will a young person ever be able to purchase a classic Alfa in the medium term? ie will prices for classic models continue their ascent, throwing all our hopes out the airlock? Or do you think there is any possibility for prices to drop in the next 10 years in real terms? Alfas up to 1975. Although I am increasingly tempted by an Alfa 75...
I would say the GFC has partly contributed to the situation if not all of it with the 105 markets taking off as a result of being pulled up itself. I guess none of us really understands how the world as a collective makes choices and it has now bestowed on the 105 GT/GTV step nose (possibly due to appearance and style which is generally admired, and racing heritage), to be a 'cool thing'. Because of the varied and changing connotations of cool, as well as its subjective nature it may change, but I doubt it! A 'cool thing' tends to be put into the luxury class! When was the last time you thought a vintage Rolex watch was 'not' cool? So prices will keep going up mostly, probably dependent on how many pristine show room conditions ones are available and really time to carry out restorations is in the 4+ years. The survival rates of the step nose cars I guess is 1 to 3 % of production, which puts the world total at about 2000 max, and say as a guess 500 are fully restored. My 67 GT Veloce will make it 501 in about 6 months, back to white original, but then again I should paint it light blue metallic and give it away as a wedding gift, like the recent electric powered light blue 1968 E-Type Jaguar.
Summary: The demand curve has shifted to the right from D1 to D2 due to Govt's around the world borrowing billions of dollars/Euros to gift to large corporations to prop them up for the sake of their country during the GFC. This once in a lifetime windfall was spent by the corporations on a variety of things and allot on various luxury goods shifting the demand curve to the right D1 to D2. So the price went up and the quantity went up for luxury goods. The flow on effect was other hi-end commodities were sought and people all long the chain got something, so cashed up after selling your Italian classic for 400k, why not buy a GTA mmm too dear and a tightly held market what about the GT Sprint or GT Veloce step nose. The reality is the old supply curve S1 is fixed in the short term. Short term is defined by how long it takes to restore a car (4 years) and how many restored cars are on the market straight after they are finished? Not many unless it is a business doing it! Time and supply is limited and demand is high.
So people may try and convince me there are allot of 105 step nose cars out there and when they come onto the market the supply curve will shift to the right S1 to S2 and prices will fall, I doubt this. If a car is in storage and has been up to now and it is not costing you too much to keep it there, should you sell it now or in a few years time? Given prices have corrected in the last 2-3 years now would be the time to sell it as some owners of very rusty cars who have no use for them have! If the owners of the better cars may decide to keep their car, reducing quantity supplied so just when you expecting supply to move to the right S1 to S2, it could move to the left of S1 to S3 (the effect of passing on the car to younger family members in preference to the market), driving up the prices even more for better cars as you go up the demand curve D2.
I doubt there are thousands of 105 step nose cars in barns/sheds around the world unaccounted for (by unaccounted for I mean the owners are not in car clubs and or have no plan to use them or rebuild them within the next 40-50 years), there may be around 50 or less of the last of the rusty hulks and may be about 50 to 100 cars that can be recommissioned into a daily driver at best, you know car hunters stuff, we sit at the edge of our seat and watch it. There was one documented case in Australia of rare Lancia being bricked up in it's garage as the owner was upset about something, only for the relatives to find it later once he died. There is no doubt some car collectors hold onto their cars for up to 50 years or more in some cases depending on when they got them so more could be out there, but as the world grows the need for space close to cities rises in value and cheap storage places will again just be at best under a tin roof or in the elements under a tarp. Farmers tend to have sheds for farming so it is possible they would keep cars they liked. As for filling them up with Alfa's I doubt it, farm equipment is more important. If an Alfa did break down in the countryside it would be towed back to the local town and fixed there if possible or towed back to the city to an Alfa workshop. In the 60's and 70's in Australia the import fees and duties made the cost of owning an Alfa double what it cost in other countries, so only the very wealthy or alfisti would buy them. Today it is still costly/uneconomic to bring a fully restored 105 car into the country now so virtually a closed gate coming in. In the past many Alfas had left Australia when the exchange rate was favorable to O/S buyers, reducing the supply in Australia. Now people are importing cars back into Australia, a LHD stepnose GT Veloce rolling shell needing a full restoration has come in from the US recently. In Europe not all houses/apartments come with garages. Storage cost for a car is substantial in Europe. You would be considered lucky if you had one car under cover car park in the cities in Europe. Businesses take your goods and sell them once you default on storage payments, you have seen the TV shows, so you really need to buy your garage spot in Europe. In the US some rusty hulks have surface over the last few years probably because they have lost their owner or storage spot in the countryside or shed.
