Inflation is the ghost currently haunting economies worldwide. How does inflation affect the classic car and collector car market? What are the advantages and disadvantages for buyers and sellers in today's market? Let's start with a simple definition of inflation. Put simply, inflation means the declining purchasing power of money. The price of goods and services increases, and the value of money falls. There are three basic causes of inflation: For October 2021, the average inflation rates in the largest classic and collector car markets were as such: After the global shutdowns caused by the coronavirus pandemic, we are experiencing an increased demand for products and services in 2021. This increased demand is responsible, among other things, for the higher inflation rate we see now. In times of rising inflation and the devaluation of money, people traditionally invest their money in more tangible assets such as gold or real estate. Classic and collector cars are enjoying an increasing popularity, not just now but for many years, as an investment in leisure activities and sometimes as a kind of “side-by-side investment”. However, if you want to invest your money in cars, you have to have a certain amount of know-how and consider criteria such as the number of items produced, the original condition or the completeness of documents to prove the car's history. The devaluation caused by inflation is currently leading to increased demand for vehicles on both sides of the Atlantic. Since the purchase prices for some car models are rising (supply and demand determine the price), many potential first-time buyers or enthusiasts are now asking themselves whether a purchase is currently worthwhile or if it is better to wait. One important fact to remember is that the number of classic and collector cars will not increase because vintage cars are no longer being built. A sudden drop in prices due to a significant increase in supply is not likely to happen, so prices can be expected to remain stable. You alone decide whether it is worth buying a classic car. You can take your time and hope that some prices will come down, but your money will continue to lose value due to inflation if not invested. Yet one thing will always be true, buying a classic car is different from most other investments as it brings with it the joy of driving a piece of history and the feeling of being able to travel back in time when you get behind the wheel and start the engine. It is unique experience that few other investments can provide. For questions or assistance on the subject of buying and importing a classic car from the USA, you can reach me at any time by email or phone. Felix Cater Business Development Manager Germany: +49-1516-5149868 USA: +1-415-830-9843 We'll get your dream car home.Inflation - A Definition
Inflation and its impact on vehicle prices
Is it worth buying a classic car now?
FAQs
Classic and Collector Car Values: Is inflation a concern? ›
The very rich will always seek rare, expensive models, and the prices these models command will likely stay stable as a result. More moderately wealthy, working-class collectors, on the other hand, may be concerned about the increased price of gas or the rising cost of restoration in the midst of high inflation.
Are collector cars a good hedge against inflation? ›The reality is that certain antique and classic cars have been a good hedge against high inflation in past eras, although others can turn out to be very bad long-term investments.
Do car values go up with inflation? ›DETROIT (AP) — Price increases for cars and trucks in the United States, which helped fuel inflation for nearly three years, are slowing and in some cases falling, helping cool overall inflation and giving frustrated Americans more hope of finding an affordable vehicle.
Are collector car prices dropping? ›Compared with the Hagerty Price Guide condition-appropriate price, the median premium of a sale was 9.8 percent, down from 18.3 percent in 2022. That drop in auction sell-through rates has been reflected across the industry throughout the year.
Are collector cars a good investment? ›Additionally, collector trends are unpredictable, so you can't bank on a specific model dramatically increasing in value. That said, classic cars do often increase in value and are one of the better performing collectibles out there.
Why not to buy a classic car? ›The most significant con is the maintenance of classic cars. The cost of maintaining an old-timer, including insurance and maintenance, can be up to 20 percent of the classic car's value. Spare parts or even simple consumables may be really difficult to buy in auto parts stores, so you have to 'hunt' for them.
What is the #1 hedge against inflation? ›Real Estate Income
This results in the landlord earning a higher rental income over time. This helps to keep pace with the rise in inflation. For this reason, real estate income is one of the best ways to hedge an investment portfolio against inflation.
Car Prices Will Likely Continue To Decrease
“Last month, the average price for a new vehicle was [$47,936] — a [1.4%] dip from last year, according to the latest KBB data. This suggests that new car prices might drop in 2024.” One factor that could lead to price drops is an oversupply of new cars.
Key Takeaways. Used car prices fell 5.5% over the 12 months ending in the third quarter, as the pandemic's aftershocks on the auto market have faded. The supply chain disruptions that made prices skyrocket in 2021 have diminished, although prices remain far above pre-pandemic levels.
How much have car prices increased in the last 10 years? ›While average transaction prices for new cars declined 1.4% year-over-year as of October, they have increased to an average price of $47,936—roughly a 60% increase over the last decade.
Is the collector car market cooling off? ›
According to the Knight Frank Luxury Investment Index (KFLII), the performance of the overall classic car collectible market has dropped 7%, where other collectibles continue to grow in value and demand, such as Fine Art and Watches.
What classic cars are losing value? ›- 1962–63 Ford Thunderbird Sport Roadster: -23%
- 1996–2003 Mercedes-Benz E320 Station Wagon: -23%
- 1981–85 Mercedes-Benz 300TD: -19%
- 2005–08 Porsche 911 Carrera S Coupe: -19%
- 2010–15 Mercedes-Benz SLS AMG: -17%
The short answer to both questions is yes. Collector car values have been rocket-strapped for nearly two straight years – including a stretch of valuation increases lasting 15 consecutive months. And even with an inevitable bump in the road, the market is poised to carry its gains into 2023 and beyond.
What is the best classic car to invest in? ›- Jaguar XJS (1975-1996): ...
- Porsche 944 (1982-1991): ...
- BMW 2002 (1968-1976): ...
- Chevrolet Corvette C3 (1968-1982): ...
- Mercedes-Benz SL (R107, 1971-1989): ...
- Alfa Romeo Spider (Duetto, 1966-1993): ...
- Jaguar XK8 (1996-2006): ...
- Datsun 280ZX (1978-1983):
Hagerty defines vehicles from 1900 to 1979 as Antiques or Classics. A car manufactured in 1980 or later is considered a collector car. Classic Car Club of America is even stricter in defining classics. As classic cars, they are only accepted between the years 1915 and 1948.
What year car is considered a collectible? ›The vehicle must be insured as a collector car and must meet one of the following requirements: The vehicle is at least 35 model-years old. (Health and Safety Code section 44011) The vehicle is at least 25 model-years old with historical vehicle license plates.
How do collectors benefit from inflation? ›Collectors
During high inflation, investors often turn to hard assets that are more likely to retain their value through market volatility. Since collectibles aren't directly correlated to traditional markets, these assets may be safer from significant value fluctuations.
Many classic cars are growing in market value, especially those with unique stories or limited production numbers. However, not all classic cars appreciate; some models are losing market value due to changes in collector preferences or market oversaturation.
What commodity is the best hedge against inflation? ›Industrial and precious metals can hedge against inflation, with the former being more reliable hedges. The inflation hedging capacity of industrial metals exhibits substantial variation over time. Due to their inflation hedging ability, industrial and precious metals are valuable portfolio components.
What is the best precious metal to hedge against inflation? ›Given the empirical data, gold and silver are categorically the most effective ways to protect your income and wealth against inflation over long periods of time.