Monday, January 30, 2017

What Makes a Car Collectable?

What makes some cars collectible and others just piles of junk?

I mentioned before that collector cars are really just perception-based investments - just stuff you buy hoping someone else will pay more for it down the road.   What makes a car worth money stems from a variety of factors.  But even a car that has all these factors going for it might not be a swell investment, as its value is based entirely on perception.

As I noted before, I recall reading in a Fiat forum an actual formula someone came up with that added up these factors to come up with a collectability score.  The Fiat Spider did OK in categories like fun to drive (convertible) and age, but did poorly in rarity (a lot were made) and desirability (it had a poor reputation).

Here is a list of factors I have come up with to determine the collectability of a vintage car.   Not any one of them is determinative, but if you add them all up, well, you get an idea of what you are looking at.

1.  Number Made:  The coolest sports car or muscle car is never likely to be collectible if a ton of them were made.  Cars that were made in the millions don't tend to become rare collector's items.   A late 1970's Camaro, for example, is not very collectible (despite what some websites say) simply because they made millions of them.  Most production cars will never become rare collectibles, for the simple reason that they made thousands and thousands of them, and many of them survived.  This is not to say they won't appreciate in value, only that they will never be worth much.

Now, some "rare" production cars have indeed crossed the auction block for millions.   Usually these are one of a dozen cars made with a particular option combination - a Hemi Cuda convertible for example.   And some of the reasoning behind the pricing is just plain hype.   Act shocked.

2.  Number Left:  It helps, of course, if only a few of the car in question remain.  Every year, car accidents, garage fires, theft, and just plain wearing out (junking) take away more and more examples of the vehicle in question.

The problem is, you can make almost any part of a car.  Ford sells entire '65 Mustang bodies, and engines are not hard to find.  If you have the title and data plate (and there are places that make that, too) you can build a whole car.  And once auction prices climb, people find it profitable to create original "numbers matching" cars from scratch, including original window stickers and build sheets (yes, there are places that make those, as well!).

3.  Age:  Older is better.  Few, if any people are going to collect a car under 20 years old, and really it isn't until 30, 40, or even 50 years that a car starts to acquire that funky patina that makes it desirable for collectors.

I mentioned before a neighbor bought an "anniversary" Mustang in the 1980s and parked it in his garage for a decade.   He hauled it out 10 years later and offered it for sale - less than 100 miles on the odometer and "the top has never been down!".   I had to explain to him that at this point it was just a low mileage used car and that it would not be even worth what he paid for it for more than 20 years or so.   He was not pleased.

One reason newer cars don't appreciate is often they are still making them, or the manufacturer is making newer versions that are better.   In the 1970's, the quality and horsepower of cars went downhill, which lead to the rise of the legend of '60's muscle cars, which appeared better by comparison.  The reality is, of course, the cars from the 1960's were crap, just not as crappy as 1970's cars.  By the 1980's, quality and horsepower started to increase, and today, we make far better cars than back then.

Today, car makers are offering better and better cars, with better comfort, handling, safety features, and horsepower.   My 1999 M Roadster is not a "collectible" just yet only because you can buy a 2017 M Roadster with more power and a retractable hard top.  So it is very rare that a newer car increases in value.  If it does, you should be skeptical.

4.  Funk Factor:  Funky cars are always more desirable, whether it is because of the esoteric styling, or some other unique factor of the vehicle.   Old station wagons were hardly collectible, at least for a while, until people started to appreciate their funkiness.   Since they are often rarer than even convertibles, their value has shot up.   Funky adds value, but sometimes not a lot.   A BMW Isetta, for example, is funky, but still not many people really want one to drive around.

5.  Fun Factor:  Cars that are fast and handle well are more fun to drive than, say, a Yugo.  So they will always be worth more.  Coupes and Convertibles will trump four-door sedans, and usually station wagons, in the early years - although those have come up in value due to rarity (most were junked) and the Funk factor above.

