The Market From the Inside: A Conversation with McKeel Hagerty

In a recent conversation with Hagerty Collector Car Insurance CEO McKeel Hagerty, his firm’s extensive database noted one of the cars with some of the greatest appreciation in value over the past two years was Acura’s 1991 to 2005 NSX. “They are up 40% over the past two years,” he observed.

Not too long ago I had the pleasure of talking the collector car market with McKeel Hagerty, the CEO of the company that bears his name. As the leading classic car insurer, Hagerty has what is likely the world’s largest database of collector car values, data that’s based upon inside information such as what policyholders paid for their cars, what they value them for, dealer and private transactions, auction results, and more.

McKeel is extremely astute, personable, low key, and has a wickedly dry sense of humor. And he loves cars. How his firm crunches numbers to uncover trends, especially when they do their deep dive advisory role for clients such as Barrett-Jackson, is mind bending. Somuch so that to paraphrase the old EF Hutton television ad (and to date myself a bit a bit in the process), “When Hagerty speaks, I listen.” (Youtube the ad if you haven’t seen it…

McKeel Hagerty of Hagerty Insurance thinks one of the best cars to load up a warehouse with for a theoretical five year hold is Lamborghini’s Diablo. But he notes “it has to be bought at the right price, and be sure to factor in maintenance when purchasing, for many buyers tend to underestimate that cost.” There’s lots of Lamborghini history in this photo, for that’s ace test driver Valentino Balboni behind the wheel of the Diablo SV. He’s conversing with Giuliano Pizzi, one of the few individuals who was there when the first ever Lamborghini V12 was first tested on the bench in 1963.

With Arizona’s auction week now upon us, some highlights from our conversation seemed appropriate. And I highly recommend using https://www.hagerty.com/valuationtools when you are researching a car, or trying to determine its worth.

Question: What is the best advice a novice collector or newcomer could get?

Research, research, research—on the cars themselves, and their values. Probably the part of research newcomers don’t spend enough time on is they tend to overbuy a car, but underestimate the cost of maintenance. This is especially true on later model supercars from the 1980s and ’90s, where reliability wasn’t that high.

McKeel Hagerty says another good mover in the market has been BMW’s lusty Z8 roadster built from 200 to 2003. In total, the German firm made 5,703 examples and, according to https://www.hagerty.com/valuationtools, those in mint condition with low miles have nearly doubled in value since September 2014.

These younger guys think they are getting a lot of car for the money, but don’t factor in reliability. For instance, a 25th Anniversary Lambo Countach that hasn’t had its maintenance done.

So I would say buy with the best chances of having a good experience the first time around, then buy the car you have always dreamt of.

Q: What is your overall assessment of the market? What are you seeing?

McKeel Hagerty points out that early Ford Mustangs (1965-66), early Chevrolet Camaros (1967-69) and Dodge Challengers from 1970-73 have performed quite well in the marketplace, with many now exceeding their pre-recession values. The 1966 Mustang 2+2 seen here is the first one I ever owned, and this photo was taken in the second half of the 1970s. It had a Pony Pack interior with extra instruments, and a 271 horsepower “K-Code” V8.

It’s cooler than its peak in 2014. Part of this is from the Baby Boomers shrinking the size of collections and increasing quality; it’s no longer about filling a warehouse with 55-57 Chevys and being the guy with the most of those, it’s now about experience and what can you do with it. That type of hoarder mentality that existed in previous generations no longer does.

Q: There must be some segments that are hot, and appreciating…

Yes, there are. In general entry-level stuff is doing pretty well, cars that are under $100,000. Certain musclecars…have not only improved in value from the recession but have gone beyond those prices. For instance, people are buying Mustangs and Camaros so they are doing really well. This would be 1965-66 Mustangs, 1967-69 Camaros and 1970-73 Dodge Challengers. This is good, solid findable stuff.

Another American machine that Hagerty says has done well in the marketplace are the 1970-73 Dodge Challengers. If I could have just one Dodge or Plymouth from this era, my first choice would probably be an AAR Cuda that was made in 1970. This car handled as well as it went, and the graphics package is one of my favorites from the classic musclecar era. One of these days I look forward to doing a proper shoot on one and getting behind the wheel, and will let you know if my lust is well-placed or not!

Trucks in particular are great entry-level buys, for they can be substantially under the $100,000 point just mentioned. Examples are early Ford F1s (1948-52), and early Chevrolet trucks. But the real standouts are early Ford Broncos from 1966-67; they are up almost 30% over the last two years. For the guy who is around 40, this is the hot ticket, along with Toyota Land Cruisers.

In the middle ground…1991-2005 Acura NSXs are up 40% over the past two years. Higher up in value, Lamborghini Diablos are up over 20%, but this is when they don’t catch fire. I’m saying that only half facetiously, for a Diablo is an example of what we were talking about earlier, where you need to factor in reliability. BMW Z8s have also done well over the past few years.

If a Lamborghini Countach is on your dream shopping list, McKeel Hagerty of Hagerty Collector Car Insurance says to be sure to budget for proper maintenance—a cost most new collectors don’t account for. Such machines weren’t built with the reliability of today’s exotics, and maintenance costs can add up quickly, and impressively!

Almost mirroring this, are cars that are showing interest on our valuation page (https://www.hagerty.com/valuationtools), where people hit the valuation tools, or are getting insurance quotes. In particular we are seeing this in 1994-2004 Mustangs, and 1993 and later Firebirds. The truly great cars got priced out of the market, and people are saying, “I want to be in a car but can’t afford it,” so they are going with what is within reach. Most are sports cars—think of the 1997-2004 era of Corvettes, and you get a lot of car for the money.

Q: What segments are depreciating? Can you give specific examples?

Yes. Established classics like Jaguar XK120s are down a little, and the Tri-Chevys (1955-57) are steady to slightly down. Mercedes 230-280 SLs are also down slightly, while a 190SL is down nearly 20%. Lamborghini Countaches were down 16% last 12 months but had a 155% increase in 2014, and a 30+% increase in 2015.

Q: If you were going to fill up a warehouse with a single car for a five-year hold, what would it be, and why?

It would be two cars—Toyota Supras from 1993-97, especially the Mk IVs; and Lamborghini Diablos at the right price.

On a different level, my wild card is first generation unmodified Mazda Miatas. If you are a person who wants to buy a $5,000-$7,000 convertible and doesn’t want to have a reliability problem like the old days with Triumphs and such, Miata are an outstanding value. And so is the first generation Audi TT.