Is It Time To Bring Quality To The Table?

THE NEED FOR A STRONGER RATING AND VALUE SYSTEM FOR CLASSIC CARS

We read the following article by Jason Wenig, of  The Creative Workshop located in Dania Beach, FL 33004 when first published and found his thoughts a valid challenge to the more traditional valuation methods associated with restored classic cars.

For sure, we have met or read of owners of a $10,000 classic car who spent another $30,000 with a restoration of some degree to end up with a car selling at auction for $15,000.  (Number too low? Make them whatever you wish them to be...) We're not referencing boiler-operation restoration efforts: new tires and a fast paint job. We're referencing a bonafide restoration by a reputable operation intended to bring a classic to award winning condition.  What's going on???

If we consider that Jason and The Creative Workshop are accredited restorers with excellent reputations and hence have a vested interest in the value of restored classic vehicles, that does not diminish the validity of his argument the "added value" associated with a quality restoration should factor into the actual market value of a vehicle.

Here is Jason's article in it's entirety:

“Cost of the restoration, $120,000, let’s start the bidding at $25,000.” What? Car collecting has evolved from

its infancy and has become a viable form of investment – for the collector, the enthusiast, or the person looking for diversity in their financial portfolio – sitting alongside real estate and artwork. However our current valuation system for this asset is as flat as a tire. Nowhere in the hard asset world is there such a discrepancy between money put in, versus money realized out. As a professional restorer, I am faced with having to explain to many clients that the value of their car after restoration will surely not return its investment.

The discrepancy between the costs of craftsmanship vs. fair market value has far reaching ramifications. To name a few, it vastly diminishes the pool of cars that are worked on and ultimately shown and enjoyed and it creates incentives for shops and individuals to take short cuts and “cheat” - significantly hurting the profession and the hobby as a whole. Determining the value of anything, whether it be a piece of art, a stamp, a property, a diamond, or a classic car is a tricky business based on a complicated combination of intrinsic worth, rarity, market demand, quality and provenance.
In the world of diamonds, for instance, value is determined by a system of C’s - rating clarity, color, cut and carats. In other words, a dependent system relating the size of the diamond, the craftsmanship in the style, design and cut of the diamond and the inherent quality of the stone. What this system allows is a 360-degree view of worth – not a broad stroke; such as the diamond is 2 carats and “beautiful”.

For classic cars, and most especially, for restored classic cars, the current valuation system (or lack thereof), is not completely reflective of market realities, and fails to reflect tangible aspects of worth.

There is a need to produce a stronger support structure. As we stand today, only a very few select cars will ever return a profit on investment – assuming the repair/refurbishment work is done correctly and with care. Because resale values are not in concert with restoration costs, many wonderful, quirky, interesting and rare cars are left by the wayside. Unfortunately, it is this amazing breadth of Classics that fire our imagination and fuels the hobby. As the diversity and richness of the hobby gets squeezed out because of an extremely limited scope of value, we all stand to lose.

WHAT'S HAPPENING NOW
Let’s look at the current system through a few examples:

Example one: A Sunbeam Alpine, 1960 – a handsome car, sporty, nice lines. The car is comfortable to drive, and shows enough detail that a fine example can really be a showstopper. It is even rather rare – although quite a few were imported into the US, very few are currently seen. In fact, most people don’t even remember the car until they see one: “nice car – what is it? Is it for sale??” Current valuation: $5K - $9K. Now take our Sunbeam Alpine and fully restore it to top show level – perhaps even a few “enhancements” to truly bring out its appeal – chrome done perfectly - seats redone in fine leather - engine reworked to bump up power – wire wheels chromed - wood steering wheel finely refinished, etc. 

The cost to completely restore and upgrade this car is $95K. So, what is the “real” value of this car now? Where do we quantify, or even acknowledge, its obvious current beauty, quality, craftsmanship, and condition. It’s enhanced worth, while obvious, is not accounted for in the current valuation system. If this car was offered for sale or for insurance coverage, it would receive a fraction of its paid-in value.
Example two: A 1930’s Packard Coupe – not the most desirable of Packard’s, but still a rich and opulent car, impressive in every way. It’s value, based on today’s scale, ranges in the $20k’s. To properly restore one, however, is a massive undertaking that will cost into the six figures. For the individual having one restored properly, it is an “investment-unfriendly” undertaking. How could a car undergoing a detailed and intricate 6-figure restoration be worth only $45K (under the best of possible resale/insurance circumstances)? 

