The enthusiast car market is cooling down. A type of.

“The sellers are showing me comparable sales 10 to 16 months ago and insist that I set the reserve to match the best prices,” wrote Doug DeMuro, YouTube automotive celebrity and founder of the auction site Cars and Bids. “Many people, even in the face of more recent sales evidence, simply don’t believe the market has declined since its peak.”

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In recent years, it seems the dominant conversation among car enthusiasts is how expensive everything is. Of course, literally Everything it’s expensive these days, but for the purposes of this story we’re talking about cars for mass market enthusiasts. The pandemic and its resulting effects on the stock market in 2020, a shortage of chips that led to a lack of new car stocks and a growing interest in enthusiast cars, combined with various other factors that led to skyrocketing prices in a wide range of vehicles.

There are signs that the market is cooling down, however. At least, it’s in some segments. DeMuro, who is, in the spirit of full disclosure, a friend, has a unique insight into this as the owner of Cars and Bids, an exclusive auction site for cars built after 1981. Earlier this month, he shared a Twitter information thread based on his experience setting reserve prices for auctions on his site.

In an interview with Road and Track, DeMuro has broadened his thinking. “I think in an inflationary period, and especially if we believe it was an inflationary bubble like me, then by definition there was an overvaluation,” he said. “Things have gotten a little out of control and obviously the Federal Reserve, and the government in general, are trying to change their money supply tactics to try and make things less inflationary … But you know, I really think that stuff is worth as much as people pay it at the end of the day. People thought it was worth it at the time, but in a situation where everything was going crazy and interest rates were really low, so debt was cheap. “

Ferrari 375 mm

This 1953 Ferrari 375 MM Spider is a good example of a traditional blue chip car. RM Sotheby’s estimates it will sell between $ 8 and $ 10 million at its upcoming Monterey sale.
Motorcar Studios © 2022 Courtesy of RM Sotheby’s

The market is still hot for a variety of reasons, including the limited supply of new vehicles. So while there are perhaps some chords to be made now, a softening is not occurring across the board, and if you think it’s time to grab a classic and rare Ferrari for a song, I’m sorry to say that day may not. be never come. “We have a different caliber car than some of those online auction houses, so we weren’t impressed at all,” said Gord Duff, auction head at RM Sotheby’s, in an interview with Road & Track.

RM Sotheby’s has seen the same huge increases as the rest of the auto market over the past couple of years, but Duff says his customers aren’t really affected by the same factors that lead to softening elsewhere. “We’re dealing with people, you know, some kind of wealth that those things aren’t really, you know, that affect them too much every day,” Duff said. “[Now, they] even more likely one more reason to, you know, put their money in, you know, very blue-chip vehicles. “

For those looking for more affordable, yet ambitious cars, the realities are very different. “What we are seeing right now is that the markets have tightened, especially the equity markets,” DeMuro said. “People don’t have all the money they thought they had six months ago.”

Bloomberg senior correspondent Kyle Stock agrees that the stock market is playing an important role here. “There are always anomalies with vehicles and buyers, but I think the core of the market in general tracks the stock market and the economy in general,” he says. “And I think it would be really weird if it wasn’t cooling down right now because the COVID push was a real thing.”

2013 porsche 911 carrera s

Doug DeMuro thinks the days of generation 991 Porsche 911s sold for a close sticker are over, at least for now.
Porsche

“When COVID happened, the market initially stopped, but then it skyrocketed, so everyone looks at their wallets and says, ‘I’m a genius! I’ve grown 30 percent! I can do whatever I want!'” DeMuro He says. “Now there’s a pickup where it’s like, maybe you’re not that much, and you don’t have enough money to hang around with. And so there are just fewer buyers or the same number of buyers, but willing to pay less money. . One of the two.

RM Sotheby’s upcoming Monterey auction catalog is interesting. A mix of cars you’d expect to see at a high-end auction – Duesenbergs, pre-war Bugattis, Mercedes Gullwings, 1950s and 60s Ferraris – and things that have stocked up in recent years. Notably, there are a number of supercars from the 1980s and 1990s and even a handful of gorgeous Nissan Skyline GT-Rs.

Duff believes there is still room to grow for cars like the Jaguar XJ220 and other Radwood-era exotics, although interest remains strong in traditional blue-chip classics. “If you look back over the past 20 years, those significant low-production cars, even if they’ve had some dips, are still worth a little more than they were 20 years ago,” he said. “When I started in the company, [Mercedes 300SL Roadsters] they were $ 175,000, $ 200,000 and went from $ 400 to $ 600,000, to $ 1 million, $ 1.5 million. They’ve come back a little bit, but they’ll never go back to $ 500,000. “

Stock says a downturn in the economy could make classic blue-chips more attractive to the ultra-rich as they continue to appreciate. See those cars, like the 1974 Dino 246 GTS “chairs and rockets” sold for $ 853,000 on Bring a Trailer—Continue to sell strongly, and we may see more at the end of this month at the Monterey auctions.

Without the benefit of hindsight, it’s hard to say exactly when the softening began, although DeMuro thinks it was likely earlier this year with falling markets and rising interest rates. One of the first automotive markets the Cars and Bids team noticed was the new Mercedes G-Wagens, which for a time was regularly selling for an extra $ 100,000 in sticker. Those were easy sales for Cars and Bids, but in the past few months they’ve started seeing cars not hitting the reserve. Even the Porsche 911s of the latest model seem to soften. Not highly publicized limited production cars like GT3s and the like, but more common Carrera models. Rising gasoline prices have also had an effect on enthusiast SUVs in general, which had previously been strong.

While the blue chip car market is still apparently growing, overall things are stabilizing. Hagerty’s Market Rating, which judges the classic car market based on a number of factorsit fell for the first time since April 2020. The insurance agent says inflation is outpacing the appreciation of classic cars, although values ​​still remain very high.

Recently built DeMuro a video on the state of the market as he sees it, and it’s worth looking at to get a better idea of ​​what’s going on for specific models. There are still many cars that continue to perform well, some surprising, like the E36 M3, and others less surprising, like the Rivian R1T.

It is difficult to know exactly where things are going, especially with a strong possibility of a recession. What is certain is that if you know where to look, there may be a business to be done. When was the last time you could say that?

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