My Car Quest

August 10, 2020

Editorial: Buy or Sell – Enthusiasts Poise at the Brink

My Car Quest is devoted to cars and car culture, and we do not want to add to the media coverage of the virus. But the pandemic looks like it is going to change the collector car world as we know it along with other changes in the world such as electric cars and climate change.

Here, one of our contributors presents arguments pro and con on what course car collectors could take vis-a-vis The New Normal. Admittedly, some of his advice on buying is directly contradicted in what he says about selling (the first could be right for one person and the second for another). So be it–go into any courthouse and you will find some defense attorneys who crossed the aisle to a prosecutors job and they have to be able to argue on either side.

A lot of change is upon us and we must be ready to do the right thing.

Mike Gulett, Publisher

by Wallace Wyss –

Because of the virus, the whole collector car market has shifted. The changes aren’t readily apparent–because many events planned long go are still scheduled and it seems like things may take longer to get back on schedule than we would all like. But, if the disease continues to find new victims over the coming months, there is the chance that there will be a “new normal” that will be a lot less classic car-friendly than the old normal. Here’s the arguments to consider before choosing your course to buy or sell.

WHY YOU SHOULD SELL YOUR COLLECTOR CAR

1.) It is too much a part of your financial assets. When that car was going up 10% a year it made sense. But now the middle class has been cut off at the knees; they can’t buy toys anymore, there will be no credit for toys. Without buyers, your collector car cannot be counted on to increase in value.

2.) It needs work you can no longer afford. Back when your business was open there was enough money to lavish on the car, on the upholstery, the chrome plating, wiring, etc. but now every dollar that’s coming in could be vitally needed later. Kind of like you ordered a bespoke tailored suit for that big party but hey the party’s over.

Mercedes 300SL Roadster

Mercedes 300SL Roadster

3.) Is your health good enough that you can live long enough to see beyond this pandemic or others to come? If you have diabetes type 2, asthma, a weak heart, high blood pressure, be realistic, and ask yourself will you live long enough to enjoy your car when it’s finished, be able to drive it and or sell it? If the answer is “no” it may be time to withdraw from the field of battle.

4) Will electric car or autonomous car growth doom your car’s future driveability? And if so, is that OK with you? I heard two world class designers say that eventually internal combustion cars will only be driven on special courses as thoroughbred horses are ridden now. This could happen if the Green agenda people take over and pass sweeping laws, all pro-electric and all anti-internal combustion. When I came to California in 1969 you could drive a Le Mans ready Ferrari 250GTO or 250LM or GT40 on the street. I know this, as I saw it, (and had a ride once or twice.) But not any more, so it could come that the utility of your collector car will be reduced to that of a static display in a museum.

Ferrari 250 GTO

Stephen Mitchell’s Ferrari 250 GTO in the parking lot at Riverside Raceway circa 1970 – photo by Larry Crane

5.) As a result of the pandemic, what are the needs of your family? Do you have kids with crushing college loan payments? Or your grown kids who lost their house and need to come with live with you? Maybe they had a business that failed because of the virus. A lot of the businesses that sold things just for pleasure (say bespoke tailored suits, jet skis, or flower arranging etc.) will go out of business as the new normal is not nearly so tolerant of some fun things. It’s survival time, bubba.

6. Your mechanics/restorers have folded. It depends on how long the virus lasts, too long a time and the shops that do the engine rebuilding, fabrication, upholstering, painting etc, on collector cars will fold because the middle class (forget the lower class, they were flat out doomed from the beginning) no longer can pay $90-$100 an hour. Who else can you find to do the work? Don’t count on the young folk most of whom can work a smart phone but not change a spark plug.

Bizzarrini GT 5300 Strada

Bizzarrini GT 5300 Strada with Mike Gulett driving

WHY TO BUY A COLLECTOR CAR

1.) Because now you can get the car you always wanted. Let’s face it that Mercedes 300SL was beyond your reach since the 80s. Certain desirable models seem to always increase in value as new rich became aware of them. Such as Elon Musk, once he made his first billion or two, began buying exotic cars and even crashed one of them. But now, as you see financial empires collapse, and you know which financiers were “car heavy” in their portfolio, this could be the time to dust off your checkbook and offer to buy that car in their collection that you’ve coveted. (say for instance the Bikram Choudhury Yoga empire, which resulted in the dumping of 46 of his cars at auction). But only if the car’s value is say 1/20th of your financial net worth.

