My Car Quest

December 16, 2017

How Do You Place A Value On A Collector Car?

by Mike –

As we head to the end of the year and past the holidays we will soon be in the midst of the Scottsdale, Arizona auctions in mid-January 2018. These are the first collector car auctions of the year and they set the trends for the rest of the year. They get everyone in the mood to buy and sell, or not.

Understanding how we set a price for a collector car, either when selling or buying, can be important.

Determining the price to pay, or the price to sell, a classic car can be a challenge especially when there were few examples made. Few cars made mean that few come to market so in a dynamic market environment setting a valuation can be tricky.

One-off custom cars

It is even more difficult if the car in question is a one-of-a-kind. A one-off car includes custom cars and hot rods. These cars are made to the builders personal taste and will limit the market size of potential buyers to those car lovers who like what the builder did with his custom car or hot rod. What do you compare the custom car and hot rod against when considering value?

Hot Rod

Hot Rod

Ferrari Drogo GoldenCar Navarro Special NART

Ferrari Drogo GoldenCar Navarro Special NART

If the one-off car was made that way from the factory, or is a coach-built car that was built custom originally, then the valuation can be quite different than if it was customized by a subsequent owner. The one-of-a-kind Ferrari Bertone in the photo below comes to mind.

Ferrari 250 GT SWB Berlinetta Speciale

1962 Ferrari 250 GT SWB Berlinetta Speciale

If the custom car was designed and made by a famous car person, like a car designer, then the value will reflect that persons following and status in the car world. This explains the $16.5 million auction price of this Giugiaro designed Ferrari.

Or, if the one-off car is a factory prototype of a popular car model like the Porsche 911; the Porsche 901 Prototype owned by my friends Don and Diane Meluzio, for example. This is essentially the oldest Porsche 911, one of the most popular sports cars of all time.

What’s it worth? I don’t know but “a lot” doesn’t seem like enough.

Porsche 901 Prototype

Porsche 901 Prototype

Special history cars

“Special history cars” are those examples that have something unique in their history that could impact the value. The most obvious category of “special history cars” (excluding race cars) is the ownership history.

Liv Tyler Jaguar

Does celebrity ownership, like Liv Tyler, increase the value of a classic Jaguar?

Was the car owned by a famous person like, oh say, Steve McQueen? Depending on who this special person was, or is, then the value could be effected a lot or not at all.

The other question comes up is when one of these special history cars sells does it effect the value of other examples of the same model that do not share the special history? An example is the Steve McQueen 1976 Porsche 930 Turbo Carrera that sold at auction in Monterey in August 2015 for several times the value of this model without the McQueen ownership. Did this sale increase the value of other Porsche 930 Turbo examples?

Original or Restored?

Classic cars of a specific marque and model are easier to value because there are more people who know and like them and there are more comparable sales to use to help set the price (like Mustang or Camaro compared to Monteverdi or Iso). There is also a baseline of condition – originality – this sets the standard for all the examples made of that model. Using comparable sales prices is important in the collector car market (when possible) as it is in the real estate market.

To help with understanding the market values for certain models use all the information you can get: car clubs, market price guides (Hagerty Price Guide and Sports Car Market Pocket Price Guide are my favorites) and the asking prices of similar cars for sale now all can provide useful information.

With the trend in the collector car market strongly going toward originality then determining if a car is really original is important. The question of how much originality is important too. What if the paint is new but all else is original? Or some of the paint is new and some original? What if some components have been changed but many are original?

Valuing these cars is more complicated than before. The recent price differences between original and restored make these questions very important from a financial point of view.

It really doesn’t change the car in question, however. The car is right in front of you and if you drive it and like the drive and the looks and the condition then maybe it is not important to you.

The value could vary quite a bit in the future depending upon the answers to these originality questions but if you like the car that helps if you pay above current market price.

Can you pay too much?

If you really like a certain rare car, have been searching a long time and you come across the perfect car (for you) but the price seems a little high – what do you do? If you plan to keep it for a long time and enjoy it then it is quite possible that the high price now is not so high in a year or two. If you pass up this perfect example you may not see another one for a long while and then the price will be even higher.

Sometimes paying too much is the best thing you can do.

Let us know what you think in the Comments.

 

 
This Raymond Loewy custom Jaguar XKE, below, will not carry near the price tag of the Giugiaro Ferrari shown above. The fact that it is a Jaguar as opposed to a Ferrari is only a small part of the reason.

Raymond Loewy XKE

Raymond Loewy Custom Jaguar XKE

1957 Gatto - Ferrari Hot Rod

1957 Gatto – Ferrari Hot Rod custom by Steve Moal

All photos, except the Liv Tyler image, are by Mike Gulett.

Summary
How Do You Place A Value On A Collector Car?
Article Name
How Do You Place A Value On A Collector Car?
Description
There are many variables that go into valuing a collector car. It is important to do your homework before you buy or sell.
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Comments

  1. Ken Phillips says:

    There is another factor in the price equation for any rare collectable.
    It is an alternative for any of the world’s currencies.
    There may have been no special love for the 14 Million dollar Ferrari ( I think our 250 LM cost about 18 thousand ) or the recent 600,000 dollars for a Yenko Camaro, or 400 Million dollar ( 4 Times the estimate) just recently paid for the questionable Michelangelo painting.
    Or 9,000 dollars for a Bit Coin.
    Are these prices a joke?
    Or are they a Tulip ?
    Well, with the tulip at least they got a tulip.
    With the Ferrari they got the physical Ferrari.
    With the Yenko, the painting they got at least something rare and PHYSICAL.

    With the Bit Coin only some degree of CONFIDENCE.
    Is that the joke?
    Or is it the dollar, Euro, Yen that have only the CONFIDENCE of the people of the world
    that are the joke?

    When you see the prices if all these things you are seeing real people making their decision on what is their answer answer

    • Diamonte Randal says:

      Ken,
      I agree with you on this point. When central banks can create money out of thin air (quantitative easing) money printing, something like 19 trillion from 2008 on, the currencies are ALL losing value. In this environment the knowing look for real assets like art, collector cars, real estate, etc.

      I see this trend continuing and the real treasures in the collector car will still do well as an end result.

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