Another Month, Another Drop for the Hagerty Market Rating
The classic car market continues to cool, as the mixed results from the Monterey Car Week auctions come to a close. The Hagerty Market Rating dropped 0.12 points this month to 63.38, continuing its slide to its lowest value since Spring 2021. In the past two years, the Market Rating has only seen a month-over-month increase twice.
Last week's Monterey auction results will hit the Market Rating next month, so its massive quantity of 7-figure cars will not provide any relief to the Market Rating's Auction Median Price metric, which has decreased for the 16th consecutive month. This metric now sits at a new all-time low of 31.26, however it's descent is at least slowing. This month's 0.31-point drop is the smallest decrease this metric has seen during its current losing streak. Perhaps next month we will see the the Auction Median Price metric rise for the first time since Spring 2023, when over 80 million-dollar-plus sales from Monterey hit the Market Rating's books.
Despite the large quantity of million-dollar sales, this segment actually performed quite poorly at the Monterey auctions. Over the past three years at Monterey, 71 percent of seven-figure cars sold. However, this year the sell-through-rate was only 57 percent. Pre-1974 million-dollar-plus Ferraris, the bread and butter of the August auctions, had a sell-through rate of only 51 percent (these cars averaged 84 percent during the three prior Monterey actions). For more information, checkout our Monterey coverage here.
At a macro-level, the high end of the market isn't looking its healthiest. The ratio of insured value increases-to-decreases for cars valued over $250,000 has fallen for the ninth consecutive month, to it's lowest point since May 2021. Meanwhile, this ratio for less expensive vehicles has grown seven months in a row.
Our industry experts predicted a weaker-than-normal Monterey, and they were right, citing a faltering stock market and an upcoming election season that tends to cause people to be more cautious with their money. But they aren't seeing a "contracting market." Instead, they see one that is taking a breather from the exuberant pandemic-era spending. The power has shifted from the seller to the buyer, which is welcome news for enthusiasts.
Next month, we will see the how a slower than expected Monterey impacts the Hagerty Market Rating. Spoiler: expect the Rating to fall again.
Yep, caution is the word of the day. No sense rushing into anything. Too many variable at play right now.
It will be interesting to see what happens when the January auction hype begins. Stock Market is on a rally. Feds cutting interest rates. Economy seems to be steady. I still see some record prices in January.
Could you please explain what the metric ratio of “insured value increases-to-decreases” means ?
The ratio of insured value increases-to-decreases for cars valued over $250,000 has fallen for the ninth consecutive month, to it’s lowest point since May 2021.
Every month, thousands of Hagerty members update the insured value of their vehicles. If the market has softened for their vehicle, many lower their insured value. But, more often than not members increase their insured value, especially when the market is hot. We calculate the “insured value increases-to-decreases” metric by taking the number of vehicles that had their insured values increase last month, and divide by the number of vehicles that saw a decrease in insured values. We ignore vehicles with no insured value change. We also split this metric by the value of the vehicle so that we can see how the “high-end” (cars valued at $250k or more) is performing vs the “broad market” (cars valued less than $250k).
During a hot market, this ratio is very high. At the recent market peak, the ratio of insured value increase-to-decreases for “high end” cars was 6.1-to-1. This means that for every 1 car valued over $250k that decreased their insured value, 6.1 high end cars increased their insured value. The market has cooled significantly in the last couple years, so now this ratio has fallen to 1.9-to-1.