The halfway point of 2023 has been reached - the perfect moment to look back on the first 6 months of the year and see what we can learn.
We'll analyse the first half of the year from 2023, through 2022, 2021, 2020 and all the way back to 2019. 2019 is selected as the benchmark due to it being the suggested pre-pandemic craziness.
Let's start at the top.
What has happened to classic car prices since 2019?
The above chart tracks the median price of cars sold in the first half of each year from 2019. Note: all cars built post-1999 are excluded from this analysis.
The classic car market was awash with talk of the Covid years being a huge boom time for classics and the reality is based upon the billions of £ of vehicles we've analysed from our database it shows Covid in fact wasn't that much of a boom time.
The reality is the boom time is now.
Prices are up 22.5% from a year ago.
Prices are up 29.0% from 5 years ago.
With all the talk of a recession and a cost of living crisis, classics are showing remarkable resilience. In fact, they're showing inflation busting resilience.
Part of that price rise is driven by traditional demand and supply factors. In the first half of 2022, we saw a record number of cars go under the hammer. For the first half of 2023, we've seen the number of listings fall dramatically - down 29%. If supply falls, all things remaining equal, prices rise. This partly explains the price rise we see here. But there's more to it...
How do price trends vary by country?
The Classic Valuer's data is collated from 30+ countries around the world, the majority of listings come from the UK, US and the EU.
And when cutting the data in this way an interesting picture emerges.
The US is leading the pack having seen the median price rise by 32.6% between the first half of 2022 and 2023.
The UK posts positive price growth too of 11.1%.
The EU, however, is seeing prices fall, down 5.7% vs 2022.
Why might that be? Two main factors.
Firstly, one argument is that you're seeing weaker price growth in the UK and falls in the EU partially down to public policy. The UK and EU both have commitments to only permit the sale of new EVs from 2035. Although this only impacts the sale of new vehicles it's clear from survey data it's weighing on enthusiasts' mind. It's another question whether 2035 is a realistic or achievable goal.
The US, on the other hand, has taken a more relaxed approach. Albeit, we are seeing some states, such as California, implement their own targets in regards to the sale of new internal combustion engine vehicles.
Secondarily, economic health. We also know that richer and healthier an economy is the stronger asset prices like classic cars become. The US has been delivering stronger GDP growth than the UK and the EU for the past few years now. US GDP in Q1 2023 was 5.7% above pre-pandemic levels, the UK's economy was 0.5% smaller than pre-pandemic levels. Naturally, this impacts classic car prices. What also impacts prices is the age of the vehicle...
How do prices vary by vehicle age?
Our favourite graph 'The Wave' is back - although this time around there are some interesting developments.
For those who haven't seen this graph it shows by decade how the price of those vehicles has changed in the past 5 years.
It represents the generational shifts as car's come in and out of favour as new generations move into and out of the market.
Three things to call out:
As previously seen with this graph, the 1970s remains the strongest performing decade, with prices up 65% on average since 2019
Again, as previously seen, the 1920s and 1930s are the weakest performing decades both down c. 10%
The broad shape of the graph as a wave coming from below the surface to cresting above it and then falling away remains.
This time around though the graph is different in two main ways:
Every single decade has seen either less of a decline / higher growth than previously seen on this graph - that's a reflection of the market being 22.5% up vs last year (the last time we shared this graph)
The impact of that is that decades that had previously seen negative price growth i.e. the 1940s and 1950s, are now seeing positive gains in price. Whether these decades remain in positive territory for the remainder of the year will be one to watch.
How are demand levels in the classic car market?
To assess level of demand for an asset like classic cars is tough. There are two key metrics which we use to track it.
Firstly, the traditional, sell-through rate. Simply, the percentage of vehicles that go to auction and sell. It has its flaws, over-enthusiastic estimates from auction houses or pessimistic estimates or no reserve sales (which are increasingly common) can skew the figure either way not to mention multiple variables like auction location, conditions etc. We can still draw conclusions though.
When looking at the sell-through rate over the first half of preceding years it's been fluctuating in and around 72% (+/- 5 percentage points).
Across that period, there's an overall downward trend of less than 1% percentage point per annum.
Secondarily, demand can also be assessed more creatively. You can track the level of internet searches for "classic car". The below chart tracks the relative number of times the topic "classic car" is searched for globally on Google. Of course, search terms don't directly correlate to demand but it is one of the few indicators to work with.
This graph can be a little confusing at first glance but the volatile line shows week-on-week how often the term "classic car" has been searched for on Google. It's indexed relative to the peak in 2019 (that's where it hits 100). The straight line through the middle is a trend line. Make sense? Bueno.
There are two things to call out here:
Firstly, this graph tells a different story to that of sell-through rate. The trend line tells us that the search volume is down 21% from beginning of 2019 to the end of Q2 2023, that's a year-on-year fall of 5.7%
Secondarily, is don't be overly optimistic by the big uptick thus far in 2023, this happens every year before falling away as classics begin to get tucked away for the northern hemisphere winter
Our take on how demand is shaping up is that the rise of no reserve sales is flattering the sell-through rate to be higher than it otherwise would be - which would match more closely to the bigger falls we've seen in Google searches. Combining both ways to measure demand would place demand falling away at 2-3% per annum.
What to takeaway?
We've galloped through a lot there. If you remember nothing else, remember:
The boom time is now. Classic cars are up 22% vs the prior year
The wave continues. Demand for 70s cars remains strongest of all - up 65% vs 5 years ago
Demand is trending downwards. Estimates indicate around 2-3% per annum.
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