The supply of replacement panels and some parts ran out as the factory was only expecting the car to survive 12 years after it was made. Parts and panels were scattered all around the world in workshops and dealerships. Once a company lost it's dealership so did the supply of the parts from the factory, so you may see some cases where workshops were forced to keep large stocks of NOS parts so as to be able to service their client's 105s needs in a timely fashion. There were OEM and aftermarket suppliers of parts, which could help out in the 80's with the consumables and some of the mechanical parts; as for factory body parts well they were 'no longer available'. In the end the 105 clients stop coming as the 105 cars were in such a poor condition needing to be totally rebuilt body wise with either rust or crash damage it quickly made the car a problem, so people opted to just purchased other cars instead. On the second hand market some cars were then tidied up so as to hide the rust, bog/filler and body and structural damage to the unaware new to Alfa buyer. Today some of us are discovering these short cuts of the past on our cars. On the rare occasion you see these ex-dealer 105 NOS collections come onto the market. In Australia there have been about 4 ex-dealer 105 NOS collections sold. Most have end up on NOS resale web sites, except the one that ended up in an alfisti's private collection! So basically you could not get the body parts when you needed them pre-internet days, so what were people to do? You must of heard of 'buy two cars, and fix one good one", then throw or chop up the other to scrap. That is why they don't exist today so let's all stop kidding ourselves that there are thousands of 105's waiting to be discovered!
Here you have a car the 105 that were in reality made to last 30 to 60 plus years if looked after well, only thing that was not the plan. So today you are presented with cars with three condition levels; very rusty cars needing full restoration, daily driver cars needing recommissioning and pristine restored cars. When restoring or preserving a car every one can take this approach. Will your car still be able to be driven 100 years from the date it was made? If you are 20 years old then driving it at 70years old will be great!
I think there are three close to vertical supply curves SRusty, SDriver and SRestored. And there are 3 demand curves. Cars will move between groups and the delay is 4 years for a good restoration regardless of starting condition, assuming you have allot of NOS parts to start with.
Once the 'cool thing' effect reacts with a tightly held limited market supply we may see D2 demand curve shifting to the right to D3 again driving up prices on restored cars, forcing people to look at the daily driver cars to restore or to the rusty cars depending on budget and timeline so you will see the price rise in some cases allot. The lack of rust does not equal an easy or quick restoration!
'Do you think there is any possibility for prices to drop in the next 10 years in real terms'?
That is good question. People fixing or owning the 105's still have to get to work buy petrol and other car/transport/train services and buy stuff like food, power and car polish. Let's say the inflation cost add up for 10 years at 2.5% per year. UK consumer price inflation fell in March to 2.5%, the lowest rate in a year, according to the Office for National Statistics. Real terms means prices don't reflect inflation effects.
I will use a restored car you don't own currently as this is what is implied in your question about 'real terms'
Today a car you are interested in costs 50k pounds and you either buy it of you don't. If you don't the current owner puts on an extra 1.25k pounds for inflation at the end of the first year so the price goes up to 51.25k pounds etc until the 10 years is up, by that time the car is valued at 64k, if you remove inflation effects it is 50k in real terms. So do I think the 50k pound car today will be worth more that 64k (50k real terms) in 10 years (64-50=14k inflation effects) mmm.
If in 10 years the price was 63k, then there was a drop in real terms of 1k car is worth 49k in real terms, what you are hoping for assuming consumer price inflation stays at 2.5% for 10 years.
Luxury 'cool' items from history tend to double in price with in 10 years; you would have to look at other comparable cars maybe E-types and Aston Martins. In 10 years it could be a 100k pound car, or (100-14) k= 86k in real terms, forcing you to pay an extra 36k in real terms if you purchased 10 years later.
Or you buy the car now at 50k pounds and enjoying driving it for 10 years. If you sell it at the end of the 10 years for 100k you will make a profit of 36k pounds in real terms less costs you will need to factor in for any loan and storage / maintenance etc.
Most of this is my personal opinion (except about some Govt’s bailing out some big corporations), you will need to seek your own paid financial advice and technical advise as to what suits you.
Best wishes Steve (I have edited the above post to clarify)