Playing the game of “Nice Price or Crack Pipe?” when it comes to buying something like a vintage car is a favourite pastime among enthusiasts. However, as the pandemic has upended everyone’s plans, some car buyers are now hoping for deals galore.
Whether or not this is the time to pounce on that sweet summer ride hinges on several factors.
Are dealerships hurting? In terms of sheer volume, Canadian auto sales went from 96,147 units in March of 2020 to just 47,168 in April. Compared to April 2019, that represents a drop off of 74.6 percent.
Manufacturers are responding with generous incentives on new cars. But the disruption to the supply chain has raised doubts about fire-sale prices (ala 2008 recession) arriving soon, especially on new cars.
With summer here, many are also probing the used market. Trying to score a deal on the cherished Honda S2000, for instance.
A search on Kijiji reveals a decent amount of inventory for the sporty, two-door roadster that was manufactured for 11 years between 1999 and 2009. However, asking prices are still steadily creeping up, especially for low-mileage examples.
Image source: Neil Kelly, Pixels
There is a theory that cars can be an investment, especially as we are entering an economic slowdown with low interest rates. Raw data provides a different conclusion.
Economists Luc Renneboog and Dries Laurs at Tilburg University in the Netherlands pegged gross returns from 29,000 classic and vintage cars sold between 1998 and 2015 at 5.6 percent. After factoring in inflation, the return shrunk to just 3.4 percent.
Of course, the wildcard in all of this speculation is the type of economic recovery Canada makes in the fall. It is known that the 2008 recession led to a decline in several years of gains in the collectible car market. CERB eventually will come to an end. An increasing numbers of mortgage foreclosures may force a greater number of people to part with their weekend toys. The necessity of a quick sale can soften the firmness of “I know what I got.”
Furthermore, increased volume, even for rarer models, will only further drive prices down. Buyers will have a comparison point to anchor their offers.
But none of this has happened yet.
Image source: Shukhrat Umarov, Pixels
The question for vintage car enthusiasts still remains, though. Is now the time to spring for the Pontiac Trans Am that you’ve been coveting ever since watching Burt Reynolds and David Hasselhoff zip them down the highway?
A nostalgia-tinged V8 muscle car would be a nice way to distract from the sorry state of the world during these trying times. Sellers also won’t be looking forward to holding onto their inventory into the off-season, which may give buyers some room to negotiate.
The ultimate goal for used vintage car buyers – for any market segment – needs to be about condition. If one is able to get a pre-purchase inspection done and there are no red flags, the vehicle that has a higher sticker price ends up saving money and headaches in the long run. Take your time when looking around. But be ready to snap up a good thing when you see it.
Image source: Clem Onojeghuo, Pexels
Finally, life is short. If you want that air-cooled Porsche 911, go out and buy it today. Don’t worry about whether it will appreciate in value or whether aliens will invade next month and tank the market. Enjoy everything you have right now, because nothing lasts forever.
TOP IMAGE: KAIQUE ROCHA, PEXELS