Classic Car Pricing: How It Works

Classic car pricing is a measure of both the quality of the asset and the desirability of the asset. Having a beautifully restored classic car is worth nothing if no one wants to buy it. Classic car pricing indexes try to consider both of these factors when creating a price list for vehicles, but some do better than others. Understand the factors that affect a car's value as well as its listed price before purchasing a classic car.

Quality of the Vehicle

The main factors that go into quality include the age of the vehicle and the condition of the vehicle. On the whole, older cars sell for higher prices than newer classic cars, but this does not hold true for every type of vehicle. A greater factor to consider is whether the car is in its original condition or not. It is best to have a car that is well-taken care of, operational, and in good repair. However, if this repair has been done in a way to compromise the original condition of the vehicle, it can eliminate a part, or even all of the value of the car. This is what makes restoring and maintaining the vehicle so expensive. It is essential to locate original parts in order to make repairs if you wish for the car to maintain its value.

Scarcity of the Vehicle

One factor that may allow a younger car to sell for a higher price than an older car is scarcity. The rarer the find, the higher the price tag. You can research a vehicle to determine how many of its model were produced. It is not uncommon to find less than a few thousand vehicles of an original car that was produced in a limited number are still in operation today. This significantly raises the price of the vehicle.

Demand for the Vehicle

Scarcity only exists in relationship to demand. If there are only 500 of a particular model of car available and 200 prospective buyers, the car will not be priced very high. This is a hard factor to measure because the demand for a car cannot be listed as easily as the number of vehicles remaining. To determine vehicle demand, most antique dealers and pawn shop owners look to recent auction prices. If a car sold at auction at a very high price, it is likely there are more prospective buyers willing to pay the same.

Novelty of the Vehicle

Novelty is a hard concept to measure in terms of dollars, but investors in classic cars must try to do so every day. Some cars can be novel despite never being "great" cars, and this may raise their price artificially. Think of some iconic cars from history: the Model T, the Volkswagen Beetle, the '67 Chevy. All of these cars have been made novel through popular culture iconography. They will remain novelty items in the future, and this may drive up the price because it drives up the demand for the vehicles.

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