Super Seven values - will we get caught up in the current bubble?

[twobone]

Have you seen what is happening with classic car values? Mid 80s Porsche 911 that would have gone for $17-24K just 4-5 years ago are now getting listed for $35-45K

 

The high end the scale (classic race cars & ferraris) is also going bananas again.

 

Will the seven brand get caught up in this inflation? I don't have any intention to sell, its just interesting to ask why we are not also riding the wave.

 

I'm actually OK with staying off the speculative car market bandwagon. It keeps the cars within a community of folks who like to wrench and drive them.

[bigdog]

Judging by the MSRP on Caterham's web page. I'd say we are already caught up in the speculation. Remember, The first Lotus 7 car was 1000 quid or $2800 in 1957 using an inflation calculator that $2800 would be $23,900 in 2014. The 7 280 will cost $51,600 with no options. I'm no mathematician. But something sounds seriously amiss to be 115 percent higher than the inflation rate accounts for.

[lucky dawg]

Judging by the MSRP on Caterham's web page. I'd say we are already caught up in the speculation. Remember, The first Lotus 7 car was 1000 quid or $2800 in 1957 using an inflation calculator that $2800 would be $23,900 in 2014. The 7 280 will cost $51,600 with no options. I'm no mathematician. But something sounds seriously amiss to be 115 percent higher than the inflation rate accounts for.

 

Still expensive, but $41,000 for the 280 + $4500 for the drivetrain = $46,500 by my calculations.

[bigdog]

Still expensive, but $41,000 for the 280 + $4500 for the drivetrain = $46,500 by my calculations.

 

The $4500 price was valid only until Feb 2014 after which the price went to $10,700 for the 1.6 + 5 spd.

[Croc]

But something sounds seriously amiss to be 115 percent higher than the inflation rate accounts for.

 

 

You are on the right track but your comparison is distorted by a few factors:

 

1) The inflation rate is not a good measure of true underlying inflation for the analysis you are aiming to do. Its composition excludes and diminishes certain elements of price increases that are important. Inflation is actually much higher for the average person. Commodity prices have increased over that period at closer to 5-6%. A car is heavily influenced by commodity prices. Look at the increase in rubber and steel costs. Energy has increased by more than 3% per year over that time. The wage inflation to employers (i.e. cost of production) is far higher than wage inflation as received by an employee as the costs of social programs, safety nets and payroll/employment taxes are born much more by the employer than the employee.

 

2) Interest rates at record low always inflates asset prices - bonds, stocks, art, homes, cars, etc. People have more disposable income and there fore feel wealthier driving up prices as they acquire or load up on debt and acquire. This has the most potential to crater asset prices.

 

3) I believe there is a bubble effect on asset prices from baby boomers aspiring to their youth dreams at a stage in their lives when they can afford it. Will 1960s muscle cars be as heavily priced as a proportion of new cars in 30 years from now? My expectation is not. I don't expect prices to plummet from this effect but I expect they will plateau and move sideways. Roughly 17-20 years after production a classic car (if it is any good) will stop depreciating and start to move upwards in value. Think of BMW E30 M3 or Ford Sierra RS500 which have taken off in recent years and compare to when the prices of Ford Escort MK1 started to take off.

[slomove]

I am not sure if our cars even fall into the "Classic" category, except original Lotus. They are sure specialty cars for enthusiasts and some high end ones very expensive. They do hold their value quite well after the initial drop but not really an investment.

[AndyB]

I agree with Slomove, even the uninitiated wants a Porsche or Ferrari even if it's just for the "Poser" factor. Generally most people that buy a Seven want a Seven and have educated themselves about the marque before the purchase. You don't buy a Seven to impress others, although they might be impressed once in the car. Having said that those "educated" people are in the minority therefore the market/demand will never be as it is for other marques.

 

As we used to say in the car trade in the UK, "There's a bum for every seat". Finding that bum ain't always so easy/fast.

[Kitcat]

Croc:

 

Ya took the words right outta my mouth:).

 

I esp agree w/pt 3. It has to be unrequited puppy love that is driving up the prices of those cars (Saw it at age 14, said "Some day....", then 50 years later the rich boomer can realize his dream).

 

Without the youthful fantasy propping up prices, the value of most of these old gems will slowly fade. They cant hold a candle to, say, a new Ford Fiesta ST in terms of handling, speed, steering feel, braking, reliability, gas mileage, safety (not to mention $21K cost of purchase along with a nice warranty).

