Each December the venerable Hemmings Motor News publishes its list of five predictions for the coming year. 2018 certainly was an unpredictable year in the automotive industry and collector car world. From the record auction sales at Pebble Beach to Tesla launching a roadster into space, it was an unusual year. Hemmings made some bold predictions last year and the list for 2019 is thought-provoking. This year, TG adds our commentary in BOLD ITALICS to the Hemmings predictions for 2019. Read below for an industry roadmap of where we might be headed in the New Year.
Source: Hemmings Motor News, December 28th 2018:
We can’t remember a year — at least in recent memory — that we were happier to see in the rearview mirror than 2018. From an automotive news perspective, it was the “dog’s breakfast,” a partially digestible amalgam of scraps, with very few tasty bits. Time, then, to dust off the crystal ball, and peer into what we hope is a slightly more optimistic 2019.
In keeping with tradition, however, it’s first necessary to re-examine our predictions from 2018:
- Electric cars — including classic cars with electrified drivetrains — will become more commonplace. We’ll check the box in the “true” column for this one, despite the fact that battery-electric vehicles (BEVs) still represent a small minority of the vehicles on U.S. roads. Overseas, the push for electrification is already on, and with many cities poised to ban internal combustion vehicles from city centers, Jaguar and Aston Martin are now offering reversible electric variations on their classic cars. British firm RBW Classic Electric Cars will even build customers a new-body BEV MGB, Jaguar XKSS, or Jaguar C-type replica — for a price.
- Expect to see more museums close and more collections head to auction. Unfortunately, we were correct again with this one. Hostetler’s Hudson Museum in Shipshewana, Indiana, shut its doors permanently in February, and in August, the entire collection was sold off by Worldwide Auctioneers. Also in August, Dick’s Classic Car Garage in San Marcos, Texas, announced it was done at the end of the year, and many of its cars have already been sold by RM Sotheby’s (and sales from this collection will continue throughout 2019). On December 16, the Tupelo Automobile Museum in Tupelo, Mississippi, announced that it will close in April 2019, the 160 cars within to be sold in a special Bonhams’ auction. While larger museums with higher traffic remain safe for now, we’re seeing fewer turnovers in displays than in years past, and less promotion of new exhibits. As we advised last year, if you have a local car museum you love, now is the time to make a donation.
- Long-ignored cars will gain in appeal among a new generation of collectors. Love the term or hate it (and frankly, we see it as a term of endearment), Malaise-era automobiles are white-hot right now. While a COPO Camaro or Shelby G.T. 350 might not garner a second look at the local show and shine, a preserved or restored Pinto, Maverick, Gremlin, Pacer, Vega, or Monza will likely draw crowds. And then there’s Radwood, which celebrated cars of the ’80s and ’90s overlooked by “serious” collectors. How much is this segment poised to grow in 2019? RM Sotheby’s is offering the “Youngtimer Dream Garage Collection” of European and Japanese cars at several auctions in 2019, and we expect them to command eye-opening prices. We told you so last year.
- After five-plus decades of speculation, the mid-engine Corvette will become a reality in 2018, but we’re betting this will be a separate model and not a replacement of the C7. Looks like we were a bit premature with this one. A year (and hundreds of spy photos) later, we’re still awaiting an official announcement on the mid-engine Corvette, which sources say won’t come at the Detroit Auto Show in January. It’s real — at least in prototype form — and leaked images of key fobs even tease at a Cadillac version. With cars (including performance cars) on the decline, will GM bring two versions (or for that matter, even one) to market? Stay tuned.
- Motorcycles will continue to climb in value at auctions, even as ridership decreases.Another check in the “true” column for us with this one. In January, a land-speed record-setting 1951 Vincent sold at auction in Las Vegas for a record-setting $929,000, while in August a partially disassembled 1933 Brough Superior sold at a Stafford, England, auction for an impressive $203,043. Rare bikes are bringing ever increasing numbers, and auction firms appear to be broadening their catalogs, upping the number of lots to appeal to buyers in all income brackets. There are still no guarantees when it comes to investing in classic vehicles, but for those who ride, motorcycles may represent the smartest (and still affordable) investment.
Now that we’ve covered the looking-back bit, on to our predictions for 2019, including a few not directly tied to the collector-car hobby:
Cars (and trucks) of the 1970s-’90s will increase in popularity – and value – at auction.
While we’re still years away from a six-figure Cosworth Vega, GMC Jimmy, or Maverick Grabber at auction, the days of finding cheap and clean examples for pennies on the dollar are over. Remember that storage locker 300ZX you almost bought for $2,500 ten years ago? That’s probably a $7,500 car now, and it isn’t coming down in price any time soon. Blame it on a new generation of Generation X and Millennial collectors, for whom cars and trucks of the 1970s-’90s are relevant, desirable — and for the time being — relatively affordable.
