I’m a basic automotive skilled – this is why costs will not plunge

Read what some classic car enthusiasts are writing online, and you’ll come to one conclusion: prices are in reverse

Sell-through rates at auction – when a car changes hands after a successful winning bid – have also declined over the past 12 months and advertised values are down.

The obvious synopsis would be that the market’s bubble has burst after prospering through Covid and beyond.

But is that really the case? This is Money’s guest writer and classic car expert, John Mayhead, explains all.

Has the classic car market’s bubble burst? John Mayhead explains what’s going on in the sector – and says if we’re about to see a crash or something less severe…

Data from the Hagerty Price Guide, the UK’s leading classic car valuation pages, confirms a tumble in the sector. 

Across the 2,851 different models of classic car under review, average values are currently at 86 per cent of where they were in June 2020.

And their ‘market rating’ – which tracks insured values, dealer prices and auction results – is down 13 points from its all-time high in June 2022.

But there are three important words from the previous paragraph that give a clue to the truth: the ‘all-time high’ was there for a reason: Covid. 

People sat at home, realised that life was short, and some decided to buy the classic they’d always wanted. 

John Mayhead is This is Money’s guest classic car writer, and the man who tracks the market for a job as editor at the Hagerty Price Guide

It was like thousands of mid-life crises all coming at once. 

Demand went up, some people paid over the odds to get the car they wanted, and sellers responded by hiking their prices. 

For a time, buyers played the game.

Then, real life – and the cost-of-living crisis – hit home. Bills rose, mortgage rates went up and fuel prices soared. 

Buyers started being much more careful with their money, auction rates dropped and dealers reported that buyers were looking, but not buying. 

As a result, prices started to fall.

This has impacted the top-end of the market most, with the biggest fallers being seven-figure models from iconic performance brands, Ferrari and Chevrolet.

The biggest faller – in financial terms – of the last 12 months is the Ferrari 365 Spider, which has lost £750,000 of its value since 2023, with values now down to just over £2.5million (a drop of 22 per cent). 

The biggest price faller of all in the last 12 months has been the Ferrari 365 California, shedding almost a quarter of its value last year, losing £725k. This 1967 example pictured had a guide price of $4-$4.5m at RM Sotheby’s Miami auction in March but failed to sell 

Classic car values have skyrocketed since Covid first struck. Demand went up, some people paid over the odds to get the car they wanted, and sellers responded by hiking their prices

It’s an all-too-familiar story that we’ve seen before. 

Back in the late 1980s and early 1990s, there was another explosion in the value of some classic cars fed by a thriving, deregulated City of London that was awash with cash. 

Then, the models to have were the Jaguar E-Type and the Ferrari Daytona, and prices of these soared to sometimes ten times their original price almost overnight. 

The stock market crash on Black Wednesday in September 1992 ended this: classic cars were easy to buy, but when times were hard, that meant they were the first thing to go, sometimes at fire sale prices. 

Prices dropped, almost instantly, below where they had been in the first place.

That was a bubble bursting.

But what we’re seeing now in the classic car market isn’t.

When the cost-of-living crisis hit home, classic car buyers started showing more caution. As a result, prices started to fall

‘For some models, the post-pandemic boom wasn’t realistic, or sustainable, and at heart, most enthusiasts knew that,’ John explains

The classic car market is better informed than it has ever been before. Which is why John says another crash like the one seen in the early 1990s isn’t likely

Today, it’s a much better informed and mature market, based on an £18billlion industry that supports owners through events, clubs, restoration and storage. 

Resources like the Hagerty Price Guide provide owners with an insider view of what their car is really worth, and the internet allows research and offers comparison.

No, what we’re seeing now is some parts of the market correcting and realigning back to a healthy state. 

For some models, the post-pandemic boom wasn’t realistic, or sustainable, and at heart, most enthusiasts knew that. 

Values, in general, across the Hagerty Price Guide dropped 1 per cent over the last quarter, but only 40 per cent of cars actually fell in price; 13 per cent rose, and the remainder were static. 

Plus, of the top ten fallers, the cheapest is still worth over £1.4million, a drop that won’t have any effect on the value of your usual, everyday classic and probably says more about exchange rates than anything else.

So, the long and short of it is, collectors have no need to worry. 

Many enthusiasts will tell you that the best way to maintain a classic car is to drive it regularly and in the long run, that may maintain its value. 

Plus, you’ll gain the benefit of owning and driving such a wonderful old machine and all the health benefits of linking up with like-minded enthusiasts. 

That has to be a good thing.