Been Down So Long it Looks Like Up to Me

Been Down So Long It Looks Like Up to Me

By: Mike Sheehan

For several decades exotic and collector cars have been both a barometer of, and an over-reaction to world economic and social conditions. Pounded by high tax socialist government in the 1970?s, the English used collector cars as a hedge against high taxes, high inflation, and as a place to "park" very mobile money. Meanwhile the Italians, under siege by Red Brigade terrorists, used exotic cars as an effective way to take money out of Italy. You couldn?t legally take money out of Italy but, in the guise of a antique or collector car, you could drive it across the border into Switzerland.

In the late 80?s car collecting reached a fever pitch for a multitude of unique and concurrent reasons. Thanks to the fax machine there was, for the first time, an instant world wide market. The newly rich Japanese, with a very strong "yen", entered the market for the first time. Several million American, European and Japanese baby boomers and yuppies simultaneously reached their 40?s, their "middle aged crazies", all while the world overindulged in an orgy of bank liquidity and loose money. If you had a pulse, you could borrow money! All this fed an orgy of speculation.

Owning and/or trading in collector cars was a license to print money. Speculators who didn?t know an Aston Martin from an Ambulance or a Ferrari from a fire engine were doubling their money literally overnight while long term enthusiasts looked on in horror. The frenzy lasted four years, from mid-1986 to December 1989, and then came the fall. Collector car "values" dropped by a staggering seventy five percent in most cases.

All markets have a peak, all markets have a bottom; both usually only visible in hindsight. The collector car "market" is now "oversold!" Any market, whether it be gold, soybeans, real estate, or Ferraris can only be described as oversold when the prices drop a full seventy five percent from their peaks.

The ultimate example was a 1963 Ferrari 250 GTO, sold by the author?s company to a Japanese collector in November 1989 for the highest price ever paid for a Ferrari, a staggering $13,750,000 US Dollars. This Ferrari was resold by the Japanese owner in September 1994 for $3,300,000, a $10 million loss!

Now, almost five full years after the peak, the bottom is near and rationality has returned. The "market" is slowly returning to stability again - at far more realistic prices.

The collector car market is beginning to bounce back in the U.S. and Germany. Wealthy Mexicans have entered the market with a vengeance and are the largest new group in the market today. Collector car sales in Japan and England are still, shall we say, "in the water closet." The following cars are well documented examples of what has happened to actual selling prices of various collector cars over the past five years, and illustrates models that are a good value for the money and are selling well today.

Car	1989 Price	1994 Price
Aston DB6 "Vantage"	$125,000	$40,000
Bentley Continental	$400,000	$125,000