When you have a breakout year, you have to back it up.
Professional sportsmen will tell you it's difficult. Expectations are higher. The attention is greater. The pressure is more intense.
That's the issue facing the classic car market right now, just a day before the sector emerges from its winter break with a major week of classic car auctions in Scottsdale.
Any classic car collector with an interest in the value of his garage will be focusing their attention on Arizona, with just one question in mind:
"Can values continue to rise?".
2013 was a stellar year.
Hagerty posted a 37.4% increase in value for its index of blue chip classic cars in 2013.
The HAGI classic car index rose by 46.7% last year.
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We also saw new records for the most valuable car at auction, set at $29.6m by a 1954 Mercedes W196, as well as the most valuable car ever sold - achieved by a 1963 Ferrari 250 GTO, which made $52m.
The figures have caused many to question whether this is a bubble waiting to explode, like the Bordeaux wine sector in 2012.
I don't think it's a bubble. Yet, I also believe that the 37% and 46% gains posted by those two headline indexes will not be repeated. That kind of growth is exceptional and unsustainable.
I'm anticipating growth will return to around the 9.2% pa gains seen between 2009 and 2012, as recorded by Hagerty.
Why isn't this a bubble?
Several reasons:
· Classic cars have a large global collector base. That's because the sector is the epitome of the high-end collectible investment. Classic cars enable high net worth individuals to store and grow their wealth while enjoying that wealth at the same time. This isn't going to change.
· The auctioneers are targeting the top end collector like never before. Just look at Sotheby's and RM Auctions' Art of the Automobile sale in New York in November - which touted cars as works of art to a wealthy clientele who perhaps had never considered buying a classic motor before.
· Chinese money is yet to arrive. China's prohibitive import laws on classic cars discourage many of the country's increasingly wealthy inhabitants from entering the sector. However, there are signs that China is set to relax its rules. When that happens, values will surge. Then we might have a bubble on our hands…
Scottsdale is going to be a great early barometer for 2014. And it all gets underway tomorrow. You can read previews of the Scottsdale auctions in our classic cars section, where you will also find the results as they happen.
Thanks for reading,
Paul
P.S Have you seen our Paul Newman-worn racing jacket for sale?