As close to 76 million baby boomers reach retirement age, the classic car enthusiasts among them are looking to cash in on the hobby they hold so near and dear to their hearts.
As close to 76 million baby boomers reach retirement age, the classic car enthusiasts among them are looking to cash in on the hobby they hold so near and dear to their hearts. The hobby born out of love, nostalgia and enthusiasm is now seeing a shift towards the next generation of owners and modern-day cars. As interest in the older classics wanes, values are beginning to fall—leaving some to wonder: Where the market will go next?
“A lot of baby boomers are leaving the market and cashing in on their collections for retirement income or just to do something else with their money," says Brook McGuire, strategy lead for specialty products at Safeco.
“They want to sell their collection and, in their mind, their car is worth three times more than anybody else's car. But the valuation for some vehicles is coming down and this is largely based on the baby boomer-era collectors who are selling off some or all of their collection," McGuire says. “Suddenly there is a lot of supply in the market and that's driving prices down for a lot of vehicles that, frankly, have probably been a little overvalued."
Paul Morrisette, senior vice president at Chubb, agrees that the values of classic cars are in a transitional period right now. “Limited production models with documented history and provenance continue to hold their value, although resale values of other cars are decreasing," Morrisette says.
As baby boomers move closer to retirement age, “what people collect and what they actually value is shifting," says Jack Butcher, senior vice president at Hagerty. “People tend to collect the cars they grew up with, or have some special memory around," he says. But as Generation X and millennial car enthusiasts enter the collector's market they are not looking for a '32 Packard classic or a '57 Bel Air and don't want to maintain a collection of older vehicles.
As premiums remain stable for the classic car market, valuations are falling for the older traditionally defined classic car and new valuations and premium rates are being developed for the new collector cars.
“Modern-day collector cars and trucks, including new Camaros, Corvettes, Mustangs, Challengers and more are the future of the hobby," says Rick Drewry, senior specialist of claims, learning & development at American Modern.
“It's not just about antique, classic or collector vehicles that are 25 years or older anymore, it's about any enthusiast vehicles or any fun-to-drive vehicles. I think there's a ton of opportunity for agents here," says Barbara LeMieux, vice president of underwriting at Hagerty.
Butcher described how a late 2000 Honda Civic “which at retail value might go for the high $20,000's was recently sold to a collector for over $50,000. So, you can see just like other collections, whether it's jewelry, wines, whiskey, guns or watches, these things can go up in value depending on the vehicle."
In general, “the demographics of classic car owners is shifting as they're coming to market and they have their own ideas of what a classic car looks like," adds McGuire. “The ones that they grew up with in the late eighties, through the early 2000's—Mustangs, Corvettes, Camaros—are still popular as always, but they're bringing things like SUVs, Jeep Cherokees, Toyota FJ Cruisers, Broncos and the old Blazer Silverados. They love the Toyota Supra, the Mitsubishi 3000 GT and they like the Mazda Miata and the Honda 2000—those are all gaining in popularity and gaining value, which is exciting."
Classic car collecting as a hobby is not fading away, but is rather shifting in line with the buying generation. While baby boomers are selling off their classic car collections, the cars they have kept in garages under a car cover and drove on a sunny Sunday afternoon, the new generation of collectors are “opting more for experiences with their cars, like tours, even international tours," Butcher says. “Some folks actually get into amateur motorsports where they're getting track time with their car, while others are becoming members of automotive country clubs that are beginning to pop up around the country."
Olivia Overman is IA content editor.