What's the cause of the car market slowdown and is it like other ones?

The slowdown is just a result of the 2015-2016 bubble. What I'm struggling to explain is that bubble, not the current situation.

 

Nothing particularly surprising about that as it is the usual hangover period post-bubble when sellers expectations haven't adjusted. True in many markets e.g. real estate

However, a small specialist dealer near me told that he is doing brisk business where sellers who have sobered up to the reality of the market are active at the right price level, which is 20-30% below where average asking prices are for some cars from the 90's and 2000's. As a personal data point, the clean UK 25k mile 550 Marranello I bough 18 months ago for just over £100k would be net low-70s back to me today. That's almost 30% down, but the typical asking prices are a long way from that.

I know that some dealers meed to advertise cars on finance at a high level to avoid issues with the loan, but the issue is wider than that. With time, the continued adjustment would get reflected in asking prices especially if there are forced sellers.

 

I just brought a 1974 Jensen Healey, which will never be a supercar. However, it is an example of what cars were like back in the day. Simply put, you have to drive this thing. There is nothing autonomous about this car. It shakes, rattles and rolls. Get up to 70, and you know you're doing 70. Moreover, you have to adjust to the car's limitations, not the other way around. The brakes, for example, can make life interesting.

Question for all you X'ers here. How many of you have ever had the brakes in a car fail completely? As in to the floor, nobody home. How many of you have had the pin fall out of the shifter causing the transmission to lock in gear? Driving these old cars is fun; but, it pays to have an exit strategy.

 

More times then I can count.

 

I cut my teeth as a young lad riding Triumph motorcycles. Cue up all the Lord of Darkness jokes you like. One thing I learned was you need to learn both your limitations and the motorcycle's limitations. Going hard into a series of twisties on a 1970 Triumph Bonneville would leave you doing the hula in the middle of a turn. The bike would tell you, "This is fun and all that mate, but if you push any harder..." Oh, and the front brakes? Purely, suggestive.

 

Small world, I had a 1971 Bonneville. Bought it from Harvey Owen Cycles in London, rode for two months around Europe that summer and then had it shipped back here. That was one of my favorite bikes. It was stolen in Boston two years later.

 

the car market is participated in by car enthusiasts, and investment hunters. depending on which group is dominating will determine where the prices are in the cycle.
if investment hunters are all trying to buy the dozen flavors of the year, those prices will rise, and likely float a few more boats on that rising tide.
if this ponzi scheme runs prices up out of reach of mere enthusiasts, and then further runs out of investment hunters willing to participate, then the prices peak and drop - sometimes dramatically.
when the prices drop back down to levels where enthusiasts want to step in again, that's the new bottom.
enough enthusiasts buy the good stuff, causing a slight rise in prices, and in jump tghe investment hunters again.

rinse and repeat.

of course there are local market specific reasons that will move prices around, but thats what makes the cars flow around the globe.

 

I attribute the 2015-16 bubble to a flat market after the recession, then really cheap money leading to alternative hard asset accumulation (i.e. collectable cars) by the time the general market catches wind 3-4 years later, you have 2015-16. Like when the shoe shine boy gives you market tips... and more common cars are inflated to stupid levels, it's over.

My favorite time was being in my 80' 924 driving down the road minding my own bidness' when it just dies. As in completely dies. Or when my 02' Boxster clutch pedal just went to the floor. Both cases was able to pull over. 924 started right up and drove (WTF who knows.. bad battery cell) and the Boxster had to be towed home. Aluminum clutch line ruptured in the front wheel well..

When a car just stops, next time I'm going to stop in the middle of the road/highway and put on my flashers. Of course stand in the middle of the road and wave my arms. You know.. what your average driver might do..

 

ive sold off a bunch of cars

thinking of getting into watches and guns

much easier to store. less maintenance and much cheaper insurance

 

There are a lot of factors contributing to today’s situation, pretty much all have been described. I remember after the Great Recession (I was in college), the cheap cars from 5-20k went up in price because your average Joe didn’t trust the stock market no more so he goes for a car “investment” instead. On the opposite spectrum, all the high end muscle cars came down.

Then 911s went crazy since everyone decided all of a sudden they’re 911 lovers. Who knows why that happened but when it did, people like me who had one sold it because I figured with this money I can buy something more exotic. Well that “car enthusiasm” then spread to other brands (Ferrari, BMW, Mercedes, etc) and finally when those went up to a stupid price (I.e e30 M3), Japanese cars were at the tail end.

I still see some doing strong but once down, maybe, just maybe the car market has one more bubble to go through. I just don’t see young people interested in cars as much anymore and as has been described, old cars are a PITA for the most part. New electric cars are more reliable and even new cars in general are BUT they are all built as appliances.