 

As to se7ens value, unlike the other collector cars, they have been continuously made, improved, refined. So rarity is not a factor except for the Lotus iterations. An excellent original example will likely appreciate. But, again, why buy one when a new Caterham/Storker/Birkin/Westfield/etc., will run circles around it- except for puppy love?

Edited May 15, 2014 by Kitcat

[xcarguy]

Yessir, I'd like an extra Storker with that order and super-size the fries, please.

[TurboWood]

Let's not forget the inflation will continue. Even if the value of a classic car declines, it is possible for the price to increase.

 

Daniel

[speedwagon]

In a world of supply vs demand, the relative value will go down. Price no doubt will come up due to "planned" inflation. The supply of 7s is increasing at a rapid rate, and the availability of seriously "fun" new cars is at an all time high. All of us who now hold current "classic" cars are fixing to leave our kids depreciated assets. No big deal so long as "we" enjoy them while we can. Even now the price of a RX-7 FD is dropping as we speak.

[powderbrake]

The price I paid to assemble my car was a "big boys toys" price. I wanted it so I got it.

I don't really care about the present or future value, because I have received 100% of the cost in sheer FUN.

 

Of course I reserve the right to hard negotiations if and when I decide to sell it.

[TurboWood]

I wonder if we are just seeing a normal cycle. I realize as one of the younger members here that this may be a dangerouse statement, but surely an earlier generation thought the same about a 30's Ford. What are they worth these days?

 

Of course I may be all wet since nobody will crave cars from the 80's with maybe a GNX being the only exception.

 

Daniel

[s2k7]

I think you will get the same FIXED price you gave to the insurance company when you insured your KIT/Replica/composite.

[RGTorque]

Daniel, dont forget the vw rabbit pickup trucks, vanagons, and especially the doka from the 80's sell for good money.

[MichaelD]

I believe all used Caterhams are now worth more money than they were before the new Caterham prices were posted.

 

Buyers that feel those prices are to high will either buy a used Caterham or a different brand Seven to save money and still have a car "that's the most fun they can have with your pants on."

[lucky dawg]

The $4500 price was valid only until Feb 2014 after which the price went to $10,700 for the 1.6 + 5 spd.

 

Still the price shown on the Caterham US site. Perhaps the initial sales volume has caused them to extend awhile longer. http://us.caterhamcars.com//sites/default/files/content/us/documents/seven_480_retail_order_form.pdf

[Klasik-69]

Don't forget the difference between ASKING PRICE and SELLING PRICE. Having an 87 slant nose turbo 930 Porsche, I'm aware of the stratospheric pricing on some of these cars. The real truth lies in what they're selling for. And it is nowhere near what the asking price is. Many have been for sale for a long time, and for good reason. Of course as one who owns one, I would like to rationalize that mine is worth $1 million............but it isn't no matter how much I wish it were. Most of these are the ones that were selling for $18K to $25K and now are commanding prices around $45K for the plane jane 911's. Turbos and other rare cars like the steel factory slant nose command higher prices but nowhere near the $125K some seem to be asking (and not getting).

 

Caterhams are a different breed, they're primarily a kit car which has a very minor presence on the streets or the track. Their numbers are small, the demand is limited although it can be intense. I wanted mine pretty badly and paid a fair price. Others will too but again in small numbers. Question is will new buyers pay the NEW prices being asked, and if so, how many will ?

 

In all fairness, you really can't compare the 1957 7 to today's in terms of quality and technical superiority. Yes, they have gone up higher than inflation but as Croc said, that's a false barometer. Engines are now fuel injected and computer controlled. Back then a distributor and a couple of carbs. Metal used in the frame is better as is the design. The use of CF also adds a good bit to the price. And let's not forget the product liability insurance costs that our attorneys have blessed us with. All cars have gone up likely higher than the rate of inflation would account for, but all cars have become a lot more sophisticated.

 

What is important to us is we have our beloved 7's. I think most of us bought them for the fun factor, not the cost savings end of it. Face it, it isn't a comfy ride, there are no creature comforts, and it will haul as much as you can cram in the little cubicle behind your seat. Nothing on the road compares in the FUN factor. I have a lot of fun cars, but the 7 is very special.

[MichaelD]

Good points all.

 

However, by most standards, buying a Seven is not a rational decision. Period.

 

But the members of this list know why those who have driven them all love them.