My theory on car values (not just Ferraris)

Generally speaking, a car decreases in value for 20 years. Between 20 and 30 years from the mid-to-end of production a model experiences very little movement. At 30 years from late production, a model will see values increase slowly, with values increasing at a more rapid pace around 35 years. Of course, not all models increase in value, and there can be external forces that can force a trend. (Movie or TV roles, a new or retro version, for instance.)

Model run length is important. This is how you get 1968 and 1969 Camaros (from 1967-1969 first-gen Camaros) far outpacing 1968 and 1969 Corvettes from the (1968-1982 C3s) in value appreciation ten years ago, but 1969 Corvettes outpacing Camaros over the last few years.

Some vehicles lose value slower or more quickly, or plateau quicker then begin trending upward quickly. Blue chip exotics follow a different path, so it's not fair to use an F40, Buick GNX, Bugatti, or Jaguar XJ220 as points of reference for a 911, 328 GTS, M3, or Cadillac CTS.

 

I was just checking out the results of the RM, Don Davis Collection - wow!

 

Agreed on the general price vs time trend. At 40 years old, the surviving good examples are fewer as well. Same with electric guitars.

I think people desire what they liked when they were kids, and as adults with some disposable income they discover that they can now own those things. So you have people collecting what they couldn't have in their childhoods.

I know what you mean about the 914... an orphan in the Porsche world for a long time. In the late 70's, BMW 1600s and 2002s as well as MGBs were commonly listed in the local paper at $150-500. Nobody wanted those cars in the secondhand market. I remember an oddity, a Lotus FJ car in the showroom of a local car dealer for a little over 2 grand -- it sat there for a long time as a curiosity more than anything. Can you imagine that today?

sammyb: spot-on with the rule not being broadly applicable to blue-chip exotics. A different market with different players.

I can understand why Dinos cost what they do today, and I think the trend will continue.

I am mystified why the 512 is so inexpensive for what it is.

 

I think your theory omits an important factor: cars from 40 years ago are infinitely rebuildable/restorable, while those from 4 years ago are disposable and will become obsolete in ways that never applied to the simple machinery of the 1960s or early 1970s. We're looking at a vastly different depreciation curve.

The Porsche 914 is a case in point. It is a very simple car, with essentially no proprietary electronics or technology. You can probably get a 914-4 engine rebuilt for less than the cost of a 360 headlight cover, and none of the value is tied up in the odometer. You can drive it, race it and rebuild it over and over. Values are up because the cars of that era can never be produced again -- simple gearbox, simple gauges, simple exhaust system, simple steering wheel, simple targa top.

And it gets considerably worse for Nintendo-like modern machines. No one wants a 40 year old sat nav system, or the first stab at an F1 gearbox, and if you compare the restoration costs of a 355 F1 Spider power top with those of the 914 targa top... no one in his right mind is going to bother with the 355, even if Ferrari somehow has parts available. Look at the Aston Martin Vanquish from 2006: built by robots, garbage F1 gearbox, dated nav, complicated beyond belief, and performance that rivals a new Porsche Boxster S. Don't look for anyone to miss these in 2053.

Invest in the classics; drive the modern ones till they fall apart, then get the newest.

Applying the same depreciation curve to the newer stuff isn't a sound approach, IMHO.

 

I think this is a HUGE factor for classics. Who's buying split window corvettes right now? People who couldn't afford them when they were kids (for the most part).

So I think if you follow this trend, what 'kids' are drooling over right now, could be worth some money in 3-4 decades.

 

Very much agree. Also, like it or not, value systems are changing. Todays kids, who may currently lust after an E92 M3 or have strokes over a GTR, won't want those cars when they're 40. They're going to want whatever is absolutely new. It's just the nature of their value system and that's ok, it's just new and different.

Our society has very much moved away from "ownership" and towards subscription model commodity economics. Across a broad range of interests and areas, people dont really "collect" and "hold" physical things anymore. They rent experiences when they want them. I would be very surprised if we werent looking at a predominance of shared ownership autonomous cars in 40 years. IMO we are looking at the end of the "traditional car" era in many ways.

