OK, let’s be honest. Many of you looked sideways when I opined (with data and informed insight) that used cars and trucks may be amongst the most intelligent investments during these tumultuous, financial times.
Guess what. I was right (again).
Per a study that was released today via Classic.com, the top ten vehicle types ranged from a 58% return on investment (ROI) to a whopping 95% since June 30, 2021. To put that in perspective, the S&P 500 is down from $4395.26 to $3818.83 (-13%) and the NASDAQ is down from $14,503.95 to $11,177.89 (-23%). Even the U.S. housing market which experienced a 16% increase in median sales price from Q1-2021 to Q2-2022 will not fair as well in the coming months due to hikes in the mortgage rate (e.g., Capital Economic projects a 5% decline in values by mid-2023). To once again highlight the stark difference, the 100th best vehicle segment identified by Classic.com, the Porsche 911 Carrera 4 Coupe – 993 (years 1995 to 1997), still provided a 26% ROI.
The biggest reason for the explosion: online auctions. Just like Zillow for real estate, Classic.com tracks vehicle listing prices, sales prices, locations, etc. for collector cars to utilitarian vehicles in both auctions and dealer sales. In the first half of 2021, 17,369 vehicles were auctioned online totaling $589.4M and during the comparable period in 2022 both of those figures went up 50-70% (28,904 vehicles for $920.6M). “We’re seeing four factors driving this growth,” states Juan Diego Calle, the CEO of Classic.com. “The first is definitely a favorable economy. The second has been the reduced availability of used cars due to the supply shortages on new vehicles. The third is the proliferation of online auctions, which has exploded since the start of the pandemic. People couldn’t buy vehicles at dealers, so they got comfortable with the accessibility and transparency of purchasing cars online. And the fourth is a generational shift: we’re starting to see a large group of buyers in their 40’s and 50’s with disposable income, looking for a fun car from the 80’s or 90’s. They want cars to be enjoyed, not just collectibles.”
That said, even auctions outside of the internet have jumped significantly. In the first half of 2021, the total across all live and online auctions was $1.2B (for 31,098 vehicles). Comparatively in the first half of 2022, all auctions soared to $2.2B (for nearly 45,000 vehicles) with one Mercedes-Benz going for a staggering $142.3M USD. Additionally, dealers began to understand the new marketplace for live purchases, which added to the auction numbers to create these incredible returns.
The Top Ten
The best performing vehicle types over the past twelve months were a mix of exotic vehicles, classic cars and utilitarian retro vehicles.
They were as follows:
1. Mercedes-Benz 200SE-W126 (1986 – 1991) 95% ROI
2. GMC Typhoon (1992 to 1993) 83% ROI
3. Porsche Carrera GT
4. Porsche 928 – Base Model, Automatic (1978 to 1982) 77% ROI
5. BMW 633CSi – Manual, E24 (1978 to 1984) 73% ROI
6. BMW 540i – E34 (1992 to 1996) 72% ROI
7. Mini Cooper S Convertible – 1st Gen (2005 to 2008) 71% ROI
8. BMW 535is – E28 (1987 to 1988) 62% ROI
9. Honda S200 CR – AP2 (2007 to 2009) 59% ROI
10. BMW M6 Convertible – Manual (2007 to 2010) 58% ROI
The Worst Ten
Shockingly there were only 75 vehicle types that lost value in the past twelve months. Arguably, these might be places to find value going forward (i.e., “buy low, sell high”):
1. MG TD (1950 to 1953) -18% ROI
2. Mercedes-Benz 230SL Pagoda (1963 to 1967) -16% ROI
3. BMW M5 – E39 (1999 to 2003) -15% ROI
4. Mercedes-Benz SLK230 Kompressor, R170 (1997 to 2004) -15% ROI
5. Lincoln Premiere – 1st Gen (1955 to 1957) -14% ROI
6. Mercedes-Benz E250 – A207 (2010 to 2017) -14% ROI
7. BMW 635CSi – Manual, E24 (1979 to 1989) -12% ROI
8. Mercedes-Benz 300SL – R107 (1985 to 1989) -11% ROI
9. Mercedes-Benz SL55 AMG – R230 (2003 to 2008) -11% ROI
10. Nissan Datsun 240Z (1970 to 1973) -11% ROI