Time Machine
A Special Report by Hagerty Insider
BY: JOHN WILEY
Collier AutoMedia proudly brings you Market Insights Powered by Hagerty Insider each month. “Time Machine” is by John Wiley. Like all of us, John Wiley loves cars. Unlike most of us, he also loves math, which is why he’s senior data analyst for the Hagerty Valuation Team. He takes a statistics-minded look at the collector car world for Insider. We hope you enjoy this edition and that it fuels your passion.
How did the classic car market perform during previous recessions? To find out, take a ride in our Mercedes-Benz 300SL (index).
With much of the world economy maintaining a defensive posture due to the threat of widespread COVID-19 infections, and the true duration of this pandemic still unknown, many people—particularly those whose livelihoods depend on in-person transactions—are in survival mode. Others, however, are planning for the future and envisioning brighter days. In the past couple of weeks, many asset classes have stabilized, and a few have even seen gains. Some view this as a buying opportunity. Owners of collector cars are no different. After all, collector car values have done well following the past couple of recessions. Or have they? The answer to that is complicated.
As Hagerty Price Guide publisher Dave Kinney has noted, the collector car market was not always as transparent as it is today. As recently as the Great Recession, transactions were not recorded comprehensively, nor were cars conditioned as frequently as they are now. Few indices captured how values changed over time. A market without transparency has a widespread between what is asked and what is offered. That spread only grows wider during times of uncertainty. Panic selling becomes much more likely.
Today, however, we have more data, which means the market is more transparent than it has ever been. We also have more historical transaction data, which helps to fill in what happened in the past and can shed some light on what might happen going forward—it’s interpreted correctly.
Simply looking at average auction prices over time only goes so far because interests have changed so much over the decades. The top seller of an auction in 1990 might have been a 1914 Rolls-Royce Silver Ghost, but today, it is likely a Ferrari with a 3-liter V-12.
For an apples-to-apples comparison, you want a repeat sale index. A car that sold five or ten years ago and sells again today says a lot about how the market has changed in the interval. It also avoids inappropriate comparisons, such as when a 1957 Porsche 356A Speedster restored to concours standards sells for less than what a barn-find 356A Speedster sold for last year. However, this type of index requires compiling hundreds or thousands of those paired or repeat sales to produce a nearly continuous gauge of market values. Just as important, the car itself needs to be timeless. Fortunately, there is such a car: the 1954–1963 Mercedes-Benz 300SL.
We have looked at the 300SL Indicator in Insider before. As a reminder, indicators hint at a likely upcoming shift in a market, just as your car’s turn signal indicators notify others of an upcoming lane change. We generally use indicators to peer into the future, but they can also be used to study the history of a given market. That’s particularly true for the 300SL Indicator, given that the car has been considered collectible from the time it was new and has never gone out of style. Now, after much scrubbing of historical transactions (thank you, Daimler-Benz, for using logical chassis numbers), we can use it to shine a light on the collector car market of the past and to understand how the market might perform in our present crisis.

Long-term observers of the collector car market will note that the 300SL index does not cover the bubble of the late 1980s. Auction transactions for that period have either insufficient detail or are too few to provide a clear, reliable picture. However, by the late 1990s, around the time of the dot-com boom, the resolution gets much better. The index shows values peaking in January 2001 and then beginning a sharp decline after September 11. The index fell for the next 18 months, bottoming out around the U.S. invasion of Iraq. From peak to trough, the index lost almost 30 percent.
The housing boom of the mid-2000s was a period of strong price appreciation in the collector car market. Between 2005 and 2007, the 300SL index increased more than 2 percent every month. The index peaked in March 2008. However, this time, it fell for just 17 months and lost only 18 percent of its value. For comparison, a well-known stock market index, the S&P 500, lost more than 50 percent of its value from late 2007 to early 2009.
One surprise in the index: It peaked in late 2012. Insider has not been shy in pointing out that the classic car market had cooled before 2020. The 300SL index tells us it had been cooling for seven years!
Note that while the index was declining, the average sale prices of SLs kept increasing. While more data might change this picture, it likely shows that after the period of real price appreciation that began in 2009, poorer condition cars were bid up beyond appropriate values during the frenzied buying of 2013 and 2014. The peak in the number of cars sold in 2014 suggests people were buying and selling 300SLs as quickly as possible. SLs coming out of long-term ownership or those that were “new” to the market (e.g., a barn find) continued to drive average sale prices up, but those bought from 2009 to 2012 and then flipped saw losses. In other words, the SL indicator previewed what was to happen to the rest of the market—too many cars for sale, not enough great ones.
So, a key takeaway from the 300SL repeat sale index is that regardless of what the economy was doing, the collector car market was already in “recession,” albeit a mild one, since 2012. A second observation about the recent performance of the indicator is that values were gradually trending up from a low in mid-2018. Of course, the biggest question is whether the indicator—and the classic car market it represents—has performed well during recessions.
The answer is a qualified yes. The SL index tended to soften for about a year and a half during previous recessions, but dropped less and recovered faster than the S&P 500. Whether that holds in the current economic environment remains unknown, but the data tells us a recession has historically been a good time to buy high-dollar classics, especially if you factor in the fact that cars always perform better than other asset classes on an enjoyment-adjusted basis.
Get the Inside Track Newsletter
Inspiring stories and market insight on exceptional automobiles – delivered to your inbox weekly.