1957 Corvette SR2 art by Wallace Wyss

1957 Corvette SR2 – painting by Wallace Wyss. For availability write mendoart7@gmail.com

2. Your doctors have given you a finite timeline and end date so enjoy life while you can. There’s some diseases that have a short timeline. Say stage 4 pancreatic cancer–three to four months tops. But prostate cancer, you can choose to live with it for years. So taking all your physical conditions to heart, you might still be able to enjoy a car of your dreams now while you still can, now that prices are dropping. My best friend is a good example, though not with cars. He’s 94, a veteran Marine who fought at several islands in the Pacific. Yet he has a stable of equine racing thoroughbreds still running. He’s still in the game, long beyond any of the competitors he started with. But his horses are not his complete financial picture. So they can live or die and he still has his house and his investments. He can relax at Starbucks with me knowing he’s still in the game. (Thanks for your service, Jack).

3. You can move up to a more prestigious brand. Let’s say you took five years to restore that Spitfire but what’s it worth when you’re done? Sadly, for the lower rung of collector cars like a Triumph Spitfire, MGBs, etc., that restored one might be worth post-virus not much more than when you started. If you would have been working on a more thoroughbred car, say a Jaguar E-type, it would be worth more–it’s more of an “end goal” English dream car than a Spitfire. So this is the chance–when everybody who lost their house when they lost their job is dumping their collector cars– to move up in the collector car world a notch or two but make damn sure your buy represents only a small percentage of your net worth.

4. Recognize your change of heart and choose something for a different driving style. Let’s say in your youth you loved to drive sports cars hard, working that manual tranny, sliding though the corners, living on the edge and valuing your driving skill at the limit. But now you’d just like to have a genteel elegant car that looks marvelous, is not temperamental and makes you feel like a million dollars when you’re seen in it…I say go for it, recognize you are now 65 or so and not 25 and are willing to forego taking the risks you once considered part of the game.

Ferrari 365 Daytona - art by Wallace Wyss

Ferrari 365 Daytona – art by Wallace Wyss

5. Shift to cars out of the stock market. I’m old enough, I remember various crisis. While this pandemic is as real as you can get, there have been others that caused people to panic, like the energy shortage of the early ’70s, when you could only get $3 worth of gas. Owners of gas-greedy cars like a 427 Cobra sold off figuring “What’s the use– I’ll never be able to enjoy this car again.”

So they invested in real estate or stocks. Well, now it’s decades later and gas is below $2 a gallon. And the stock market, as a result of the pandemic, has taken dives that are the biggest in recorded history. So, if the market has hurt you too many times, if it recovers even slightly, cash out and buy the car you love. A lot of things that cause the stock market to drop are just temporary and those who had a classic in their garage and hung on were able, years later, to see appreciation more than they did with their stock. I have a friend with 10 or more AC Cobras, real ones, which he bought since the ’60s. Appreciation is far beyond everything except Malibu coastal houses.

De Tomaso Mangusta

De Tomaso Mangusta

Plus you have something enjoyable to drive on the weekends. I’ll never forget driving my rosso corsa Ferrari 365 GTC/4 to Monterey. Yet I forgot most of the stocks I owned and lost ten of thousands on. So if you don’t trust the stock market, but think you know car values, reduce the stock percentage in your portfolio. Put a restored ready-to-drive classic in there instead. But again, I beseech you, only if it’s say a maximum of 1/20th of your net worth.

What say you?

Let us know what you think in the Comments.

 
 
THE AUTHOR: Wallace Wyss is the author of 18 car books four of which are in the Incredible Barn Find series.

 
 
 
 

Carmel on the Avenue - 2020

We will not see many scenes like this in 2020.

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Editorial: Buy or Sell - Enthusiasts Poise at the Brink
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Editorial: Buy or Sell - Enthusiasts Poise at the Brink
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If the coronavirus continues to find new victims over the coming months, there is the chance that there will be a "new normal" that will be a lot less classic car-friendly than the old normal.
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Comments

  1. Di Galvieri says

    Hi,
    I completely agree with Walalce especially on his point 4 when he writes “I heard two world class designers say that eventually internal combustion cars will only be driven on special courses as thoroughbred horses are ridden now”,
    very true and even regardless of the Covid but with just an acceleration because of it …
    Be ready in the next few months instead of the next few years that “the utility of your collector car will be reduced to that of a static display in” … , if not in a museum, in the barn of your country house, if you still have one ?
    Everything will change dramatically for classic cars as well as for dinosaurs in another era…

  2. Robb Northrup says

    Completely disagree with Di Galvieri:. Yes, two designers said eventually internal combustions cars blah, blah, blah. I think that’s been on the radar for a while and as electric vehicle technology evolves, it will eventually happen. But we’re not there yet. And, there is push back on the autonomous vehicles.

