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Market: Q1 Results Analysed

As Q1 concludes we've analysed the numbers to see what we can infer from the first 3 months of the year for what the future might hold.

Let's start at the top.

How are Q1 classic car prices shaping up vs previous years?

Median Classic Car Prices Since 2020, Q1 Data | Source: The Classic Valuer
Median Classic Car Prices Since 2020, Q1 Data | Source: The Classic Valuer

This graph shows the median price of classic cars sold in Q1, between 2020 and 2023.

As Q1 draws to a close the median price of a classic car stands 15.5% above where it did a year ago, 27.4% above where it did in Q1 2021 and 17.2% above where prices were in Q1 2020.

So, what's causing these prices rises? Multiple reasons, let's talk about two.

Firstly, the volume of cars coming to market is down 12% on the year before. Less supply, higher prices.

Secondarily, fears, rightly or wrongly, of an impending recession. Classic car prices tend to do well in periods of financial difficulty. The 2008 financial crisis was a prime example. Between 2007 and 2010, prices rose by 76% over that period before falling away afterwards.

Takeaway: Prices are stronger than they've been at any point in recent years

How have prices changed by price point?

Price Growth vs. Price Point (2020/21 vs 2022/23) Q1 Data | Source: The Classic Valuer
Price Growth by Price Point (2020/21 vs 2022/23), Q1 Data | Source: The Classic Valuer

Very good question, glad you asked.

The above chart maps the number of vehicles selling within certain price bandings and between the years 2020/21 combined and 2022/23 combined (years are combined to boost the volume of results and therefore confidence levels).

The strongest performer is the £250,001 - £500,000 band, with 5.5% more cars selling in this band between the two periods.

The weakest performers here are the £0 - £5,000 and £500,001 - £1,000,000 bands, down 5.9% and 4.7% respectively. Note: sample sizes are naturally smaller at the extremities of the price bandings so take it with a pinch of salt.

Takeaway: The vehicles at the price extremities are struggling, if you're playing in the core classic car space (£5,001 - £500,00) the picture is one of growth.

How have prices changed by decade?

Price Change By Decade 2018/19 vs 2021/22, Full Year Data | Source: The Classic Valuer
Price Change By Decade (2018/19 vs 2021/22), Full Year Data | Source: The Classic Valuer

Those who follow our content regularly will be familiar with the above graph, we call it "the wave". This shows price changes for cars from different decades. It is without doubt the most important graph when it comes to classic car prices, the above graph is looking at the data across the full year. Below is looking at Q1 prices only.

Let's start with the top graph showing the median price change of vehicles from each decade between the 30s and the 90s between 2018/19 and 2021/22. In other words, over a 3/4 year period what has happened to the prices of cars from each decade.

We know from analysing over £10 billion of sales from the last 20 years that this wave has existed for decades and will continue into the future. The change over that period is simple: it's shifting to the right.

To put it another way, this graph represents the generational shift in classic car collector demographics and preferences that gradually moves to increasingly modern vehicles. It's part of the reason certain pre-war cars have struggled, exemplified here by cars of the 30s being down 29% over the period.

The cars from the 40s and 50s are following closely behind and the data tell us they are due to suffer the same fate as those from the 30s.

Inversely, the 70s cars have been incredibly strong over the period, up 23%.

Again, the cars from the 80s and 90s are following on closely behind and the data again indicates that these vehicles are likely to see prices rises akin to their 70s counterparts over the coming years.

So, what does the data from Q1 tell us in this regard?

Price Change By Decade (2020/21 vs 2022/23), Q1 Data | Source: The Classic Valuer
Price Change By Decade (2020/21 vs 2022/23), Q1 Data | Source: The Classic Valuer

It shows a slightly irregular wave but the key trends remain.

Those vehicles from the 60s onwards are making positive price movements.

Those vehicles from the 50s backwards are (40s aside) making negative price movements, with 30s the weakest of the bunch once again.

Takeaway: This trend will continue. I repeat, this trend will continue.

How is the level of demand in the market?

Sell-Through Rate, Q1 Data | Source: The Classic Valuer
Sell-Through Rate, Q1 Data | Source: The Classic Valuer

To assess level of demand for an asset like classic cars is tough. There are two key metrics which we use to track it.

Firstly, the traditional, sell-through rate. Simply, the percentage of vehicles that go to auction and sell. It has its flaws, over-enthusiastic estimates from auction houses or pessimistic estimates or no reserve sales can skew the figure either way not to mention multiple variables like auction location, conditions etc. We can still draw conclusions though.

Over the past few years the sell-through rate has been fluctuating in and round the 70s for the past 4 years aside from a Covid induced drop in 2020. Across that period, when looking at the full year data, there's an overall downward trend on the sell-through rate of 1 percentage point per annum.

However, when looking at the sell-through rate during Q1 only (see graph above) the picture is slightly more rosy. The sell-through rate in Q1 this year was 71%, that's down vs the previous two years but up from the 67% of 2020, albeit influenced by covid factors.

Applying a trend line across this data, the sell-through rate is very slightly up: +0.5% per annum over the period.

Secondarily, demand can also be assessed more creatively. You can track the level of internet searches for terms relating to classic cars. The below chart tracks the relative number of times the topic "classic car" is searched for on Google.

Note: this is the topic overall not specifically the search term "classic car". That's important as it means it's inclusive of a far broader set of terms than just "classic car" on its own.

Relative Search Volume For The Topic "Classic Car" | Source: Google Trends
Relative Search Volume For The Topic "Classic Car" | Source: Google Trends

There are two interesting things to note with this graph.

Firstly, that demand is falling based on this metric, down on average 6.6% per annum and that trend is accelerating. This is visualised through the trend line falling at a steeper rate in the past 12 months.

Secondarily, is the consistent pattern at the beginning of each year where search demand picks up as winter concludes and spring emerges in Europe and with that classic cars emerging from their hibernation.

Takeaway: Despite positive signals in Q1, our wider analysis including the full year data indicates demand is trending downwards.

Hope you got a nugget or two out of that.

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