Is There A "Bubble" With Certain Used Vehicle Pricing? IF So, When Do YOU Anticipate A Correction?

I don't think it will break until there is a major recessions - and even then it will not break as much as in the past for more affordable cars.

What has happened is that the average american car buy can no longer afford an average priced new car, even with a 6 or 7 year loan. AS a result - there is a shortage of these cars available 3 years old. I do not see the middle class getting a tax cut as long as the republicans hold the senate - and the Presidency - so the relatively small tax cuts they got were eaten up by gas prices rising. And as anyone who has gone to the supermarket recently knows - food prices are going up - and somethings - like Aluminum foil - have doubled in price - due to the Tariffs.

Certainly - you will hear no complaints from me - the tax plan was great for me. But then - I could have easily survived without a tax cut.

I do not think the i affordability of the average car to the average Joe relates to a bubble in the pricing of ferrari 360’s

Actually - it does in a way.(Although I admit that example is a little speculative - the question does not specifically mention ONLY at that level though)

The rise in prices of new cars - putting them out of reach of the average american wage earner - means that there will be less New Cars sold eventually.
Car sales are generally a leading indicator in the direction of the Economy. Even at the high level - there are the really rare special cars that will sell even in a recession - and then there are the exotics that are less rare - that will lose value in a recession.

THe recent fall in oil prices - notwithstanding - eventually a recession moves the lower classes into smaller CARS - the supply of which will be severely short because right now they are not selling. so we have a mixed bag.

We live in a somewhat 'speculative' economy - since real estate is no longer bubbling up in price, people with a speculative bent are looking for the next 'sure thing' and they seem to have focused on certain collector cars to do so.

Whenever money chases somewhat scarce items, the price goes up. Then when supply = demand the price levels off or goes down. What happened in real estate will happen with collector cars also, except for the exceptionally rare cars (perhaps certain Ferraris but not the more "mass produced" ones like the 360).

are you referencing the used car market or the collector car market? They are two completely different segments. While headlines will always report record sale prices. The collector segment overall peaked in 2014 and has been on a downward trajectory ever since.

How can you extrapolate a used car price bubble on the evidence of a handful of esoteric cars that sold for far more than their worth? That is the height of illogical thinking.

The collector car market is still quite viable to be into for the sake of business, but it definitely comes down to buying right so as to sell well. The $50K Honda S2000 is probably a $15K vehicle at best.

Matt — 

Those were merely examples.

Look at the prices of Porsche GT cars, Ford GTs, Ferrari Testarossas, hell, even the 308/328s.

A lot of cars have seen positive movement in the past 12 months.

00R If they are only examples then the headline is grossly misleading because the headline purports that the ENTIRE used car market is headed for implosion. How about crafting more accurate headlines?

Certain cars from certain areas will go up and down in price depending on demand by those who value them. Cars from the 20's 30's 40's etc used to be worth a lot, now not so much. Muscle cars now command a good buck, but this can change too. If you buy something red, naturally aspirated, a limited run and with a prancing horse on the hood, you will be better off then most in the long run.

For someone NOT in the business you certainly love to pretend you are knowledgeable. This is patently false: "Cars from the 20's 30's 40's etc used to be worth a lot, now not so much." The rate of appreciation may CURRENTLY be slow but they have not lost their worth.

@MD I am not an expert. Just a keen observer of the obvious. Here is a listing of the top 20 cars sold at auction in the last few years. The rarest and the very best still hold their value. But Ferrari holds its value far better than all of them. And race cars with pedigree from Ferrari seem to do even better. If you had that kind of money to invest in a collector car, I think the choice is obvious.

https://www.businessinsider.com/most-expensive-cars-sold-at-auction-2018-9

@CC so you can Google something and use that to call yourself a "keen observer". Lovely, my dear. BUT to act like because you read something on Google that you know anything is laughable.

I make a pretty penny in buying, flipping, and selling collector cars and the market is far from sagging.

But you like your snobbery, so why listen to anyone with real business experience?

@MD- in the last 3 years just how many cars from the 20's-50's have you bought and flipped and how many from the 60's to present day? Where is the demand? Where is the price growth? Where is the market? How many people these days want a post war Packard vs 1970 Challenger? A 1960's Mustang? An air cooled 911? I don't doubt your knowledge and experience but what is "in" and collectible changes with the times. And so does values. Even you must see that in your daily car trading activities.

