January’s big sales couldn’t reverse the greater market slide
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Even a January in which nearly 6400 vehicles were auctioned off in front of enthusiastic crowds couldn’t stop the Hagerty Market Rating from sliding again.
The Hagerty Market Rating, updated monthly, conveys the performance of the classic car market as a 0-to-100 number. The higher the number, the hotter the market. The Rating is calculated through a comprehensive algorithm of fifteen weighted measures including the Hagerty Price Guide, auction transactions, insurance data, opinion from industry experts, and the world’s largest database of private sale transactions. A detailed explanation can be found here.
The Rating hit record highs in 2022 but ended the year on a slide that has continued into 2023. If you’ve been following the January auctions, that mind sound odd. The sales in Kissimmee, Florida and Scottsdale, Arizona set a record with sales totaling $487 million. However, said record was achieved through volume, with 17.5 percent more lots offered compared to 2022. Auction volume factors into the Market Rating, but so does average sale price, and that dropped four percent from $95,351 in 2022 to $91,489 this year. In fact, the Auction Median Sales Price metric used in the Market Rating has reset to September 2020 levels.
The main takeaway from the January auctions is that the market appears to have shed the feeding frenzy behavior seen during the pandemic and returned to normal—albeit an elevated normal, at least compared to pre-pandemic levels. The Market Rating reflects this.
Economic uncertainty continues to weigh on the Market Rating. The macro-economic indicators used in the Market Rating continue to decline, erasing two years of growth. Economic uncertainty often leads average collectors to more defensive spending, while the ultra-wealthy buy up physical assets to hedge inflation.
Indeed, January sales evidenced how those two groups of collectors are behaving differently. Special cars with unique histories sold particularly well last month, including the 1912 Simplex 50HP 5 Passenger Torpedo Tourer, which sold for $4,845,000, topping the Scottsdale auctions. In contrast, more run-of-the-mill vehicles that bidders are likely to see more more examples of had trouble earning top dollar.
“The market appears to be bifurcated, with typical moderately-priced ‘mainstream’ cars that represent the bulk of the market being soft and others in six- and seven figures being avidly chased with wild amounts splurged on them,” noted auction analyst and industry expert Rick Carey.
This trend is reflected in the Hagerty Price Guide Indexes, where the inflation-adjusted average value of the Hagerty Hundred, or the 100 most insured vehicles in the price guide, has dropped eight months in a row. During this same period, the Hagerty Blue Chip Index, which is comprised of the Ferrari 250 and its closest peers, has remained relatively flat.
The high-end market will be tested at Amelia Island in early March, where nearly 70 seven-figure cars have already been consigned to the four auction houses in attendance.