If you remember nothing else from this post let it be this:
The UK classic car market has never been more accessible.
But that comes at a cost. What cost we’re going to explore in this post.
So why do I say it’s more accessible than ever?
Well I don’t, the data does.
We’ve crunched the numbers on auction results comparing the first 9 months of this year with the same period over the past decade looking at classic vehicles (those over 30 years old).
Three things point to this being the most accessible market ever.
Firstly, we are seeing twice as many cars coming to market than 5 years ago.
Online auctions have played a major role in that rise.
5 years ago, online auctions made up 1% of all vehicles at auction.
This year that number was over 25%.
Secondarily, not only are there more cars, but they’re at the more affordable price points.
In the first 9 months of 2024, we saw 12% more cars sub-£10,000 come to market than the prior we saw in the same period last year.
And when you look over 5 years the number of cars sub-£10k has more than doubled, 160% up.
But that comes at a cost…
People can greatly over complicate what drives classic vehicle prices.
Time and time again from our analysis, the single greatest driver of prices is what you would’ve learnt in your Economics class as a kid. Supply and demand economics.
Simply, as supply falls, demand increases and prices rise.
Inversely, as supply increases, demand falls and prices fall.
That’s precisely what we’re seeing today, with more supply than ever prices are falling.
In the UK though, they’re not just down, prices are the lowest they’ve been in over a decade.
Globally the picture is similar.
Prices are down 14% from last year and we’re back down to 2021 price levels.
But are we seeing different price trends in different markets?
Absolutely.
Whilst we track data from 40+ countries, there are 3 major markets. The US, the UK and Europe.
Europe is the only market where prices have risen this year, up 20%.
In fact, they’ve risen every year since 2020.
The US which has seen prices every year from 2018 has finally seen prices tumble, down 19% on the previous year.
And the UK, well the graph below is particularly grim viewing depending on your perspective.
The UK has seen prices slip and slip, classic prices fell 17% vs last year and are down nearly 40% in the past 5 years.
They’re at their lowest point since we’ve been running these numbers.
Well, the next question to ask is right Giles, is that driven by cheaper cars coming to market or are values actually falling of comparable vehicles?
Two ways to answer that, both of which lead to the same outcome
Of the 50 most popular makes in our database only 3 have seen prices rise in the past year: Lamborghini, Rolls-Royce and Lotus.
Of the 200 most popular models, 88% have those have fallen in the past year.
When looking across those 200 models prices are down 10% on average - a very similar figure to how much the market is down overall.
That tells us it’s not that simply cheaper cars are coming to market but rather than value of vehicles on a comparable model by model basis is down.
Right so we know the market has never been more accessible, but that comes at a cost with prices at their lowest point in the UK in recent times.
What other trends are we seeing?
Well, ‘The Wave’ is still true.
This is our favourite chart. We've named it 'The Wave'. Well, because it's shaped like a wave that rises from below the surface, crests and then falls away again.
This is showing how the median price of cars produced from the 1920s through the decades has changed in percentage terms over the last 5 years.
The 1970s remain, as they have in almost every iteration of this graph, the main growth area across any decade with prices up 28% in 5 years.
Interestingly, when we ran the same graph at the same time last year that 5 year growth was 52%. In other words, we’re seeing slowing growth in the 1970s.
The 60s and 80s slot into 2nd and 3rd place as we have seen previously with this graph.
The 1920s and 2010s are laggards both down 19% over 5 years.
Intriguingly, when you run this graph over a 1 year period, every single decade has seen price falls comparing 2024 to 2023.
The best performing decade was the 1980s, but still down 8%.
The worst performing decade was 2010s, partly as a function of the higher interest rates making the financing that supports many of these purchases trickier.
The Wave graph is all about shifts in demand, how demand from new generations shows appreciation both mentally and financially for an increasingly newer breed of vehicle.
In simple language, we'll see the crest of that wave moving into the 80s and then 90s in the coming years.
So, depending on your outlook, you could argue this is a negative story.
Either you see it as, prices are falling and demand is ebbing away.
Or you could argue, the market is becoming more accessible.
We, the community, have a great opportunity to use it to our advantage into the future.
How is the future looking?
Firstly, anyone who says they know what’s going to happen to vehicle values with certainty is telling you porkies and you should walk away from that conversation.
Secondarily, we can infer some insight from demand metrics in recent years and well as wider political and macroeconomic trends.
So, what demand metrics can we work off of?
Sell-through rate is the first we’ll come to. At a headline level, sell-through rate has stabilised after 2 years of declines and it stands at 68%.
The really interesting thing to call out here is what we saw post-election.
Post the general election in the UK we saw multiple auctions straight afterwards have a sell-through rate that was struggling to hit 50%. That’s near unheard of.
Elections and change of Governments always cause instability, particularly this time with the messaging coming out for Whitehall around the October budget it seemed like we were seeing people very much in a holding pattern.
That fear is starting to subside though.
In the past few weeks as messaging around the severity of the budget has started to soften the sell-through rate has started to climb again back to normal levels and even reached 75% in a sale recently.
Taking a step back the light blue line on this chart shows the overall trend for sell-through rate and it’s down about 1 percentage point per annum, not a material drop off.
We can also infer data from Google Trends.
The behemoth publishes data on whether a particular topic is trending up or down in search popularity.
When you look at the volume of searches in the UK for the topic of 'Classic Car' you get the following chart.
This graph is a representation of how many people are searching terms relating to 'Classic Car' relative to the peak in July 2021.
Three key things to call out here.
Firstly, is the peak. It happened in July 2021. Covid time. Everyone at home scanning the auctions for some bargains in their spare time.
Secondarily is the cyclical nature to our industry. The peak for each year happens in Spring just as classics start to appear en masse again.
Thirdly is the trend, overall there is certainly a downward trend year-on-year for interest in the classic car space. The downward trend in the UK is more aggressive than we see at a global level as well.
In other words as we look to the future we can see sell-through rate trending down at about 1 percentage point per annum, search volumes falling away slightly faster alongside but not cliff-edge to worry about as many have talked about.
To bring this full circle, at its core prices are down and continue to fall, we know that’s down to the actual value of vehicles falling, and we’ve got some headwinds as we look to the future.
I make the case to you that that’s not a case for despair.
But rather a case for optimism.
After all, our industry has never been more accessible.
What we need is more people wanting to partake.
My ask of you all today is to go and shout about it.
Shout about how accessible it is.
Shout about how great it is.
Shout about how much fun it is.
Shout about how there’s never been a better time to get involved.
If you enjoyed this article, do share it with a friend and sign up to our free newsletter here.
Comentários