For the last few years, Hemi powered Mopars have been at the forefront of the rise in muscle car values. They’ve also towed most of the performance oriented Mopars right along with them up the value charts. Road Runners, GTX’s, R/T’s, Chargers and of course, those E-bodies (Barracuda and Challenger).
It’s become almost an accepted tenant--buy a Mopar today and you’ll make money tomorrow. That’s dangerous thinking. The collector car market is just that--a market. It’s subject to the same rules as every other market. Without exception, markets rise and fall within any given time frame. Gold, oil, equities, housing, collector cars--it doesn’t matter.
After analyzing Hemi sales (original cars) at auction over the last three years, the data unquestionably points to at the very least a leveling off of values in 2006, and there are strong indications that there has been an outright decline in the past few months. Are those who are paying the really big bucks for these cars making shrewd investments, or because they appreciate their beauty, power and/or historical significance?
Another potential tip-off of trouble ahead is that the sales rate has fallen from about 60% to around 40%. This could be a leading indicator of more softness to come, or it could reflect that owners may believe they’ll get more in January in Arizona, and are holding on until then. There is also the possibility that Hemi’s are simply catching their breath. All eyes will be on the Arizona auctions to see if the other shoe will drop and send prices down, or if the pace picks right back up again. We’ll be paying close attention to the action.
|Owners are increasingly rejecting market offers. A mistake, we belive, as the market shows signs of a major drop.|
|Average sale price shows steady decline since peak.|
An interesting trend we noticed from this analysis was that most of the decline came from the most popular years for the Hemi: 1968-1971. A full 26% decline was calculated, while Hemi's from pre 1968 showed virtually no decline.
The 1968 and up Mopars have been scorching hot--maybe a little too hot--and right now it looks like they have already peaked. We’ve often thought it was a little crazy that a gorgeous ‘66 or ‘67 Hemi GTX or Hemi Charger currently typically brings about half what a similar condition 1968-71 will bring. And this is actually an improvement over 2005, where the ratio had fallen to less that one-third. Going back several years, the earlier cars sold for approximately 80% of the average selling price of the later cars. This by itself means little (the market could simply be reflecting shifting preferences), but the recent decline of the later models coupled with stability of the earlier ones suggests that the market thinks things got a little too far out of whack.
Perhaps even more ominously, we found signs of market softness with some other popular muscle cars. In particular, 1968-72 Chevelles and 1st generation Camaros. These are two of the bread and butter segments of the hobby and they are currently experiencing declining sales rates and values that have at the very least stagnated, but probably have dropped about 5%.
None of this means that the sky is falling. Indeed, cars such as Mustangs, AMX’s, and Corvettes are holding rock steady, and even inching up a bit. What it does mean is that it’s time to get a little cautious. If financial considerations come in to play with your collecting, you may want to seriously consider selling your Hemi soon. We think it’s a good bet that the long and strong bull market for these is over. The question that remains is will Hemis simply even out, pull back a little, or take a hit in 2007? Considering all of the above, we’re inclined to lean towards the latter. Even if they bump up in January, long term we think the fantastic Hemi run is over.