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Why do Exotic and Classic Car Values Keep Increasing?

1985 Lamborghini Countach from Denver Concourse D'elegance

23 Aug Why do Exotic and Classic Car Values Keep Increasing?

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I am  a huge fan of exotic and classic cars. I own four cars myself including a 1999 Lamborghini Diablo. I bought my Diablo in May of 2014 and I have been amazed as prices on my car have increased over the last year. It is not just Lamborghini’s that are seeing huge increases in value. Ferrari’s, Porsche’s, Maserati’s, Aston Martin and classic American cars have been increasing in value over the last few years at incredible rates. So why are car prices increasing so much? I think a number of factors are contributing to higher prices including market shifts due to demographics of people with money, the global economy and the fact they are not making any more of these cars.

How much has my Lamborghini Diablo increased in value in one year?

I bought my Diablo in the spring of 2014 for $126,000. It was a monterey blue, alpine edition with about 22,000 miles on it. I think it is a gorgeous and awesome car and I think I got a pretty awesome deal on it. However, the car was for sale for months with no buyers, before I ended up taking possession. I may have gotten good deal on the car, but it was on open market and not a fire sale by any means.

After looking at the Diablo market I now see early Diablo’s in the 1990 to 1993 range listed for $130,000 or more. Hagerty’s price guide confirms that prices for early Diablo’s (not nearly as desirable or reliable as the later model cars) have increased a ton over the last year. I have seen the late model Diablo’s asking prices go up even more that the early cars. I rarely see a 1999 or newer Diablo listed for less than $200,000. I visited Cats Exotics, where I bought my car, in February of 2015 and the owner believed my car was worth close to $200,000 as well. Even if my Diablo is not worth $200,000, but only $180,000 that would be an increase of 43 percent in one year.

What other exotic cars have seen huge increases in value?

Besides the Diablo, other Lamborghini’s have seen huge increases in value. The Countach has seen values increase from around $120,000 for a 1985 car in 2012 to over $500,000 in 2015 for the same car. That is an increase over 300 percent in about three years! I have followed the Countach closely because it is one of my favorite all time cars. It went from being slightly attainable a few years ago to a dream recently. Many other Lamborghini’s have seen huge increases in value, but not as high as the Countach. I can see why the Countach saw such a huge increase as they only make 1,700 over 16 years. The Countach was the poster on many kids walls in the 1980’s and 1990’s and maybe that is why it took so long to see big value increases.

Other cars that have seen huge increases are Ferrari’s like the 365 Daytona and the Maserati’s like the Ghibli. American cars like the 1967 Corvette 427 have also seen prices increase, but not as much as some of the European exotics.

Why are exotic cars increasing in value?

There are many reasons why exotic cars will increase in value. With my Diablo I think one of the main considerations was it’s age. The car was built in 1999, which does not make it a classic, but it is 15 years old. Many exotic cars will depreciate greatly after they are bought new. However, unlike more common cars the exotics tend to start increasing in value after they have depreciated. Finding or anticipating the bottom of a depreciating curve on a rare and exotic car can be a great way to own an awesome ride and have a great investment as well.

Here is a great program that teaches you how to spot good deals on exotic cars.

The depreciation curve may explain the value changes on some newer exotics, but the Countach and older cars like the Ferrari Daytona are too old for depreciation to be affecting them. There is obviously something else at play causing these cars to rise so much in value in such a short period of time. With the Countach I could see this price increase coming, because there were no cars for sale in the entire US for months at a time. There was no supply and the law of supply and demand forced prices to increase very quickly. There is also the fact that many people who idolized the Countach as a kid are getting older, more wealthy and can now afford the car. Not only was supply incredibly low, but demand increased at the same time.

The Countach price increases can be explained by little kids growing up and now having the money to buy the cars. The older cars like the Daytona and the Ghibli were produced almost 20 years earlier than the last Countach.

I don’t think those values increased because of kids growing up to be able to afford the cars now, I think those prices increased because a lot of really rich people are looking for ways to diversify their investments. We have recently seen a housing crisis in the United States and problems with the global economy. The richest people in the world with a lot of cash, may not have the confidence to invest all of their money in the housing markets and the stock markets. The exotic car market is another way to invest and a lot more fun if you ask me. They are not making any more of these exotic cars. Every year fewer and fewer exist due to crashes or neglect.

Conclusion

I think there are a number of factors for why the exotic car market has increased so much. For cars like my Diablo, it is a mix of depreciation curve and more investment in to cars. For older cars it may be a different generation buying their dream cars from when they were children and the very richest people in the world are seeing cars as an investment vehicle. The question now is whether we are in an exotic car bubble. Are prices too high to be sustainable in the long run? Only time will answer that question.

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