While some of the "classics", call it certain cars made from 1920-2000, may continue to appreciate, I don't think even that will continue forever. Kids being born now won't care at all. Kids that are age 10-15 now, by and large, *already* don't really care. The fact that cars are becoming more and more automated and convenient, and "easier" overall, says a lot about what the vast majority of people want. The fact that this is now true even for *dream cars* (like the 458), says that the super wealthy share these values. In the old days the super wealthy *wanted* a near death experience in an F40. Today's multi-millionaires don't.

None of this is good or bad, it just is what it is. I think the OP is a fair assessment of how things *have gone*, but like Bullfighter, I absolutely do not think it's how they *will go*.

As the value of the automotive experience increasingly becomes based on its implementation of *technology*, its longevity decreases. I still have an Amiga and a couple of old Macs around because I'm a life long technologist and they bring back memories for me, but I don't ever actually *use* them. Technology is quickly supplanted and once supplanted is immediately forgotten.

 

The generational phenomenon may apply to a lot of cars especially the B and below level cars. Tier A or blue chip cars, I think, cross generations just like collectible art. For instance, there are pre-WW Bentleys and Alfas that remain quite valuable today; and that generation is not likely doing any driving anymore. Personally, if my car hobby budget allows, I'd buy a 50s barchetta or 60s targa Spyder racer. These cars were around prior to my birthday. Beauty, provenance and rarity rule for these cars.

Back to the 40 year old theory, I think this applies to C level cars (914 2.0s, etc), B level cars seem to happen sooner 25-30 years (FG 308, 328, impact bumper 911) . Then, at some point, I think the value increases will level off if not even decrease as the demographics shift. The demographic population has an impact to the values of such cars as well i.e. baby boomer versus Gen X. For instance, I don't see the 328 increasing in value as much as the Dino simply due to supply (production) versus demand (less Gen X) ratio, though I do see the 328s increasing in value.

WRT the electronics era, B level cars such as 355, GT3s, I think it's still too early to tell. While the Millennium generation population is favorable numbers-wise compared to Gen X, there seems to be less percentage of folks in this generation dreaming about cars in their youths. Many have argued about the disposable nature of the electronics cars. If there is enough of a demand to run such cars, I think someone will come up with replacements for the primitive/obsolete electronics. I just simply question the generational demand to fix such cars. To emphasize, I'm referring only to B and below level cars. Tier A cars in this generation such as the McLaren F1 will likely cross generations and someone will find a way to keeps these cars running.

 

My theory has long been expressed on my Profile Page under;

Wanted Cars

Stating list leads to; hyperinflation of values AND deterioration of condition AND availability of said cars, while purchasing has opposite effect

 

You can't use straight math to make this analogy. You have to factor in emotion.

Beautiful cars sell better than less beautiful cars --- even if they are more common.

Uniqueness in the industry is also another factor: Speed, technology, racing history, etc.

The "they don't make them like that anymore" factor -- which is why chrome bumper cars and carbed cars seem to be more attractive to collectors.

Maintenance, reliability, and repair costs.

How many good survivors are there out there. You can have a lot of production but if only a few are left....

Timing: We like to collect cars of our childhood memories or early year's dreaming. That's why the 40 year factor creeps in. 60/70 plus years? Not so much.


But in the end people buy what they like. No one wants a 40 year old Yugo no matter how well it's restored.

I think the big question is what "the future" brings in terms of regulation, taxation, etc in the collector market. Right now you can sell a car and pay no tax on it as an investment. Will that continue? Or, will they be regulated off the road (or granted to run only on special permits) as being somehow dangerous to modern machines and regulations?

Hard to say but it's also not hard to say, the auto is changing rapidly in the modern world.

 

True, so true. Frankly, I'm not a collector (even when I was a kid I brought baseball cards for the bubble gum) so take this as a grain of salt. To me, nostalgia is like a sexual fantasy -- they are both highly over rated in realtiy. I'm a driver instead of a lover. While I like driving the old cars, I love driving really good cars fast. Back when I owned a 330 GTC and a 550 Maranello, more times than not, I'd grab the keys to the Maranello.