DEMOGRAPHY IS DESTINY. EACH DAY ON BRING A TRAILER WE SEE STRONG BIDS FOR CARS FROM THIS ERA. VEHICLES FROM THE 70’S TO THE 90’S ARE AFFORDABLE, FUN, AND EVOKE FOND MEMORIES. TODAY THERE IS A LARGE DEMOGRAPHIC THAT COVETS THE DISCO DECADE AND NOW THEY ARE GROWN UP AND HAVE DISPOSABLE INCOME TO SPEND. WE AGREE WITH HEMMINGS HERE AND THINK VEHICLES FROM THESE DECADES WILL CONTINUE TO SEE STRONG BIDS FOR THE FORESEEABLE FUTURE.
ANOTHER FACTOR THAT IS ANYTHING BUT CLEAR—EVEN FIVE YEARS AGO WE DID NOT KNOW OR UNDERSTAND THAT THE ERA OF THE INTERNAL COMBUSION ENGINE MIGHT BE COMING TO A CLOSE SOONER THAN ANYONE ANTICIPATED. NOBODY KNOWS THE TIMING HERE, BUT IT SEEMS VERY PROBABLE THAT ELECTRIC MOTORS WILL CONTINUE TO GAIN IN POPULARITY AND MARKET SHARE. FROM A FULL-CYCLE PERSPECITVE (CRADLE TO THE GRAVE), IT IS NOT ENTIRELY CLEAR IF ELECTRIC VEHICLES ARE BETTER FOR THE ENVIRONMENT THAN TRADITIONAL INTERNAL COMBUSTION CARS. IF THE ADOPTION OF ELECTRIFICATION ACCELERATES, THE V12 MOTOR MAY BECOME EXTINCT. WILL EFFECIENT BI-TURBO V6 ENGINES EVENTUALLY BE DISPLACED BY SILENT ELECTRIC DRIVE? AS THIS TRANSITION OCCURS IT IS POSSIBLE THAT DEMAND FOR PETROLEUM-BASED CLASSIC CARS INCREASES BECAUSE THE FUTURE OF GASOLINE ENGINES IS COMING INTO QUESTION. ON THE OTHER HAND, MIGHT OUR COLLECTOR CARS BECOME AKIN TO FILM CAMERAS—FUN FOR A SMALL HOBBY NICHE BUT COMPLETELY USELESS TO THE MASSES THAT HAVE MOVED ON TO THE CONVENIENCE OF DIGITAL?
Cars of the 1960s will remain popular, keeping prices high, but the same can’t be said for cars of the 1940s-’50s.
According to Hagerty, Generation X and Millennials have surpassed Baby Boomers in shopping quotes for classic cars (despite the repeated — and incorrect — insistence that “this generation isn’t into cars”). The classic-car insurer cites the timeless styling of 1960s cars as the reason behind their continued appeal, even with younger buyers. We believe that this trend will continue, keeping prices of collector cars from this decade stable or even slightly elevated (though we doubt the stratospheric pricing once enjoyed by rare Mopar muscle will return). Don’t expect the same to ring true of cars from the 1950s and 1940s, which generally lack direct ties — and hence, an emotional appeal — to a younger generation of buyers.
CERTAIN IMPORTANT CARS FROM THE 60’S SHOULD CONTINUE TO SEE STRONG INTEREST WHILE 40’S AND 50’S CARS WILL INCREASINGLY STRUGGLE TO FIND A BID. LET’S FACE IT, EVERYONE WHO WANTS A 57′ CHEVY HAS ONE. THE DEMOGRAPHIC REALITY IS THAT DAMPENING DEMAND FOR CARS FROM THE 1950’S IS ACCELERATING. COLLECTOR INTEREST IS CLEARLY SHIFTING TO THE BURGEONING “YOUNGTIMER” ERA.
Look for more companies to offer battery-electric conversions for domestic performance cars – new and old.
Jaguar and Aston Martin may be onto something, and we suspect that more companies here will jump on the reversible electric drivetrain conversion bandwagon in the coming years. The key to its success will be the ability to return to internal combustion power, should a future buyer desire originality above all else. Companies may even engineer solutions for supplemental electric power, too, retaining the stock engine but adding more torque and horsepower via an electric motor or motors. Chevrolet is already toying with the idea of an electric crate motor, and performance-wise, this makes sense. While electric motors don’t make the noise we all know and love, they DO produce peak torque at zero rpm. Translated: A battery-powered performance car has the potential to press you back into your seat like nothing you’ve ever experienced when the fun pedal is mashed to the floor. Will it be to everyone’s taste? No, but internal combustion didn’t catch on overnight, either.
