Is depreciation back? Yes, suggest 911s and Corvettes
As we mark the halfway point of 2023, the Hagerty Market Rating, which has dropped for 10 out of the past 12 months, reminds us what a difference a year makes. Even though we’re still seeing records at auctions and premiums for the latest supercars, trends show a leveling off or even a receding pattern for some of the hottest cars in the market. One segment in particular highlights this well: “instant” collector cars.
These models—like the Chevrolet C7 Corvette ZR1 and C8 Z06, and Porsche’s GT line, both of which have tremendous pent-up demand—have come on strong in the last decade. Porsche and Ferrari figured out the recipe early on, and now even Chevy and Ford have successfully cultivated enthusiasm for their halo cars to bolster demand and increase exclusivity. Widespread dealer markups as well as significant premiums on the secondary market have sprung up as a result, but that tide is turning.
While visible in market pricing, the phenomenon is also confirmed by Hagerty’s data, and we’re able to track it over time. Hagerty insures a lot of vehicles built well over 25 years ago, but we also cover a wealth of modern enthusiast vehicles that aren’t used every day. Our guaranteed value policy means we work with owners to understand the market replacement value for the vehicle. If an owner needs to replace a 2021 Ford Mustang Shelby GT500, we know that they’re selling for more than the number on the window sticker (MSRP). As cars trade hands and new owners add vehicles to their policy, those values show us how much a vehicle has depreciated or appreciated over time.
Porsche’s 911 GT2 and GT3 models, particularly the RS variants, have long commanded premiums as new vehicles, and over the last five years they have continued to sell above MSRP even when they hit the secondary market. The older 991-generation cars (model years 2018 and 2019) trended 30 to 40 percent above MSRP in early 2019 but then dipped to the teens in mid-2020. They then rebounded to over 40 percent over sticker during the summer of 2022. The current, 992-generation GT3 saw even higher premiums over the winter of 2022 to 2023. However, the market for all five variants is showing signs of slowing. Values in 2023 for the 991-generation cars even appear to be depreciating.
Another vehicle that has shown even greater appreciation since 2020 is the 2019 Chevrolet Corvette ZR1. Available in both coupe and convertible, the highest-performance version of the last front-engine Corvette increased in value by almost 70 percent for the coupe over 30 months starting in mid-2020. The convertible ZR1 lagged slightly but still appreciated by almost 60 percent over the same interval. Similarly, the 2023 Z06 coupe and convertible hit the market at a premium and are still trading well above MSRP. However, like the GT-series Porsche 911s, the value trend for these Corvettes appears to be slowing or even depreciating over the last few months.
The 2020 Ford Mustang Shelby GT500 made it to the market in late 2019 and immediately trended up from 20 percent above sticker to more than 50 percent by mid-2021. The 2021 model saw an even higher peak at 61 percent over MSRP in mid-2022. Coincidentally, that was about when the 2022 model reached the market. Over the past twelve months, values for all three have dipped or leveled off.
While many other models have traded for a lot more than sticker over the past couple of years, the last vehicle we’ll examine is the Ferrari SF90. With nearly 1000 hp from its hybrid powertrain, it is one of the fastest models in Ferrari’s lineup, but Maranello hasn’t capped production. The 2021 coupe version reached the market in early 2021 and quickly appreciated to 70 percent above MSRP. The 2022 Spider variant appeared in early 2022 but appreciated to “only” 60 percent above the MSRP. The coupe has depreciated since its mid-2022 peak, and the Spider is also starting to show signs of slowing appreciation.
In aggregate, flips (which we define for these purposes as a resale from 2018 to present; our data average a 1.8-year hold) where one of the above-mentioned models went to a new owner show a slowing market, too. While the average return on a flip increased in 2021 and 2022, flips completed in 2023 show a lower average return.
What’s causing this downturn, which many enthusiasts will likely see as an opportunity?
For one, higher interest rates and tightening standards for auto loans mean that fewer people are able to stretch their budget to attain one of these cars. Among the modern supercars we insure, we see signs of a decreasing share of them being financed—something we will be covering in greater detail soon. While the pandemic disrupted many of the usual ways of doing things, including within the car market, many of the hottest modern performance cars are starting to depreciate again. Let us know what you think is causing it in the comments.