Canadian Dollar has had two divergent effects: For current owners, the value of their cars has risen to near and, in some cases, above record levels. But for those wishing to purchase in dollars, the cost has skyrocketed.

EMERGING TRENDS

Ed Waterman, owner of Motorcar Gallery in Fort Lauderdale, Florida, has witnessed this whipsaw effect before. “There are cars that are selling to other countries, including some emerging markets, but not so much to Europe,” he says. “The Canadians are coming down in droves to buy cars. Most of the market activity continues to be in the United States.” Still, Waterman states, “International transactions happen less often now than in the ’80s.”

One need only look at the recent resurgence in hot rod visibility and popularity to see how quickly trends can develop in the collector car arena.

Those who have been involved in the hobby for 30 or 40 years have witnessed many of these changes in popularity and collectibility. While the purists look down their nose at resto-rods, the recent phenomenon of earlier cars being retrofitted with new drivetrains and modern conveniences, including air conditioning, full-power high-end audio systems and more, has appeal to a segment of the marketplace for their turnkey operation with classic styling.

Even rat rods – homage to an era after World War II where returning soldiers built their jalopies with little regard for cosmetics – have returned. In fact, whether hot, street, rat or retro precedes it, rods in general are showing an increased presence in the portfolio of collector vehicles.

Exceptionally well-documented and iconic muscle cars are riding out the troubled waters, but the cars with sketchy histories – and certainly those cars cloned from lesser vehicles – have seen sharp decreases in value.

While some cars have already adjusted downward from their record levels, Motorcar Gallery’s Waterman, who has been in the business of buying and selling vintage exotics for more than 40 years, has become bearish at some of today’s prices. “Some cars have gone up in value so much that they will have to stop and adjust,” he says. “But I don’t see this adjustment happening anytime soon.”

Market watchers are looking for increases in value in 1950s “jukebox-styled” cars that might have missed the last go-round of value increases. For every 1959 Cadillac with its outrageous fins and one-of-a-kind styling, there are hundreds of lesser-priced Buick, Pontiac, Dodge, Mercury and other major makes – as well as orphan cars, such as DeSoto and Studebaker – with distinctive 1950s styling cues. If and when the cost of entry into the ’50s market takes off, expect to see more chrome-laden and pastel-painted cars being piloted by those whose memory of the ’50s came from reruns of the era’s shows and not from actual experience.

THE CHANGING FACE OF THE HOBBY

The pundits who proclaimed the death of the Brass Era Cars are eating their words, as recent auction prices of high-horsepower pre-1915 cars have soared in the marketplace. Newer car guys have replaced their fathers and grandfathers in discovering the merits – and challenges – of pioneer motoring.

Bill Scheffler, chairman and cofounder of the Connecticut-based Fairfield County Concours d’Elegance, has some thoughts on collecting. “Automobiles are in our DNA,” he says. “Many of us baby boomers now have the time and money to appreciate the automobiles we couldn’t afford, but truly wanted, when we were younger. We were all aware of car culture growing up, because of magazines, music and movies about cars. It’s all been a part of our lives.”

Along with the expansion in local car shows, hot rod events and regional concours, the auction market has gone from red hot to white hot in the past few years.

Gooding & Company, Russo and Steele, RM Auctions and Mecum have all seen growth in the number and size of their respective events. Other auction houses have been reporting record sales, both in terms of dollar volume and number of cars sold. The auctions themselves have become destination events, with entire families often in attendance. Perhaps this is the result of increased TV coverage or the relative ease of sellers marketing their vehicles at auction. “The general public is getting a little taste and wants more,” Scheffler says. “You can easily be channel surfing and come across an auction coverage show. Russo and Steele, RM Auctions and Barrett-Jackson are all more visible as a result.”

One thing is certain: Our hobby is maturing. And as it does, it continues to offer a broad spectrum of activities, events and opportunities. It is a hobby that can be celebrated alone or with a group of old – or new-found – friends in person or across a broad reach of miles. Our hobby remains sound, interesting and, most of all, fun.
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To see this article in its original format, view the pdf version of the Spring 2008 issue of Hagerty magazine.