WHILE NOT YET A TREND, IT’S EASY TO IMAGINE THAT MORE ELECTRIC CONVERSIONS OF CLASSIC CARS WILL OCCUR IN THE FUTURE. TG SAW THE VINTAGE JAGUAR CONVERSION AT PEBBLE BEACH AND IT GENERATED PLENTY OF INTRIGUE AT THE QUAIL. WE ARE INCLINED TO VIEW ELECTRIFICATION OF CLASSIC CARS AS A DECADES-LONG TREND FOR SPECIAL CIRCUMSTANCES ONLY. MANY PURIST COLLECTORS WHO VALUE ORIGINALITY ARE UNLIKELY TO BE INTERESTED IN ELECTRIC CONVERSIONS.
On a similar note, electric car batteries could either get really cheap – or really expensive – in the coming year.
Every month, there seems to be some announcement about a potential breakthrough in energy density that will make batteries for electric cars (and other consumer products) cheaper and more robust. Eventually, it stands to reason that one of these predictions may come true, potentially reshaping the market overnight. On the other hand, rising demand for lithium-ion batteries (the type used in electric cars) has created a need for cobalt, essential to their production and typically mined as a byproduct to copper or nickel mining. Half the world’s cobalt currently comes from the Democratic Republic of the Congo, which in December declared the element a “strategic” substance, increasing the royalty rate for miners from 3.5 percent to 10 percent.
SURGING DEMAND FOR BATTERY-RELATED RAW MATERIALS IS ALREADY CREATING GLOBAL SUPPLY BOTTLENECKS. MOST RARE EARTHS COME FROM CHINA. COBALT COMES FROM THE CONGO. AS GLOBAL DEMAND GROWS FOR KEY RESOURCES THERE COULD BE INCREASING ECONOMIC, POLITICAL,AND SOCIAL TENSIONS AMONG NATIONS. HISTORICALLY, THE DESIRE TO CONTROL VALUABLE RESOURCES HAVE PLAYED A MAJOR ROLE IN IGNITING GLOBAL CONFLICTS. IT IS ALSO UNCLEAR IF ENOUGH RESOURCES CAN BE EXTRACTED IN A VIABLE WAY TO SUPPLY FUTURE GLOBAL DEMAND FOR BATTERIES.
Fuel prices and interest rates will continue to rise, impacting disposable income.
Though prices differ significantly by location, today most of us are enjoying relatively cheap gas, at least in the grand scheme of things. This fall, the state of North Dakota surpassed the country of Venezuela as a crude oil producer, which (in theory) makes us less dependent upon external sources for petroleum. There’s also a glut of crude oil on the market at the moment, which has prompted OPEC to slash production by 800,000 barrels per day over the next six months. In the event of a supply disruption, this could have a significant impact on pricing at the pump (which seems to rise independently of external triggers as well).
As for interest rates, predictions are that the Federal Reserve will raise interest rates three times by mid-year 2019, making financing of homes, vehicles, and businesses more costly. As borrowed money gets more expensive, look for more mid-tier classic cars (say, those priced below $100,000) to cross the auction block as owners divest of assets. Factor in the current volatility of the stock market, and things have the potential to get really exciting in the coming year.
IN 2018 OIL PRODUCTION IN THE UNITED STATES GREW BY 25%. AMERICA IS NOW THE LARGEST PRODUCER OF OIL IN THE WORLD! TEN YEARS AGO NOBODY WOULD HAVE BELIEVED THIS STATEMENT. BOTH RUSSIA AND SAUDI ARABIA NOW LAG BEHIND U.S. PRODUCTION. OVER THE NEXT YEAR IT APPEARS MORE LIKELY THAT THE FED PAUSES ON RATE HIKES AND OIL PRICES STAY CLOSE TO THE $50/BARREL RANGE.
As sponsorship dollars evaporate and the fan base declines, professional motorsports series will face a challenging future.
Ask a dozen racing fans what’s wrong with their sport today, and you’ll likely get a dozen different answers. Ask team owners (and drivers) the same question, and the common response will be “It’s getting harder and harder to attract big-dollar sponsors, yet the cost of staying competitive goes up every year.” To which promoters and track owners will add, “It’s not getting any easier to fill seats, either.” The reasons why are many and varied, but it ultimately comes down to money. Sponsors expect a return on investment, and with fewer fans and viewers each year, it gets increasingly difficult to justify paying six-plus figures to paint your name on a car. Fans often have less discretionary income than in years past, but ticket and hotel prices haven’t dropped in response. And then there’s the issue of the racing itself: Rule changes meant to make races more interesting in NASCAR have done the opposite, particularly the contrived “competition cautions” that turn a single race into stages. One could argue that Indy Car serves up a variety of winning teams and drivers, not to mention exciting wheel-to-wheel racing, but long-time fans are opposed to the spec-racer rules that mandate a common chassis and just two engine choices.
