25 February 2010

Hold times are up for collector car dealers

It’s no secret that the collector car market has seen a general slowdown over the past eighteen months or so, but most of what has been written was from the perspective of end-users. Certainly from an appreciation standpoint, the 10-15 percent annual increases seem to be a thing of the past. Now many buyers who made purchases at the top of the market in late 2007 are looking at indefinite hold times to once again find themselves in the black on their investments.

Now dealers find themselves in the same boat with holding old inventory, but with the added pressure end-users don’t have: Their sole object is to make money. Charlie Kuhn, owner of Chicago Classic Cars in Gurnee, Ill., has certainly seen time-in-inventory go up since the start of the economic crisis in late 2008. “It’s simply taking a bit longer these days for cars to find new owners.”

Dave Kinney, of Hagerty’s Cars That Matter, says the churn-and-burn paradigm of car dealers does not work in the classic car industry, especially at the high end.

“A buy-and-hold strategy works best for many dealers, as the marketing time is expressed often in years instead of days or months,” he said. “Put in another way, while the poster shop on a busy street corner might sell 10,000 prints in a year, resulting in a $50,000 profit, a fine arts dealer on the second floor of the same building might sell just one painting in the course of that same year, perhaps yielding a much higher profit. And what term do we use to describe their businesses in general? Are they not both art dealers?"

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