You may want to rethink sinking your cash into a classic car purchase. Although the market for collectable cars consistently increased in the past — rising 17 percent in 2015, more than any other luxury assets — sales seem to be driving towards a yellow light, according to the Knight Frank Luxury Investment Index.
Other signs point to the same road: The HAGI Top index from the Historic Automobile Group International, which tracks the market for classic cars, accelerated by a mere 2.21 percent from the start of the year to July. And the HAGI P index, which measures the market for rare Porsches, actually dropped by 2.61 percent in the same time period.
Auction sales also seem to be decelerating as evidenced by Scottsdale — the U.S.’s largest auto auction by volume — falling by 15 percent to $251 million in January, marking the first drop in sales since 2010.
“For certain areas in the classic car world, you could say so (the market is decelerating),” Tim Schofield, Bonhams U.K. head of cars, told CNBC on Tuesday.
Investors seem to be pumping their brakes on classic auto purchases because of fears there will be an interest rate hike by the U.S. Federal Reserve and a downtown in global liquidity.
Those still in the car buying game are becoming pickier, concentrating more on provenance, rarity and condition of automobiles.
“I think lots of modern motor manufacturers are now realizing that low-volume motor cars, low numbers, with some very nice additions and accoutrements, special engines, special finish, special bodies by bespoke coach makers, are now highly prized and you’ll see in the likes of Aston Martin, Ferrari et cetera producing very low-volume motor cars that are filling that void,” Schofield told CNBC.