In recent years, cars built starting from the 1980s to the 2000s have increasingly drawn the interest of collectors. They appeal to the new generation of classic car collectors who are streaming into the market. However, while recent media reports suggest that the modern classic market is red hot, analysis of data from the last two decades reveals that classic car buyers are feeling lukewarm on modern classic cars. Here’s some more information on this topic.
A study by AXA XL Art & Lifestyle on the 2018-2019 trends in the global classic car market reveals that classic cars remained stable in a period when passion assets depreciated significantly. The aforementioned AXA report specifically noted the escalating demand for cars built within the last decade, known as the ‘instant classic cars.’
The AXA report also revealed that there had been a shift of interest from the established traditional models such as Rolls-Royce and Bugatti to racing cars, which may be a sign of new demographic entering the market. Moreover, auto experts largely agree that the newer buyers are redefining what’s viewed as a “classic” car. The baby boomer generation of buyers was drawn to the cars from the 60s and 70s, but the younger buyers are drawn to limited-production cars from the 1980s and 1990s.
Nostalgia, Availability, and Economics
A study by Specialty Equipment Market Association (SEMA) found that vintage car buyers are typically interested in the ‘cool cars’ of their youth. This means the nostalgia factor varies greatly with each age group. According to the SEMA report, the catalog of emerging classic cars also includes older Hondas, Toyotas, and BMWs. Availability and economics also influence the classics enthusiasts’ definition, according to the SEMA Report. It’s now difficult to find the cherished older cars. Besides, the steep prices of the traditional classics are also driving collectors to the more affordable later models.
Modern Classics Trends
When you read media reports in recent times, you get the sense that the modern classic market is going wild. However, research conducted by Hagerty paints a different and more nuanced picture. Sure, modern classics have been setting new price records in recent times, but a small number of sales, however notable, can’t illustrate the trends in an entire segment. To zero in on the real trends in the modern classics segments, the Hagerty team analyzed the repeat sales data.
The Hagerty’s analysis revealed repeat sales in the last two decades peaked in the mid-2000s and then declined until late 2010 (a time when the whole collector market bounced back). The performance remained steady until 2019 when it began to rise. This trajectory is no different from what’s been happening in the more mature segments, like the muscle car market.
Conversely, the trailing 12-month average price of modern vehicles –including those not sold twice – peaked in 2015. The difference between the repeat sale index and the trailing average suggests that outstanding cars were sold only once and for a significant sum. However, the newer entries into the market have not sold for as much, likely because of their relatively poor condition. Nevertheless, cars in great shape have enjoyed relatively predictable and solid returns over the same period. Therefore, it’s reasonable to conclude that the modern classics market is not as hot as the media hype seems to suggest.
While the overall classic car market has continued to grow steadily even during the pandemic, the demand for modern classic cars is still relatively low. If you own a classic car, you should protect it with the right insurance policy. For a classic car insurance policy that will adequately protect your modern classic car, reach out to our experts at CAV Insurance Agency, Inc today.