How much is that Porsche in the window?
1 September 2017
Classic cars. The market and their valuations today.
The advent of the GFC changed substantially the way in which the world views investment. The traditional bank deposits coupled with minimal (or even negative) interest rates have been replaced by a number of alternatives such as wine, international property, art & the classic car market.
Whilst in the past this market has always been there principally for personal enjoyment, investment attempts have invariably been of a boom or bust nature.
The changing situation in NZ is no different to that happening in the rest of the world. The baby boomers have the kids off their hands, they are mortgage free, have down sized the family home or sold an investment property and have disposable cash to play with. The “I had a picture of one of those on my bedroom wall” syndrome is a reality which to a large extent has fuelled an interest in cars of their era and which they can now afford.
For many years it seemed that prices of most classics were fairly static with the sum insured remaining static. However, as the market has expanded so too has the value of the vehicles frequently. If you bought a classic car in the ‘80s or ‘90s chances are you’ll be quids in with an average increase p.a of circa 15% sometimes, a bit more. OK you say that’s pretty good! What is often overlooked however is the fact that your insurance cover hasn’t kept pace
with this increase in value.
I make a living out of valuing classic cars and frequently get calls from people that haven’t reviewed their sum insured for more than 5 years. Vehicles worth $100,000+ that are insured for less than $50,000 is quite common. When I then explain to them the realities of today’s market it’s usually met with great surprise as they haven’t realised what has been happening in the intervening years.
A case in point is the Porsche 930 turbo. This is a car that 5 years ago you couldn’t give away at $40,000. If you find one now for $150,000 then grab it as they will be a $200,000 item before much longer! So what has caused this situation? A few years back they had a 40th birthday, a fact which the motoring press devoted many pages to and this stirred the “I never thought about buying one of those before” factor. Now everyone wants one.
Essentially, the under-insuring of classics is common today. I have a large number of clients for whom I value their car annually, yet many of your clients will never have had their car valued. With the world getting smaller we can all react to situations much quicker. Vehicles that trend upward in the UK or Australia will invariably perform the same here in NZ. May be not as dramatically but I can assure you that this market will reflect the same outcome. I subscribe to many global classic car auction sites which gives me a wide view as to values. I also attend annually at least two major international classic car events. In April I went to Techno Classica in Essen which is the largest, classic car show in the world with a minimum of three days needed to get around! It gives me a real good feel for the market both the ups and downs and allows me to pass information on to my clients as to what is happening to their car values.
When I review a car I tend to consider a service history as being more useful than low mileage. Ex UK may be a negative as there is usually rust somewhere and yep it does sometimes rain in California so a car from there is not always perfect. Provenance means a lot. Was it driven by Denny Hulme, Stirling Moss etc. Colour too plays a part. Not so many years ago greens and yellows were very passe. Now they are sought after. I don’t have a problem either with accident damage providing it has been correctly fixed.
This business is to a large extent about managing people’s expectations which I endeavour to do with sensitivity as after all you’re dealing with some one’s pride and joy. You need to be fair and explain the facts of life both for your own integrity and clarification for the client which is why I need to know my facts. Not always easy!
I have been involved with classic car valuations for more than a decade. Like any form of commerce in this age changes are part of life. What I try and do is put the changes in perspective and drive a win/win outcome to create an ongoing relationship that the insurance industry recognises and which
we all ultimately benefit from.
Did you know that if your client gets their classic car professionally valued (from someone like Ian) then Star Insurance will provide a “certified value” meaning your client can be guaranteed exactly what they will be paid in a total loss claim!
Contributing writer: Ian Nott
Telephone: 021 610 911