The fun factor thing is a huge consideration.   It is so huge that many restorers are taking older Mustang hard tops and sawing the tops off to make them into collectible ragtops.  Correctly done, few could tell the difference.   The same is true for four-door cars - some people "convert" them into coupes with major body work, as a coupe is worth some coin, but a sedan languishes at auction.

6.  Driveability:  Closely related is the ability to actually drive the car.  This may sound silly, but older cars, particularly from the brass-lamp era, are often difficult to drive on modern roads.  Even getting proper fuel for such old cars is tough.

A neighbor on the next island has a model-T Ford for sale.  Not a convertible, sadly, but a windowed doctor's coupe.   The problem is, it only goes about 45 miles an hour with the pedal to the metal, and of course has no air conditioning.  It is a car you can look at, but driving it is somewhat awkward, uncomfortable, and just not fun.

7. Status:   Cheap cars are rarely collectible.   No one will ever covet an old Chevette or Chevy Geo.   Taking aside that millions were made, very few exist today and thus are arguably "rare".  But rarity and collectability do not always go hand in hand.  People would rather collect a loaded Chevy Impala than a stripped Biscayne.  So the further up the food chain you go, generally the more collectible a car is.

8.  Star Power:  A car that has a song named after it will be more collectible.  The Beach Boys saved many a 409 from the wrecker and Ronnie & The Daytonas created the whole Pontiac GTO mystique.   Cars that star in movies, such as Steve McQueen's Bullit Mustang can end up as priceless artifacts - but also provide a halo effect for that make and model.   Celebrity provenance in terms of ownership or better yet, racing history, is also always a selling point.

9.  Popularity:  Oddly enough, the more rare a car is, sometimes the less it is collectible.   For years, people salivated after "muscle cars" from the 1960's, provided they were from Ford, GM, or Chrysler.   AMC's venture into this market (e.g., the Marlin or "Rebel Machine") were roundly ignored by collectors, and often AMCs would languish at auctions.   Only today are values starting to rise, as people realize the rarity of these cars.  But most collectors would rather have a vintage Mustang convertible rather than a vintage AMC Rambler American Convertible.

10.  Nostalgia:  Many people - particularly men of a certain age - pine for the cars of their youth.   A friend of mine has two 1955 Imperials (not "Chrysler" Imperials) in his garage, one in mint original condition.  As a youth, he lusted after this car, and now he has one.   To me, it is a neat car, but I would go for the later, more outlandish '57-'60 models, as they have more funk factor.   The car does not resonate for me as nostalgic.   On the other hand, I had a set of 60's Chevies ('66, '67, '68 - all rust-buckets) and a '65 Mustang in High School.   Those cars have more nostalgia value for me than 50's models.

On the other hand, some cars are just hated.   No one will feel nostalgic about most late '70's cars because they were pieces of crap.   Few will restore a 1992 Corolla, even if it was their first car in High School.   This gets back to the fun and funk factors, which are inter-related with nostalgia.

11.  Hysteria: Often, some models of cars are subject to bubbles.  We saw this in the 1990's with the dot-com boom.   Silicon Valley millionaires went out and bought vintage Ferraris to show off their wealth.  Pretty soon, the price of Ferraris shot through the roof.   People started paying ridiculous prices for old 308 models and even Testarossas, which were made in large quantities and hardly rare or old enough to be coveted.

When the dot-com boom collapsed, the value of these cars - particularly the later model cars - plummeted.   These were like the Condos of collectible cars - shooting up in value more rapidly than houses, and then plummeting just as fast.

The current fascination with 1960's muscle cars is about the same.   People with money to spend are bidding these up in price.   But as Jay Leno has noted, a simple economy car today can out-accelerate and out-corner many of the "muscle" cars of the 1960's and early 1970's.   The fascination with those cars could wear off very quickly.  If you want a fast car, the dealers all have 600+ HP cars on the showroom floors today - nearly double the horsepower of the "muscle" cars of that bygone era.

