Outlook for classic car market remains positive despite Brexit uncertainty, says funding expert
- Unique insight provided by leading market finders, Classic & Sports Finance
- Broad confidence in market continues
- Certain post-Brexit trading conditions may even assist global market
- Cautious optimism bodes well for future market stability
The premier funder of classic and collectable cars, Classic & Sports Finance, says the outlook for the classic car market remains cautiously optimistic, following the British public’s decision to leave the European Union last week. It has engaged with a number of customers, dealers and suppliers to better understand how interest rates, exchange rates and free movement will effect the classic car market.
While economic uncertainty can limit demand for high value luxury items, some investors will see classic cars as a hedge against economic uncertainty. If interest rates are pushed lower, the classic car market could flourish as investors look for security in tangible assets. Economists expect any increase in interest rates to be negligible, ensuring that classic cars remain a worthwhile investment.
Despite an immediate negative reaction to the referendum result in the financial markets, the classic car market has remained steady. Dealers and auction houses have reported no knee-jerk reaction in sales, values or customer enquiry levels.
Robert Johnson, managing director at Classic & Sports Finance, said: “While there is still plenty of uncertainty about the future of the wider UK economy following the referendum result, the outlook for the classic car market is largely positive. Lower interest rates will drive investment in classic cars, while exchange rates will not effect the majority of UK buyers, and credit remains readily available. While there are concerns about the free movement of cars and people, it is too early to say whether restrictions will come into effect.”
In theory, a weaker pound against the euro could make the UK an attractive market for Eurozone buyers. However, with UK buyers typically purchasing cheaper vehicles from Europe, the lower value in the European market could make any saving negligible.
High value British cars will become more attractive to American buyers, however, who can realise serious savings with the strong dollar against the pound.
Exchange rates should not effect the majority of the domestic market, although dealers looking to immediately profit from European imports may be concerned.
Credit availability and equity release
Equity release has been increasing in popularity over the last 12 months, and this trend is expected to continue. With low interest rates, high vehicle values, and a considerable appetite from lenders, a growing number of classic car owners are expected to release equity from their collections.
Credit availability will be a crucial factor to the success of the classic car market. There is currently no change in the cost or availability of credit from our lenders, although this will be a determining factor in the coming months.
Classic car values began to plateau more than 12 months ago and, while this trend is unlikely to reverse for the majority of the market, it cannot be seen as a direct result of Brexit.
It is expected that the best cars will continue to hold or even increase in value, while top tier dealers and auction houses will continue to flourish.
Assuming that free trade is restricted – although it is still uncertain if or when it will be – buying and selling in EU countries will become more expensive due to tax and duties. This could have a negative effect on the market in the medium-term, with 10-20% of UK classic car sales going to overseas buyers.
Restrictions on the free movement of people could see values harden or increase as good cars leave the country with their owners and UK supply diminishes. However, it is too early to say whether restrictions on migration will come into effect and to what extent they will operate.
For more information on the post-Brexit future of the classic car market, see the Classic & Sports Finance blog.
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