New cars are becoming more and more expensive. Is this good or bad for classic cars?
12/07/2022
It's no longer entirely new. The price of the average new car has risen significantly in recent years, more than wages, more than many other things. The reasons are supply difficulties, inflation, material shortages, coronavirus and many more. The increasing spread of electric cars seems to be exacerbating the problem, as these vehicles are priced significantly higher than their predecessors with combustion engines.
There is little the consumer can do to change this, some people are probably waiting to buy, others are switching to used cars. But even these have become more expensive, almost in step with new cars.
This raises the question of how more expensive new cars will affect classic car prices now and in the future. And there is a whole range of factors to consider here. Experience shows that classic car prices are definitely linked to the former new car prices; after all, a Ferrari also costs more as a classic car because it was already more expensive as a new car. It can therefore be assumed that classic car prices in 30 years' time will also benefit from today's price increases.
Because there is a certain interaction between price level and demand, the lower supply of new cars at present is also likely to mean that fewer cars from the 2021 and 2022 vintage years will ever become classic cars than from earlier vintage years. The future shortage, in turn, will have a positive effect on the price level one day.
However, because today's cars will be kept for longer and possibly also used up more if people cannot afford a new car, more modern vehicles (i.e. those built after 2000) will never reach classic car age. This will further reduce the supply in the future, which in turn will have a positive impact on value development.
It therefore appears that the price increases for new cars will have an overall positive effect on the value development of old cars. However, this is not an advantage for future classic car buyers, as they will have to pay more for their dream car one day.
P.S. How suitable today's cars are for long-term ownership is a different topic and should not be discussed here.