There needs to be a way to make concrete what is immediately evident … these cars have “value added” and should be easily recognized for their obvious worth! Throughout history, quality, detail, craftsmanship and art has been culturally “valued”, it’s time it was applied to mechanical art – automobiles!

WHY WHAT’S HAPPENING DOESN’T FIT WITH WHAT’S HAPPENING
The major cause for this “failure” of the current evaluation/ valuation system lies in its lack of recognition of the growing and developing art form of car restoration. In the ‘80’s, restoration often meant riveted or screwed on metal panels, plastic body filler, paint, some new mechanical parts (“correct” or not often didn’t matter) and a few new wires clipped in place of the burnt ones. Now, the art form has come full circle. 

Metalcraft is the buzz and meticulous researching down to the last screw for historical correctness is what distinguishes prized cars. Today, there are several different guides, each with similar numbering systems to help determine what “condition” any given car is in. Whether we use a “1 through 3” or a “1 through 5” system, we have all become accustomed to the fact that a condition 1 car is “perfect” (or near to it) and at the opposite end of the scale is a “parts” car or near to it.

Most of the problem lies in fairly determining what a “#1” car is. Is a car in excellent condition worth as much as a car that has been meticulously restored to an exquisite level of excellence? Partly because the current rating system is too simplified, the worth of any given car is almost solely based on popular desirability. “Perceived worth” is a strong factor in determining market value, but so should craftsmanship, parts availability and mechanical/rebuild difficulty be a factor of “real worth”.

FROM A RESTORER, CAR LOVER, INVESTOR’S POINT OF VIEW: A MORE EQUITABLE SYSTEM
There is one immediate and logical way to affect a change: initiate a more sophisticated valuation system. A system based on two separate but related scales – “1 through 4” for marketplace desirability (which includes rareness), and “A through E” for the level of rebuild – a craftsmanship scale if you will. With such a rating system, a car that might not be as rare but that was restored to the finest of levels, would have the ability to achieve higher value at resale or insurance coverage – more commensurate with the actual cost of its restoration.

     Desirability:
          1: Extremely rare and/or desirable car 
          2: Rare and/or desirable car 
          3: Average desirability 
          4: Below average desirability 

     Craftsmanship 
          A: Immaculate and detailed craftsmanship 
          B: Above average restoration 
          C: Average professional restoration/Good home restoration 
          D: Unrestored or original used classic 
          E: Parts car

An experienced appraiser will need to/should know the marque and the peculiarities specific to the car or era – incorporating into the mix, items such as, the difficulty to restore pot metal, unavailable rubber seals or a particular marques enamel emblems, which are not reproduced. 


Cars with catalog followings – ones where nearly every part can be purchased new, should be discounted, whereas the oddballs – the ones where in-depth searching and networking is required to source certain or most parts, should be rewarded a premium. Similarly, date coded parts, original tags and emblems, etc. would be awarded a premium. 

With such a revamped system, a car would be accompanied with a “pedigree” – for instance, a “1A” (a very rare/desirable car restored to the highest of standards). This “pedigree” would properly identify the car's unique features and account for the level of work needed to attain these results. For sellers/purchasers and restorers alike, a more dynamic system would encourage and protect investment, and reduce the propensity to take short cuts. This benefits us all.

CLOSING THOUGHTS 
Collector cars are a limited commodity, you can no longer “make” new ones, and each year, they are getting older, harder to come by and more difficult to preserve. (Garagistry note:  we have made this very point many times - if we don't preserve a vehicle's history and provenance today, tomorrow may be too late.)

If a change isn’t made in the way we value these treasures, sooner rather than later, the diversity and richness of this hobby will be gone. The introduction of a new or adjusted system would not necessarily mean that the value of restored classic cars would immediately increase. It does, however, provide a starting point - a better foundation by which cars could be judged, compared, valued and appreciated. What is needed is a support system that rewards exploration, allowing enthusiasts to invest in the diversity that all available marques offer us. It’s time to make a change."

CONCLUSION:
Can a new system of classic car valuation be established that is fair, reasonable and equitable when considering make, model, year and country of origin?  We think so; but where and who will initiate such a system is an open question.

So - what do you think? Is the current "system" in place to evaluate just the top 5% of all Collector cars, most cars or all cars? Why is it perfectly acceptable to upscale valuations for "Blue-Chip" cars by including the cost to restore, but rarely, if ever, considered when valuing other Classics? Please use the comment section below and let us and other readers know your thoughts...

Keep the Hobby Alive and Values Real -

The Garagistry Team

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