12.  Condition:   This is a tricky one, as it can mean several things.  Lately, the market has started to appreciate "original condition" cars more - ones that are in good shape, have original paint and chrome, and maybe even interiors, but maybe a few repairs to keep them running.   A little patina isn't deemed to take away from cars like this.

Meticulously restored cars, often called "over-restored" are still valued, but they don't have that patina and funk of an original car.  For historic cars (e.g., Steven McQueen racing provenance) restoration may actually decrease the value of the car.   Collectors want a car with his sweat stains on it.

But a car with mechanical or rust problems isn't "patina'ed" but just ratted out.  And rust is the worst of all - very hard and expensive to fix.   And if you see a little, chances are, there is a lot.  A clapped-out old car is just a clapped-out old car, unless it has provenance or is really, really rare.   But even then, it needs restoration whose cost often exceeds the market value of the car.

You spend $100,000 restoring an old car, generally it is worth $50,000 - the "half what you have in it" rule.  Few people make money restoring cars, other than the companies that have people pay them to do this.

13.  Modifications: That rare collectible muscle car might be ruined if some teenager decided to saw a hole in the hood and put a huge fiberglass hood scoop on it.   Generally mods don't hurt too much if they are reversible with a wrench and you kept the old parts.   Mods that improve drive-ability and utility (better brakes, air conditioning) might have neutral or a slightly positive value.

Sadly, most modifications are irreversible and often destroy the value of a car.  I saw online a fellow with a pre-war Packard coupe that was painted two-tone pink and purple, with a 350 Chevy swap and an automatic transmission.  It had a Mustang interior and a Vega steering column.  No doubt more driveable than the stock vehicle, but no longer a collectible car.   Putting it back to original condition - with so many parts missing, including the interior - would be cost-prohibitive.

Most mods like this are made when the car is in that languishing period where it is not quite yet collectible and just another used car.   It is one reason why "original" cars are harder and harder to find.

* * *

You add these all up, and you can see that some add, and some subtract, depending on the type of car you have.  Some cars can be rare, but not very collectible.  An old post-war Panhard, for example, is pretty rare today, as most were rightfully junked.  It is a funky car, but not that interesting to look at or drive, except maybe for someone who grew up with one.

A '57 Chevy is old, but they made an awful lot of them.  In fact, there used to be an urban legend about this - that people were secretly making '57 Chevies after they went out of productionWhat else could explain why there are so many of them?

My neighbor has one - a four-door post sedan in green over green.   It is a nice car, but he rarely drives it.  It is a collectible?  Well, if it was a two-door two-tone, it might be more collectible. If a convertible, even more so.

Collectors are looking more for originality today, so if you yank the old "blue flame" six out of you Chevy and drop in a 383 crate motor, it isn't helping matters any.  If you could find a ragtop with the factory fuel injection (which most people removed, as it was so troublesome) you might be on to something.

As an "investment" though, an old car is not a very good deal.   You might have fun with it, and it might be a nice hobby to have, but you likely won't make money at it.  Most hobbies are this way.

If you look on Autotrader, you see nice '57 Chevies for sale for $30,000 to $89,000, which again are asking prices not sales prices.  According to Hagerty, which has to insure these things, the average value is about $34,000.   That seems like a lot of money, but bear in mind that is less than what you would pay to have one restored.   Even if you restored one yourself, you would likely spend more.

It is hard to tell what such a car cost new, as sites vary and it would depend on models and options, but most sites seem to suggest around $2000 for a new car back thenThat would be worth about $17,000 today, which makes these cars sound like a real bargain!  But that fails to account for the amount of money needed to restore such a car or maintain it over the years, or to pay for storage fees.   And of course, along the way, most of these depreciated down to nothing by the mid-1960's, which is when they were junked.

Collector cars are a great hobby, yes.   But don't kid yourself they are an investment strategy.

And this goes quadruple for the guy with the yard full of moldering rusted out cars.