The collector car hobby is basking in the limelight. But what does the future hold?

Once it was thought that if you were into old cars, you were kind of strange or odd – a person with greasy fingernails and a hoarder of junk. Now the collector hobby is the stuff of prime-time cable channels, a dozen glossy magazines, lavish vintage racing and concours d’ elegance events, as well as thousands of swap meets headlined by the annual Antique Automobile Club of America (AACA) Fall National Meet in Hershey, Pa.

The hobby has come a long way since the AACA was founded in 1935. Today’s collectors encompass a wide range of people with varied interests. From early brass-era cars, classics, American “iron,” European sports cars, hot rods, customs and racing cars, every segment is well supported with events, clubs and suppliers. A large and growing group of enthusiasts have also made collecting “automobilia” a quickly appreciating part of the market. Driving events and vintage rallies have served to make collector cars more visible to the general public than ever before.

The growth of the hobby has been the subject of articles in Newsweek, The New York Times and Forbes in recent months. Indeed, the collector car hobby has arrived.

A 2006 Hagerty Hobby Survey showed that just less than half the respondents belong to clubs. Club membership is a key barometer to passion for cars. While club membership is not universally higher, certain single-marque organizations like the National Council of Corvette Clubs (NCCC) have grown by 20 percent in the past five years.

Helping fuel the hobby’s growth is the Internet. Dealers, private sellers and auctions continue to play a role, but online auction sites are widening the access to cars for millions of potential buyers.

Recently eBay Motors marked the 2 millionth car sold on the site. Selling a car 25 years and older every four minutes, it reports that as of the third quarter of 2006, an average of 8,200 collector cars are available daily on the site. The Internet has also made it easier for people to find cars far from their home; eBay statistics show 71 percent of the listings are sold across state lines.

Also helping fuel growth is the number of baby boomers entering their reward years propelled by a bullish stock market. The market has also been helped by a shift from equities investments to objects of all kinds, including cars. David Gooding, founder of the auction company that bears his name, put it this way: “People will realize that it’s more fun to have an E-Type in the garage than to own stock, even if it’s performing well.”

It’s generally agreed that this “bull market” is rather different from the last one seen in the late ’80s; the number of speculators in the market seems to be smaller than was the case then. People who are buying cars are doing so because they love them and want to enjoy them. Any financial benefits are looked on as “the icing on the cake.”

The collector car world has been abuzz in recent years because of the multimillion dollar prices for certain muscle cars at the Barrett-Jackson auction. In general, the value of muscle cars and European sports racing cars continues to rise, with interest in classics and early cars not far behind.

During the 2006 Monterey, Calif., event, 519 cars changed hands for a total of more than $100 million, up from 2005’s $79 million and 374 cars. Last year’s Scottsdale Barrett-Jackson racked up almost $100 million in a four-day sale that attracted nearly 5,000 registered bidders and 250,000 spectators. A source in the auction business predicts that evidence of a cool-down in the real estate market may be seen in a slowdown in the $50K-$100K segment of the market, while not being a factor in the top end where cars sell in the millions.

Many are concerned about an overall “market correction” that might be coming but is not necessarily a foregone conclusion. It can be expected that prices will level out or even decline at the end of a strong market. Says RM Auctions co-founder Michael Fairbairn: “Certain segments, those that have advanced the furthest and the fastest, will see greater corrections than others.”

Trends in the hobby

A key factor in determining values has been an emphasis on how collectors use their cars. Christie’s motor car department specialist Christopher Sanger observes: “The smart collectors are looking for usability for a specific type of event. Quality, provenance and usability will drive the market.” Cars that are eligible for the events people most want to enter bring markedly higher prices than those that are not.

Another trend is the newfound interest in “original” cars. Unrestored cars have become more desired as there’s no going back once they’ve been altered. Once, if a collector had a very original car, it was viewed merely as the starting point for a full restoration. Now that same owner is challenged not to touch it at all.

