Are Classic Cars Doomed? (And Will They Become Worthless?)
Classic cars have long been a popular investment strategy for investors wishing to diversify their portfolio, and for those who love the classic car market in general.
There have been concerns in recent years that the classic car market could be doomed due to the upcoming regulation changes around internal combustion engines, and the lack of interest from the younger generation. So are classic cars doomed?
Classic cars are not doomed, and the market will adapt to the upcoming emissions regulations. Classic cars remain extremely popular, and the global classic car industry is worth billions of dollars. Classic cars will not disappear, regardless of regulations.
So no, classic cars are not doomed. But what happens once the emissions regulations are enforced, and is it smart to buy a classic car?
Is the Classic Car Market Dying?
The classic car market is not dying, and Hagerty reports that optimism among market experts is at its highest level since 2015. Valuations of affordable classics in particular are on the rise.
Despite classic car sales taking a hit during the outbreak of the pandemic (as with most industries), things are now looking positive. Private sales continued strongly throughout and continue to do so.
As with any market, the classic car market has seen various peaks and troughs over the years. But valuations of different types of classic car vary drastically, and there has still been plenty of money to be made since 2015 if you know which cars to look out for.
The good news for many is that the market for affordable classics is growing significantly, and has been growing for over a decade, according to Hagerty. Modern classics, too, have seen a surge over the last five years as large displacement engines become a thing of the past in new cars.
Will Classic Cars become Worthless?
Despite plans for new emissions regulations in many countries, classic cars will not become worthless. Only new cars will be affected by regulation changes, so classic cars will continue to have a value.
“Classic car ownership is one of the most popular hobbies in the USA, UK and Europe, and is increasing in emerging markets such as the Middle-East and China.”
The increased demand for such cars will ensure that they continue to have a value for many years to come. The global market for classics is worth billions and employs many thousands of people.
Classic Cars will not be Banned
Despite many people fearing that classic cars will be banned once new emissions regulations come into force, classic car ownership will not be illegal.
It will not be against the law to own or drive a petrol powered car. People will still be able to own and drive classic cars long into the future.
Will Classic Cars Drop in Value?
Inevitably some classic cars will drop in value. Cars that aren’t rare, have too many miles on the clock, or have been badly maintained will not interest collectors. They will therefore retain less value in the future.
But that’s not to say all classic cars will drop in value. In fact, a large proportion of cars will increase in value in the long term, provided they are well maintained throughout their lives.
If you’re looking to buy a classic car and want to reduce the risk of it dropping in value, you can consider these factors:
- Exclusivity – how many were built? The fewer the better
- Car condition – has it been well maintained?
- Originality – has it been modified? Investors prefer cars with no modifications
- Maintenance costs – how much will it cost you to maintain?
- Price when new – what did the original owner pay for the car?
- Cult following – is the car already popular with enthusiasts and investors?
Millennials’ Classic Cars
Reports indicate that millennials are driving the classic car market forward, with some even suggesting they may be even more likely to buy a classic car than their parents’ generation.
Millennials are defined as people born between 1981 and 1996. Many of the people from this generation grew up with an interest in cars that we would now class as ‘classic’, and are reaching a stage of life where they have spending money. They can now begin to think about buying a classic car.
Hagerty reports that Millennials are “the fastest growing demographic of car collectors”.
This is excellent news for the future of the classic car market, as it means values of these cars will be maintained, and potentially increased, well into the future. The market will continue to be fueled as long as there is demand for classic cars.
Classic Cars in Emerging Markets
Car enthusiasts in emerging markets such as China and the Middle-East are helping to fuel the classic car market.
Classic American and European cars were previously unattainable for those on the other side of the world, but in recent decades the barriers have very much been broken down.
“This is good news for those who own a desirable classic car, as demand will continue to increase and supply will only become more limited in the future.”
There are reports that the Chinese in particular are developing a taste for US and European automotive history, despite being relatively new to the automotive world themselves. If there were to be an influx of demand from China, we could see values of certain cars skyrocket.
Is it Smart to Buy a Classic Car?
It can be smart to buy a classic car if you have good knowledge of the market and an excellent understanding of the car you want to buy. There are risks involved as not all classic cars will rise in value.
As with any investment, buying a classic car has its risks. Only a select number of classic cars will rise in value, so if you’re considering buying a classic then you will need to thoroughly research the market first.
“Buying a classic can be a smart investment, and many people have made money through the classic car market.”
If classic cars are your passion, then it’s likely you will want to own one. Before you do, be sure to research the costs involved in maintaining the car you’re looking to buy. It can become very expensive if you choose the wrong model, or pick a car that hasn’t been well maintained by the previous owner.
Source: The Car Investor, Adam Chinn