Can anything be done to save racing here in North America? We’re not sure that anyone has the answer to that, but the first step is to recognize you have a problem. NASCAR, IndyCar, and the NHRA — we’re looking at you.
WHILE FORMULA ONE REMAINS VERY POPULAR, COSTS FOR RACING ARE SPIRALING AT ALL LEVELS. TODAY’S SPONSORS HAVE A LOT OF OPTIONS WHERE TO SPEND THEIR ADVERTISING DOLLAR. FEWER FANS MEANS LESS POTENTIAL REVENUE AND EYEBALLS FOR SPONSORS. WE SEE FORMULA ONE GAINING INTEREST WHILE NASCAR AND INDYCAR HAS AN ONGOING UPHILL BATTLE.
The current myopic focus on autonomous cars will prove costly for certain automakers.
Wall Street and Silicon Valley would like us to believe that “autonomous cars” are just around the corner, but here’s our take: Level 5, fully autonomous cars are years — and quite possibly decades — away from deployment on a broad, coast-to-coast scale. Sure, many of today’s high-end cars offer some degree of autonomy, but under what circumstances? Bumper-to-bumper rush-hour traffic on the 405 is one thing, but perfecting the technology to navigate Vermont’s dirt roads — at night, in a blizzard — is something else entirely. Along the way, there will be setbacks in development, such as the fatal crashes involving Uber’s Level 3 “self-driving” car and Tesla’s Level 2 Autopilot, tied to two deaths in the U.S. and one in China. Recent press releases from Ford and GM paint a different picture, letting investors know that they’re on the bleeding edge of autonomous car development. It’s a shell game, and one being played at the expense of product. History has shown this to be a financially devastating mistake, and one that both automakers stand poised to repeat.
IT WILL TAKE DECADES FOR AUTONOMOUS VEHICLES TO REPLACE HUMAN DRIVERS. THE SLUGGISH PACE OF CHANGE MAY BE MORE RELATED TO SOCIAL ADOPTION THAN TO TECHNOLOGICAL LIMITS. HOWEVER, TESLA’S AUTOPILOT AND MERCEDES’ DISTRONIC PLUS ARE AN INCREDIBLE WINDOW AS TO WHERE AUTONOMY IS HEADED. THE NEAR TERM FUTURE WILL SEE HUGE IMPROVEMENTS IN ASSISTED AUTONOMY THAT WILL BE VERY HELPFUL IS ELIMINATING REAR END COLLISIONS AND MAKING MUNDANE TRAFFIC ACCIDENTS A THING OF THE PAST. OVER THE NEXT FIVE YEARS WE WILL SEE SPECTACULAR BREAKTHROUGHS IN ASSISTED AUTONOMOUS DRIVING AND A GRADUAL ADOPTION BY THE PUBLIC AND WORLD GOVERNMENTS. LIKE SEAT BELTS, 5MPH BUMPERS, AND AIRBAGS, EVENTUALLY, MAJOR FUNCTIONS OF ASSISTED AUTONOMY WILL BE MANDATED BY GOVERNMENTS.
Look for used-car prices to spike as interest rates and sticker prices climb.
There’s no denying that the current range of new cars is safer than any produced in the past. Features like radar adaptive cruise control, automatic braking, cross traffic warning, and lane departure intervention have indeed reduced accidents, but they’ve also driven the cost — and complexity — of new cars into the stratosphere. For those of us who don’t want such features, the only answer may soon be “buy used,” and when enough consumers follow this trend, prices for clean and serviceable used cars will rise accordingly.
WE WOULD AGREE THAT USED CAR PRICES WILL STAY FIRM, BUT IT WON’T BE BECAUSE OF RISING RATES. FOR THE MOST PART, NEW CARS ARE JUST A TERRIBLE INVESTMENT. EXPENSIVE NEW CARS FACE A VERY STEEP DEPRECIATION CURVE. AT LESS THAN HALF THE PRICE OF A NEW ONE, WHAT IS WRONG WITH A LOW-MILEAGE THREE-YEAR-OLD CAR THAT HAS A 5-YEAR WARRANTY? AS AN EXAMPLE, A THREE-YEAR-OLD MERCEDES S-CLASS WILL HAVE MORE HORSEPOWER THAN YOU WILL KNOW WHAT TO DO WITH AND WILL ALSO INCLUDE BLUETOOTH, NAVIGATION, SATELLITE RADIO, MASSAGING SEATS, AUTONOMOUS FEATURES, AND A DOZEN AIRBAGS.