Despite a slow start to the 2020 classic car season due to a fairly flat economy and the onslaught of COVID, the market eventually picked up, as enthusiasts and collectors embraced the upswing in online auction activity. The Government’s financial assistance packages benefitted many car-buying budgets, not to mention the extra spare time some people had on their hands due to furlough schemes.
These factors and a lower supply of high-quality vehicles helped to support market conditions through 2020, as buyers looked for classics that could help tick some bucket lists and investors sought other ways to beat dire economic forecasts.
Auction houses had already reported a modest uplift in classic car prices in late 2019 and this was further encouraged by better trading through the second half of 2020, mainly due to low supply. Assuming the economic picture FOR CLASSIC CAR INVESTORS (and this is a very important caveat) remains relatively stable, my early forecast for 2021 is more of the same.
Supply remains tight and this is not all due to COVID. With returns still low in traditional investment schemes, investors who do not face economic stress in 2021 will keep their favourite favourites for the long haul and this will keep the best opportunities in low supply. Supply may be affected should blue-collar enthusiasts enter choppy financial waters, but this is by no means a certainty. I expect the supply of desirable cars to sit fairly static.
One new factor to consider will be the effect of Brexit: how might cross-border purchases be affected by the new rules and will fewer European buyers in the UK markets (due to potential changes in currency rates and access constraints) have an effect on selling prices? Will more challenging EU market access for UK classic car buyers – so used to bringing cars across the Channel with little or no paperwork to complete and no tax to pay – compel them to buy at home? This is something worth watching.
For now, my opinion is that low UK supply will continue to support the domestic market for desirable affordable classics, with the “modern classic” market carrying its strong 2020 momentum into the new season. Classics in the very best condition should also have a reasonable year, but high restoration costs and a lack of skilled classic specialists could mean that older cars and vintage models find the market slightly tougher going.