Dale

 

There are two issues at play with the 512BB. The first is simply timing: we've had a big recession, which came at a time when desirable late 70s/early 80s cars were about to hit their increased valuation stride.

The second, and this is the most important -- car valuations in the classic market are largely based on nostalgia more than rarity. In my collector car column I used the line "one cannot be nostalgic about something one never saw." In the case of many of the gray market cars, this has been an issue to their valuations in the collector market. The market for the Alfa Montreal was pretty weak given how desirable they were new. (People almost went to jail trying to bring them through Canada.) But the classic market, until very recently, had these amazing works of art at a discount due to the lack of people in the US willing to pay for nostalgia.

Keep in mind that "dream cars" are a little different. Most people never saw a 959 in the flesh, but since it was on so many posters and magazine covers, the collector market never suffered. The same applies to most supercars. The 512 just didn't have enough exposure to have that top-of-mind recognition.

But as with all Ferraris, the 512 will have its due. The TRs will soon take off, which will bring the whole line into the expected crazy collector Ferrari range.

 

Not sure about the recession logic. If you look at the Dino 246 and pre-1974 Porsches, prices surged while the economy (Europe, Japan and US) was in the toilet.

I hate to oversimplify, but I have to refer back to The Mayor's point about restored Yugos, which suggests that a car's value depends on the car. Style, usability, significance, stature as a icon. All of that trumps nostalgia and rarity.

I never saw a 246 when I was growing up in the '70s and '80s, but I can tell that it's uniquely beautiful in the way that a 280 ZX (saw tons of those as a young car enthusiast) isn't. Nostalgia certainly matters, but it's hugely overrated. I remember the Pontiac Fiero when it was new, and the '84 Corvette, and the Porsche 928. You can buy those all day for basically nothing because they're either junk or look dated or both. (Market has spoken...) For those of us of a certain age, the Ferrari 308 is the definitive exotic. But, values are low because wedges with plastic bumpers aren't a draw for investors. Chrome bumpers, '60s curves and classic brightwork are a draw and can bend a price curve upward.

What about the stuff that belonged to generations that are no longer above ground or getting too old to drive? A Porsche 356 Carrera coupe is hard to find for under $300K these days unless it is on fire. Most of the guys who would have lusted after one of those back in the day are near the age where they're hanging up their keys. Bugattis made before any of us were born sell for handsome seven figure sums. No one "remembers" these cars, but those of us in our car buying prime now recognize them as signficant. Bentleys from the 1920s -- not a nostalgia thing, but bring your checkbook if you want to play. Original Cobras...

Nostalgia plays a part, but moreseo for, say, an '80s Mustang GT -- a car whose long term value is probably nil -- than for a '50s Ferrari or '60s E-Type, which will be recognized long after we're gone as something valuable. The greater the intrinsic importance of the car, the less nostalgia matters. (Otherwise Pontiac Fieros would be pretty steep right now...)

I agree with you about rarity. It helps, but if you look at E-Types, Speedsters, early 911S's and Dino 246s, none of them are rare. You could buy 10 of each tomorrow. But the market for nice ones is extremely active and prices have been strong. OTOH, a Lamborghini Jalpa is extremely rare by '80s standards, but they're junk with a design no one noticed then or now, and whatever nostalgia wave would have supported them is over and done.

 

Most here won't admit it but the 512 BB's problem is the Countach, which was the sexy winner between the two for most kids at that time. The BB may be a better car, but it's not what we remember or dreamed about. When you talk about early super cars, you have to mention the Countach. The fact that BB prices are close to current values of Countach should tell us something -- 1) the car is properly priced and 2) the Ferrari mystique works.

That, and the fact that they were not imported or marketed in the US where the 308 and TR were in TV, movies, and Hot Wheels models. The BB is the "invisible" Ferrari for most aside from those of us who really care or know about it.

