You're looking at a 1970 Dodge Challenger R/T SE that sold at the August 13th Mecum Auction in Monterey for $45,000. As the owner of a 1970 Dodge Challenger R/T SE I watched this auction very carefully. It's not everyday you get to see a real-world example of how the market values a car nearly identical to the one in your garage.
In this case I was happily surprised by the result. The above car was clearly restored, though I spotted a few minor flaws after only a quick glance, and probably could have found more if I'd really dug in. It had a 440 engine (same as my car) and was also a "high impact" color (Sub-Lime in this case, versus Plum Crazy for mine).
So at first glance the cars are quite comparable, suggesting my car is worth roughly $45,000. However, there are some key differences between the two. First, this car was restored while mine is almost 100 percent original. That means my Challenger doesn't look as clean as the Mecum car, but originality has its own value that often trumps the condition of the paint or interior.
Also, while this car was the SE (Special Edition) model, and while it had a 440 engine, it was otherwise pretty lean on options. No air conditioning. No AM/FM radio. No rear defrost. No rim-blow steering wheel. My car has all of those because it was originally a dealer demo car, loaded up to encourage showroom shoppers to order more options for their cars.
I'm not sure what my car would have brought at this auction, though I'd like to think it would be a higher price. However, even if I sold it for $45,000 at Mecum two weeks ago my original investment in the Challenger ($40,000 in Spring of 2006) has done better than it would have in the stock market (Dow at 11,279 on March 24, 2006).
I've talked about the muscle car market versus the stock market several times over the past 10 years. In fact, I've been writing about it long enough to have perspectives on when both were waaay up and when both were crashing down. That's why this Challenger's sale was so interesting to me. We're basically in-between those two stages right now, and while the collector car market isn't back to its heights of a few years ago I feel it's doing better than the stock market. I expected this car to top out around $35,000 (maybe $40,000 at best).
I watched plenty of other cars during this auction and would describe the bulk of them in a similar manner -- hitting prices I wouldn't have expected. Now maybe some folks would say the same of the Dow, "You know, I just didn't think the Dow would be struggling to stay above 10,000 in August 2010. It's really doing well!" But I get the impression most people (certainly most people highly invested in the market) don't feel that way right now...
Remember (as I've said probably too many times for some of you) the only reason for investing in stocks is to make money. If you don't, it's a completely pointless (and potentially costly) excercise. With collector cars you might very well make money if you know what to buy and sell and when to buy and sell it. But even if you don't, you still get to own and drive a collector car versus owning and...well, I guess looking at stock reports.
I should mention I was in the stock market from May 2009 to May 2010, and actually did quite well. Then I hit all my sell order prices as the market started tanking again, and jumped back out while still well in the black. So I'm not suggesting the stock market is never a good idea.
But I guess the timing for traditional investing is far more critical to me than the timing for muscle car investing, as I don't have the patience to wait years and years for a theoretical paper payoff that may never come. Not when I could be enjoying a material item that pays real-world dividends -- even when its value isn't going up.
By opfreakx
on August 31, 2010
05:14 AM
This stupidity again? dont you ever learn.
For example, that material thing you can use every day... the more you use it, the less its worth. So to get the most value you have to not use the item. But you have to continue to pay for matinace, storage insurance, plates, stickers, regestration.
sometimes you are so blind.
By 7driver
on August 31, 2010
07:24 AM
I'll bet there's a huge difference in commission costs between selling at Mecum and selling at eTrade.
Also, you can make money when the stock market goes up and you can make money when the stock market goes down (google "ProShares UltraPro Short ETF"). I'm still trying to figure out how to make money when the muscle car market goes down (real estate market, too).
By andrew717
on August 31, 2010
07:52 AM
I'm in institutional investments, and one of my client foundations also has a portfolio of "collectibles" including art, baseball cards, and cars, in addition to more traditional mutual funds, hedge funds, etc. I don't run that portfolio but I hear about it from time to time, mostly when we're moving cash to or from it to what I do manage. It is a very small part of the overall pool, but if you have someone with a knack for it you can get good returns and a bit more diversification. I'm not saying clean out your 401(k) and buy an old muscle car, but it isn't completely insane in the context of proper diversification. Most people have most of their wealth invested in a single item as it is. They live there.