    Further, our country does NOT have the infrastructure to support a rapid changeover to electric cars. Not when we have power outages and brown outs (as always, California leads the nation…). I cannot see that this changeover will occur in a few months. You really think that collector cars that are street legal will be relegated to the museum in a few months? Not in the USA. It would take quite a push for the liberal “greens” to take over. The average American who votes usually is middle of the road. And with the battles we now see in House and the Senate, getting agreement on “sweeping changes” would be difficult at best and take a while to implement.

    I don’t think it’s time for the gloom and doom. Not yet.

  3. Robb Northrup says

    I should further add that you may see it in California someday. But California is only one state in the US. It won’t fly in Iowa, or Ohio, or even Michigan (look at the pushback on that state’s governor for outlawing residents to go to their summer homes up North). I wish folks would quit citing California as representative of the country. It is a very different environment compared to most of the country.

  4. Tirefriar says

    I remember the market crash of the 90’s and the 2000’s. Best way to sum up Walace’s assessment above is “be rational and use your best judgement”. Bring a Trailer just published their March numbers and they are UP. Could be the momentum I guess, can also be that buyers are based in areas not impacted, or as severely impacted by the virus. The sky is not falling….

    • The Bring a Trailer numbers certainly are a reflection of the success of their business model. The numbers also may be an indication that we will see more on-line classic car auctions replacing some in person auctions.

      The RM Palm Beach March auction which was moved from in person to on-line seems to have gone well.

  5. SKIP HINOJOS says

    I CONSIDER THE De Tomaso Mangusta, TO BE A BEAUTIFUL DESIGN, ALTHOUGH IT WAS 20% TOO SMALL, WAS ONE OF THE WORST HANDLING CARS EVER DESIGNED, AND HAD THE WINDSHIELD WAY TOO CLOSE TO ONE HEADS, TO BE CONSIDERED SAFE, IF ONE CRASHED OR EVEN CON TO ANS ABRUPT STOP.

  6. Yes, I have the carowner virus. OK, no more puns. Near term, gas is going to be cheap for a while. We need to buy it and burn it in order to help jump start the economy. I’ll be glad to help with that. So we ban cars, boats, ATVs and gasoline driven aircraft? I doubt it. Longer term, there aren’t as many younger people today who are as in love with machines as we are anyway. And if they are, they can’t afford to spend big money on one. I don’t want to lose money, but I think the prices of lower and mid range tier cars will drop some and that’s a good thing if you’re a buyer. Suddenly if my car is not worth much going forward, I’m not selling, I’m going to drive it all the time. It would be great to see more collector cars somewhere besides car shows. And i can be just as happy driving an Alfa as I can a Jaguar. Bottom line in my opinion: they’ll be bargains out there and car values will track the economy as it recovers or doesn’t. I’m maintaining my position as is.

    • Di Galvieri says

      “Longer term, there aren’t as many younger people today who are as in love with machines as we are anyway. And if they are, they can’t afford to spend big money on one. I don’t want to lose money, but I think the prices of lower and mid range tier cars will drop some and that’s a good thing if you’re a buyer. Suddenly if my car is not worth much going forward, I’m not selling, I’m going to drive it all the time. It would be great to see more collector cars somewhere besides car shows. ”
      Totally agree ! Regardless of the covid and the ecology, this is another obvious reason for the short-term decline (5-10 years at most) of the value of cars which are not exceptional (Jaguar E, Corvette, Mustang and even “normal” Porsche 911 included …). At least, if we still have the right to ride with, or otherwise, at night outlawed, a greater number of enthusiasts may well end their lives by driving them! Have fun …

      • wallace wyss says

        Di Galvieri: that’s a horrible thought at the end but I think I could write a fiction story on it, reminds me a famous stunt pilot who had a fatal disease so his way of choosing his own death was to fly his stunt plane into the sun until it crashed…

        • Di Galvieri says

          Dear Sir, I rather wanted to write “end or continue” their life – even outside the law – without necessarily losing it before the hour … but I admit that it would make a beautiful and terrible fiction, thank you ! 😉

  7. Wallace Wyss says

    Di Galvieri: I wrote a fiction story where the enthusiasts end their lives the hard way. See what happens when you choose the wrong words?.Now we gotta get Mike to run it…
    Wallace Wyss

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