Think Thrice

A few weeks back, I was at a party where the host approached me with an acquaintance in tow. I was introduced as “Jay, the car guy I was telling you about.” My plan to remain anonymous and keep the bartender company had been thwarted. Luckily, this guy, let’s call him Tom, was about as nice as they come. Unfortunately for him, he started in on specifics and asked for my opinion.

Tom had a desire to find an original and unmolested ’57 Chevrolet Bel Air for a reasonable price, buy said Bel Air, and restore it himself in his garage. Unfortunately, he was shopping for fillet on a ground-chuck budget. When he asked for my take on his options, I caught myself doing something I’m not sure I’ve ever done before — I discouraged him.

If he had asked about restoring a ’57 Plymouth Fury or a ’57 Ford Ranchero or a ’57 Pontiac Chieftain, I would have been his number-one cheerleader. But instead, I tried to convince him of a better option by educating him on the three pillars of valuation: Desirability, Demographic and Economy.

Coveted, restored, sold

From a Desirability standpoint, the 1957 Bel Air ranks right up there at the top as one of the most coveted American classics of all time. As a result, every decent shell between Seattle and Tampa has been yanked out of the brush or barn already. There might be a handful left out there somewhere, but the days of lucking up at an old lady’s garage sale are long gone.

On the upside, desirability has driven the preservation and resurrection of thousands of cars that would have otherwise languished in obscurity or been recycled into fence posts. Consequently, you can hardly turn a corner at a neighborhood cruise-in without running into one, which is a good thing.

It doesn’t take a mathemagician to understand that the 1957 Chevrolet is a known commodity. The ACC Premium Auction Database indicates that average sale prices first reached the $50k mark way back in 1999, after a slow and steady climb. From 1999 to 2005, we saw a sag, but average prices only fell by about $10k at their lowest. After climbing back to the $50k mark in 2005, these cars have bobbed up and down between roughly $50k and $65k ever since, the latter being pretty close to today’s number.

What can we infer from the numbers? Well, let’s look at a slightly less established model for comparison: the first-gen Ford Bronco. These early utilities have been on an absolute tear that has seen the average sales prices climb from less than $10k in the early 2000s to almost $50k this year. The last decade and a half has been all flow for the Bronco, with no ebb. Numbers like these point to the lack of market saturation that we’ll eventually see. From there, the numbers will likely turn south, providing our first market correction. What will that number be? Without hard data, we’re all speculating.

That’s why the ’57 Chevy, with its initial climb long past and realized prices now stabilized in a range that has held rather steady for a decade and a half, looks to be about as safe a bet as one can make — at least for now. Which brings us to our second pillar: Demographic.

Who is buying?

A significant influencer of the stability of any given model is the demographic holding it up. If we do a little simple math and assume that the average enthusiast invests in vehicles they had meaningful connections with during their formative years, that puts most of us chasing vehicles five to 25 years our junior. That places the primary demographic for the 1957 Chevrolet somewhere between the ages of 66 and 86.

What does this mean for values? Well, as I argued with Carl Bomstead this year on the ACC panel at Barrett-Jackson in Scottsdale, I think we’ll likely see a slow descent in prices over the next few years with maybe a few “can you believe it?!” blips here and there, followed by an eventual drop due to the sheer number of nice cars pouring into a market supported by a disinterested demographic. Don’t believe me? Take a look at what’s happening now with values of late-’40s street rods.

Numbers tell the tale

And now, Economy. I am no economist, but the numbers don’t lie — and the truths they expose are often a bit counterintuitive.

For example, if you view average sales by year through the lens of the performance of the S&P 500, you might expect that established, stable models would be the most likely to remain stable, and the surging models would suffer. Not true here.

When the S&P nosedived between 2008 and 2009, the ’57 Chevy fell with it, with average sale prices dropping by about 10%. The first-gen Bronco? It flatlined, but lost virtually no ground. When the market started climbing, the ’57 had recovered three or four percentage points by 2010, but the Bronco skyrocketed, with average sales increasing by 30% from the year before.

When the S&P hit a new high in 2015, so did the average sales price of the ’57. Unfortunately, when the market wavered later that year, the ’57 lost every dollar it had made since 2014. The Bronco? The average sales price hasn’t lost a dollar since 2003, which happens to have coincided with the bottom of the S&P’s last big dip before the Great Recession.

So what does all this mumbo-jumbo mean for our friend Tom? I suggested that if he really wants a ’57 Chevrolet Bel Air, he should wait a year or two and buy a heck of a car for a lesser price — which is the same thing several would-be Tri-Five owners I know are planning on doing. I also suggested that if he really wants to build something now, he should find a truck or old SUV, which will be easier, cheaper, and more likely to make money once it’s done. But that’s just me.

What do you think? Are Tri-Fives going to stay solid, or are the numbers showing us the future? Send me your thoughts at comments@www.sportscarmarket.com.