@CC

The 20s-50s segment is most decidedly NOT the sweet spot for collectors. I'd go so far as to say it's never been the sweet spot.

The 50s-70s is FAR more lucrative of a segment.

I flip cars where the money is.

Cars from the 20s, 30s, and 40s aren't very "flippable" because the ones worth buying have already been flipped, so even if you buy well and resell, your margin is going to tight because the market for those cars is among just a handful of people. Once they are saturated, your market goes soft. Thus, using that segment as a bellwether for the collector car market just shows a person's utter lack of knowledge.

Ford and Chevy pickups from the 50s-70s and 50s-60s American cars are lucrative if you don't over-restore them and by lucrative I'm talking a profit that covers the cost then an equal amount above that (e.g. $25K in $50K out). "Bullet" and "flair" birds are big money if you have donor cars to keep the price of replacement parts in line. Cadillacs, Corvettes, Camaros, Chevelles, and Mustangs are easy money. Turning 914s into 914-6 replicas is lucrative if you can find the right buyer, but we've done several of them and profited nicely. Oddly, I've done Jensen Interceptors with ease and that's not a project for a neophyte.

My biggest failure was an Iso Grifo that looked like an easy flip, but was a money pit. A generous benefactor allowed me to make that mistake. I was in my early 20s. He'd seen the car two years before I "discovered" it and he passed on buying it. When I was bugeyed over it, he didn't dissuade me. $25K into the restoration--not counting the price of the car--the job was so hopeless that we turned it into a Frankenstein Corvette under an Iso Grifo body. I still have it and it looks marvelous, but any collector would see the heresy it is and walk away.

I also got a lot of first-hand learning at Barrett-Jackson because my benefactor--aka surrogate grandfather--took on three collections of colleagues of his--one at a time--as they died. All three were "confirmed bachelors" with more money than The Almighty. In their wills, he was given the task of selling the cars for the respective estates. His compensation was that he got to pick a few for himself as well as getting a percent of the sales.

That was an eye-opening experience and a half and it taught me a LOT about selling to a clientele with money.

One collector in Newport Beach was interested in an Aston Martin in one of the estates because he had competed with the guy that owned it when the original seller made it available. He wanted it, so I trailered in down there and when the guy met me, he gave me the talk to the hand gesture, and phoned my "grandfather" and said "What in hell is this?" (referring to me and pointing with his finger). I had been told to dress nicely. I wore khakis and a polo from JC Penney thinking that was good enough. Nope. I very nearly wore jeans because the was just a drop off and collect the check in my mind.

I returned a week later dressed expensively and the guy paid the asking price. Once the papers were signed and the money in hand--cash--I told him wherefore and why. He laughed at me and told me that if I could keep up with him on martinis, he'd forgive me. The hangover was painful, but he passed out first. He's the reason I usually go to Newport Beach once a week. I work part time for him now. He plans to be among the first 500 to have the new TVR Griffith and the subterfuge on that is ongoing.

My advice would be to tell collectors not to collect as an investment, but to collect what they enjoy driving.

@MD- Great stories. And thanks for sharing. Rich people can be funny at times. Glad you made it through and enjoy this part of the car business as a going concern / side venture for yourself. It certainly must keep life interesting...

@CC I have lots of interesting stories. I've put together a nice little business empire which happened in spite of my education in a field totally unrelated to cars.

The guy in Newport Beach is a "guncle" (gay uncle) now in my family which is the term he uses. He'll be up for Thanksgiving and I'm looking forward to it. My brother from San Francisco and his husband always come. My local brother and his husband will be present. All of them are car guys and verbally I'll have to be on my toes. I'm trying to get my buddy from Tucumcari to drive out because...another car guy.

Mr. Newport beach moved his collection up here because storage is far cheaper here and he could get a new building with very specific technology built in to protect his cars. If he wants one, we truck it down to him and usually pick up one for the return ride. The cars are started and driven once a week and are kept in immaculate condition. He has the money so he makes it happen as he chooses.

I oversee his internet sales operation. The stories I have on that one are rich.