There’s also a growing gap between historic cars that have undergone full restorations – or cars that are in well-preserved and documented original condition – and more common cars with needs. This is true at all levels of collecting from common English sports cars to major classics, but is especially seen at the top end. “My 1931 Murphy Duesenberg roadster is original,” says collector Charles Le Maitre of Massachusetts. “People used to ask, ‘When are you going to restore it?’ Now, they say, ‘Please don’t touch that car.’ ”

“Now that they’re getting rarer and harder to find, original cars are even more appreciated,” says David Gooding. “People are realizing that shiny isn’t always the best. The cars that have never been touched have a lot to say.”

The Type 35 Bugatti that sold this year for $2.6 million at a Pebble Beach auction is unlikely to ever be used today on a vintage race track due to its extreme originality. But for those who crave usability, this creates a dilemma. The irony is that a car that has undergone some massaging with the application of replacement parts can still be driven – and enjoyed for what it was meant to be. “It’s the difference between an objet d’art and a piece of sports equipment,” says Miles Collier, owner of the Collier Collection in Naples, Fla.

So we are seeing a major division between “cars as cars” and “cars as art.”

“Cars have indeed begun to come into their own as art objects,” says Le Maitre. “The person who buys a Mercedes 540K for $2 million is really buying an automotive Rembrandt.”

In contrast, to the trend toward original, unrestored cars, there is a growing acceptance of street rods and resto rods into the hobby. “Not everyone can have a car like a Yenko Corvette or a 1970 ZR-1,” says journalist Ken Gross, “but it is possible for you to create one. Likewise, people today who own cars like an original 1964 Pontiac GTO or a Chrysler 300 run the risk of being blown off by a guy in a Subaru WRX. Now, it has become acceptable to use contemporary hardware under the skin — as long as you do it carefully and tastefully without major surgery.”

In addition, suggests Gross, cloned cars, where an original muscle car like a Hemi ’Cuda is recreated using crate motors and reproduction parts, are starting to fetch prices that rival what the originals were going for several years ago.

The legislative climate

Hobbyists are rarely targeted by laws and regulations, but are often caught unintentionally in the broad net of otherwise sensible laws, especially as they relate to emissions regulations and alternative fuels. These laws are often the product of well-intentioned decision makers attempting to solve a legitimate problem without considering the needs of hobbyists. As a result, Hagerty and other companies have partnered with experts at the Specialty Equipment Market Association (SEMA) as well as numerous active car clubs to make sure that the needs of hobbyists aren’t overlooked.

An area of particular concern is the advent of alternative fuels such as ethanol and its potential adverse effects on older collector cars. Other concerns relate to stricter emissions laws, scrappage incentives for older cars and usage restrictions on vehicles of a certain age. (For more information, visit www.hagerty.com/ethanol.)

The future

While energy policy and legislative initiatives are always difficult to predict, the hobby is better represented than ever before and should continue to thrive. Like any human phenomenon, the collector world will continue to be subject to the cyclical nature of the stock market, real estate prices and other economic barometers. But like fine art, interest is unlikely to wane, especially with technologies like the Internet and eBay – as well as a host of collector magazines – all of which will continue to fuel our passions and make information about old cars more accessible. The best is likely yet to come.

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Fathers and Sons

Old cars can help fathers and sons build a strong bond. More than 20 percent of the respondents to Hagerty’s Hobby Survey share their car activities with their sons and 11.5 percent share with their fathers. Sports car collector John Wright inherited his passion from his Ford-loving dad, and now he’s passing it on to his son. When 16- year-old Johnny began driving, it was in a red MG that father and son restored together. The finished car was more than just a great Christmas present; it was a shared experience.

The hobby offers an opportunity to share a passion and become closer. That’s why more than 75 percent of those surveyed say having a family member involved in their hobby is important to them.
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To see this article in its original format, view the pdf version of the Spring 2007 issue of Hagerty magazine.