The first one I ever saw was in Europe on the Autoroute in France doing about 120 MPH. I've only seen one wild on the road in the US many years ago (not one going to a show of course --- just driving around). I've loved the car ever since I first saw it --- but how many had a similar experience?

If you don't know about it, it's difficult to fall in love.

On the contrary, there were quite a few Dino's in the US since the early 70's and it was VERY well known. Even I, a kid in what was then that little town of Phoenix knew what they were. And, the image of the Countach was everywhere.

Most of us with enough disposable income today tend to want what we could not afford as a kid when we look at classic cars. Whether that's a classic Mustang, a 70's Muscle car, and E type, a classic Porsche, or a TR6. If we are not, then we are speculators only interested in the value of the car but having little "love" for it aside from what it can bring us later on when we pass it to the next sucker.

We want to relive that period and that helps drive what people want to buy. The BB --- as good a car as it is -- just doesn't tug at those memories as much or for as many as other cars do. It's not the metal, rubber, and plastic --- it's the memories of that car that drive us.

This is why you can't use a straight formula to predict car values.

 

I think the Countach is the choice, something like this:

1981 Lamborghini Countach LP400 "S" for Sale - 1704099 - duPontREGISTRY.com

early car, still carb'ed as others have said, it was every boy's dream. Still remember picking up a copy of R&T at my friend's house when I was about 15, and looking at the pics of that orange beast on the cover. I was imprinted.

I think it is a solid choice right now, as mentioned fame and attention can have a lot to do with it.

The BB seems like a great car and the Lambo brings all kinds of compromises due to its styling.

The BB, while beautiful is not so striking/shocking as the Lambo was, and to many people, it is barely distinguishable from the 308.

Seen in the flesh, the early cars are really stunning, especially if they don't have the flares. Later versions just bastardized the styling and became more common (think the 89 anniversary editions)

Just sitting in one at average sized and height (5'10") is it very uncomfortable.

This though I think is to it's advantage, you aren't going to drive it much, miles will stay low, you won't spend as much money on it as a classic that you would use all the time.

If you buy a good example, I don't see how you could go wrong. Here's a nice photo of a very early car.
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Spot on IMHO

 

Any idea on what they're asking for this?

 

A 914 for $50,000? Wow, that strikes me as a lot of money for a dumpy car.

Edit: I get it now, the -6 was a race car. Standard 914's are going for $12,000. That makes sense.

-F

 

Oh, OK. Not really familiar with the particulars of the Porsche lineup. Regardless, I consider the 914 a pretty dumpy car and paying $50,000 for one is insane IMO.

-F

 

Really? This is the one demographic that consistently turns its head when I'm out for a drive in the 308.

 

Before you ask, you might search the internet for RHershey and 29 pages of interesting reading concerning this seller....

 

First of all, da Mayor is spot on. Beautiful styling teumps all when it comes to future value.

Then - I love Mike Sheehan but he can't seem to comprehend that value is based upon both dupply AND DEMAND. He says - categorically - that the later Ferraris will never become collectible because there are too many made. While I do agree that the newer cars will never become as valuable as the older ones, that were built in numbers of 50 - 500, I say the newere cars will become collectible. I say MS is simply ignoring the facts of the past. Here are some cars that are currently quite collectible that were built in HUGE numbers compared to ANY Ferrari models.

Jag XKEs (about 70,000 total) Mercedes 230/250/280 SLs (50,000)

Austin Healeys (80,000) Plus all the MGs, Triumphs, Sunbeams, etc.

early Mustangs (more than 2 million made?) and Camaros (600,000 V8s alone) and Chevelles (more than 200,000 big blocks alone)

55/56/57 Chevys (600,000!!)

Porsche 356s (70,000) Ealrly Porsche 911s - thru 74 (nearly 100,000)

All pre 1984 Corvettes e more in total than ALL Ferraris ever built)

Alfa GTVs (about 100,000 made)

Anyway, I think this makes the point that collectibility is based on MORE than production numbers.

 

Not sure about the UK, but in the US the problem is that not enough guys are ever out for a drive in their 308.

I remember my 328 sparking a lot of fun car conversations with guys much younger than I am.