By blueguydotcom
on August 31, 2010
08:28 AM
7driver,
True. I'm not a fan of the stock market (it's all numbers games and really quite a scam) but the idea that a car is a better investment. Well that's a bit out there and not really facing reality.
With real estate it's possible too. Just tricky and always a worry as the exposure is more than the money invested. Guess this is one way stocks are better... invest once and you can walk away. It's rare an investment in IBM will suddenly result in a call from a broker telling you to buy a new AC system for IBM's product managers. Wish it were so with rentals...
By editor_karl
on August 31, 2010
08:28 AM
Vision check opfreakx:
Purchased 1970 Plymouth GTX September 21,1986 for $4,000 with 83,000 miles.
Used as daily driver off and on for high school, college and into marriage, putting 50,000miles on it. Admittedly put around $12,000-$15,000 into it through maintenance and light restoration work (lost track of every detail over 24 years but it was no more than $15,000 max).
Sold on April 17, 2010 for $24,000 in a DOWN muscle car market. Don't bother me with inflation arguments or rate-of-return arguments. To be PAID $5,000-$8,000 to drive a car 50,000 miles is a GREAT INVESTMENT.
So, in conclusion:
1. You'll be hearing about this topic FOREVER
2. You sound pretty ignorant when you brush off this concept
3. Try laser vision surgery. Mine has been tested and is now better than 20/20 after using Maloneyvision in Westwood. I can get you the contact info if you need it
By andersendl
on August 31, 2010
08:33 AM
It's really good to see the collector car market back closer to earth, vs. in outer space a few years ago. The recession seems to have blown out the non-enthusiast speculators and the leveraged-to-the-hilt, pseudo-rich home equity loan buyers.
There's still a lot of cash lying around, though, and it's evident that some of it is being put to use in collector cars, as prices seem to have recovered some from a year ago. But the wild speculation of years past is gone, which is good for the "regular Joes" in the hobby.
To me, treating cars primarily as investments for most people is dumb, and takes all the pleasure out of owning a collector car. If you're focused on maximizing your return on investment, then you will not enjoy the car as it is meant to be enjoyed. It becomes just another object to try and make money on, costing you money in the meantime to store and maintain. Why bother?
Better to just buy what you like at a price you can afford, and drive and enjoy owning the car. If you can come close to breaking even over time, or even make money on it, so much the better.
By opfreakx
on August 31, 2010
10:25 AM
The igronant one here is you:
"Don't bother me with inflation arguments or rate-of-return arguments"
If you ignore facts & Reality you can make anything up. Just dont try to sell the world on your snake oil.
By editor_karl
on August 31, 2010
10:29 AM
Well I'm not ignorin this comment by you:
"For example, that material thing you can use every day... the more you use it, the less its worth. So to get the most value you have to not use the item."
Please address, as I believe you were completely wrong on this one, but maybe I need clarification from someone who has better vision.
By opfreakx
on August 31, 2010
01:13 PM
Simple question
Would your 'invesetment' be worth more if it had FEWER miles on it?
By editor_karl
on August 31, 2010
02:24 PM
No. 83K or 133K -- both too high to make a substantial difference in value compared to history of the car, documentation and overall condition.
By opfreakx
on September 1, 2010
04:58 AM
^but there is a differnce. if you put on another 50k miles and now your car has 188k on it, would you be better off with it sitting there and selling at 133k?
Or if since you seem so hell bent on calling it a useable investment,
what happens if you invest in a low milage car, and then take on 50-60k miles? Does your investment go up or down?
Again you chose to ignore things like inflation/maintance/insurance, costs to sell, cost to house, etc etc.
You have a fixed conclusion 'classic car = good investment', then you try to make the story fit. Instead of looking at facts.
By greenpony
on September 6, 2010
05:40 AM
Whenever you can sell a car for more money than you put into it, in anything but a high-inflation market, I'd say that's a good investment. Your $4k would be about $8k in 2010 dollars, and your $15k spread over many years might be $20k in 2010 dollars. Excluding routine maintenance, registration, insurance, etc that you need on every vehicle, you got to drive this car for 14 years for $4k (2010). $24/mo to drive a beautiful plum crazy Challenger R/T? I'll take that.