Editorial by Vince; 2020 has been an interesting year. I’m not going to dive into the discussions of remote work (been good, been bad) or the nuances of home-remote schooling children (they’ve been good, they’ve been bad). Those topics have been brought to the table, seconded, discussed, and put into the minutes by other talking heads far more eloquent than myself. However, I do want to discuss 2020 and what it meant to the cars, particularly used late model, vintage, and modern classics — and I’ll wrap that up with some DT highlights.
I don’t put much credence into indexes and gross value aggregators when it comes to used cars…but Manheim’s used vehicle index showed something interesting at the beginning of 2020. Manheim is a wholesale vehicle reseller (who sells about 8 million used vehicles per year at round $57 billion in transactional value) and their used value index is seasonally adjusted wholesale used car prices and reflects part of what you’ll pay at a local used car lot or from the second hand pile at your local Toyondabenz dealer. First, you’ll see that when COVID19 first hit prices dropped from 140 (this is normalized to 1995 as 100) to 125 — this was similar to the drop we saw during the 2008 recession. However, prices jumped up within a few months and have now hit an all time high. When the pandemic hit, we would have assumed that everybody getting laid off and furloughed would have lead to a drop in demand for used cars…but production of new cars was so impacted that used cars became more valuable. This mostly applies to newish used cars (less than 5 years old) so that means that some of the expensive luxury cars we thought would be cheap…well they aren’t so cheap. For a fascinating read, spend some time perusing Manheim’s quarterly conference call presentation.
Here is one example chart that I put together to illustrate what we are seeing with the late model used/depreciated sports car market. The data shows KBB private party average market value for a good condition Porsche 911 Carrera with a 6-speed and 100k miles. What you’ll notice is that KBB says the early 996s are worth something in the $12k-$19k range and then we get a slow ramp up to $30k for a basic 991 (2012) continuing to a large jump to the restyled 991.2 (2017…but part of that discontinuity is that I dropped miles to 50k instead of 100k). The takeaway from this graph is that older used cars haven’t been propped up by this “new car deficit” as much as newer cars. The best example that I use to illustrate the insanity of pricing for late model cars is just hit carmax website with a search for cheap cars. Here you’ll find a 2014 Nissan Versa with 41k miles offered for $10k. That was a $15k car in 2014…now, 7 years later (that car was probably sold in 2013 as a 2014MY, so it will be 8 next year) and it has only dropped 33% of its value. That is a mystifyingly low level of depreciation for a terrible modern economy car…but that is the new market. It seems that used car dealers are offering financing to anybody who can fog a mirror, and those people can afford $170/month without a problem (that is probably on par with their internet bill) which works its way to a 60 month loan on a $10k car…and presto, every car at a used car dealer lot is worth about $10k. Strange times. Interestingly enough, Manheim spends some time discussing the number of auto loans that are in default, particularly subprime auto loans, of which 4.64% are severely delinquent.
Let’s move on to the exciting news in the marketplace — cheap CHEAP used cars are back…sorta. In late 2017-2018-2019 I had noticed an alarming trend in craigslist — you couldn’t get a running/driving used car for less than about $3k-$4k. It seemed that all of the running (but ugly) used cars in the $2k price range had been crushed in the cash for clunkers or had been propped up artificially by the small dealer nonsense of the $150/month financing. Something in the post pandemic marketplace has brought back things like a 2009 VW Golf GTI with a salvage title and some overdue DMV fees to brake maintenance for $1995, or a 1996 Nissan Maxima with “liquids for up keep” that only needs an alternator for $700, or an “excellent” running 2001 Buick Century for $1500. These cars would have been offered for $3k-$5k a few months ago, but I think the low consumer confidence that has been ignored by the stock market has affected the bottom of the used car market. Like this 425,000 mile 1990 Volvo 245 Wagon offered for $1200.
Enough of the modern used car market, let’s talk about classic car market. It has been an interesting year for classic cars — but mostly a stagnant year for big price changes. Sure, some cars have gotten more expensive, but for the most part, 2019 prices just continued into 2020. You can still get a decent deal on a vintage 6-series BMW, you can still buy a used first generation Mazda RX-7 for change you found in your sock drawer, and W108 Benz’s are still decently cheap. From a car selling marketplace perspective, some of the biggest changes is that BringATrailer was purchased by Hearst Auto (Motorweek, Car & Driver, Road & Track, etc) for an undisclosed pile of cash. Youtube nice guy Doug Demuro launched something called Carsandbids which brings an auction environment almost identical to BringATrailer but focused on late model cars. And lastly, DailyTurismo was totally overhauled and rebooted into a new operating environment that shed all the years of spam and (hopefully) allowed many more people to comment.
2020 from a DT writer perspective has been fun, we’ve had some interesting cars, some total piles of junk, great comments, new commenters, old commenters, and generally had a fun time. If I had to pick a favorite car from all the features…it would probably be the 1977 Buick Wedge custom thing.
My favorite article to write was the 10 Things I Need in a Car in 2020, but there were so many interesting cars, like the Porsche 914 Frankenstein, or a good looking fake Ferrari Dino, a GTO powered Jag, a half a million dollar depreciated Bentley, sketchy as they come Wrassle Castle free candy van, two Corvair custom movie star cars from the movie Condor, just to name a few. I hope you enjoyed reading as much as I enjoyed reading your insightful comments and tips. DT tippers and commenters are the best and I appreciate everything you guys and gals contribute. Here is to hoping that 2021 treats you better than 2020.
Happy New Year, DT E-i-C Vince
P.S. We will have DT reader ride calendars available soon (alterative printing is in the works).