I also think one factor that contributed to this bubble towards the end (last 5 years) has been social media. That has brought a lot of attention and interest in older stuff to a younger generation but I don’t think it’ll do much to create actual demand.

 

My experience has been just the opposite. Owned a 360 for 10 years and it spent 1 night in the shop waiting for parts.

 

sorry i mangled the english language so much in trying to relay the idea.
but i guess you understood what i was aiming at
swings and roundabouts.

i also do not buy the 'young people dont like cars' argument.
whoever says that has not been to a cars and coffee in houston ! literally thousands of young enthusiasts that are drooling over everything from pagani's to ricers.

 

well if you would like to quote me in GQ, please let me know

 

I agree with your numbers Barry.

I've been on the hunt for a 550/575 for a little over a year. In that time I'd made offers on two which were both rejected. In hindsight I'm glad my offers were rejected.

It's taking a while for asking prices to catch up with reality it seems. However rather than being able to buy a car for less money I now feel I'm able to get a better condition/specification for my budget which is just ideal.

Interesting thread all round. I also agree with Ross, that's by far the most logical explanation of where we find ourselves.

Economically though we're in the most bizarre financial vacuum that I've never seen before. The next 12 months could be very interesting.

 

The younger generations mostly don't care about cars. I've seen this at the dozen or so car shows I visit a year and in my 17 and 19 year old nephews attitudes towards cars. As the older guys pass their cars into the market there needs to be younger buyers to keep the prices rising. A walkaround at a muscle car show like Carlisle or Charlotte reveals nothing but retired men and their wives attending. Very similar demographic but probably higher net worth at Amelia and similar exotic type shows. The last group of cars to go up and become collectable will probably be the 90's Japanese cars like Supras and Civic type R's and Skylines. After this I don't know what will become desireable as the average young man in his late teens and twenties don't seem to long for any cars, but instead seem happy with uber or 'green' cars like Teslas and the Prius. There seems to be no extension of a young man's desire and personality into the car realm. The cell phone and selfie are the new way to broadcast and express yourself, and just as the horse was replaced by the horseless carriage, the phone has to a degree, replaced the horseless carriage in many ways.

 

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Commentary cites the lack of "headline-making cars" coming to market this period...but 400's and 412's are popping!

 

The cause right now is money (being the top) second, is the constant smash that fissile fuel cars will be outlawed. Not too many people I know of the younger generation with money, are willing to invest in something who's future is unknown. Sure they will buy a new lambo, or Ferrari, but they will not buy a classic. Too much risk of the current values dropping off a cliff.

They can handle the 30k/50k hit. But not the 200k to 400k smash if classics are regulated to track only status.

 

This *could*happen, but I’m betting that the pattern will skip a generation, for the simple reason that cars from the 70s-80s are among the worst cars EVER made.
Giant heavy inefficient cat converters, EGR systems, and all the other anti smog garbage slapped on to already anemic engines (180hp Corvette?) in cheaply made plasticcy cars, some with first gen electronics that are bound to be having aging issues, leaky capacitors, delaminating circuit boards etc? I can’t imagine the appeal to anyone who knows anything about cars. It’s hard to get nostalgic about a 1982 mustang.

As to the OP, I think we’ve just hit peak Daytona.

 

Good points! It’s a generational thing...however I personally enjoy the hunt for parts and the soul the older cars have over the new ones... also 13k In receipts isn’t much versus what carbon ceramic breaks will cost


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Agreed, it’s a correction


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The biggest problems with 20 somethings I am 24. Is debt and wages, debt is huge 40k on average for college grads, and wages are low. I worked at JP Morgan with a degree in marketing and sales, have a 7/66 stockbrokers.
I worked for 2 years first year 75k they moved me locations to 55k salary and commission.
Just ended up quitting an going back to the family business, roofing/insurance adjusting made 6k this week.

The demand and interest is there, the ability is not for the average graduate from a state school.
I graduated in three years with 8k in debt.

 

The biggest problem with 20 somethings is they think this has never happened to anyone before.
Got news for you, I graduated in the early 90’s and it was the same story then. Gen x ers weren’t disenchanted and miserable over nothing. It was as bleak then as now, but with less sympathetic parents.

Question for you, as a younger man...since someone mentioned the Daytona as a barometer for car values...what do you and your friends think of Daytonas?

Reason I ask, is I was a teen during the Miami Vice years(had a Daytona in it), and none of us car guys had any real interest in that car. I still am underwhelmed by it. We loved the TR, Countach, 3x8’s etc, but Daytonas never sparked us, although we respected the marque, it just never evoked lust. Wondering if their appeal to age groups under 50 has simply diminished and it’s no longer going to be representative of the broader market? Hence, peak Daytona.

 

What goes up must come down