The economics of commercial restoration...

[100702mark]

I was doing some work this weekend on classic cars as an asset class for work. There is an index in existance that tracks Porsches. I dont have all of the constituents but the top 10 cars making up the index were Carrera GT 2004-6, 911 RS Touring, 1965 911, 904 GTS, 550 Spyder 1953-56,959, 550 A Spyder,356 speedster, 911 RS 2.7 leicht and 906 1966.
Very crudely and if it is correct the market in this index fell approx 62% peak to trough from 1989 to 1993 and took 15 years to then get back to it's 1989 level. Year to date the index is down about 5%
The same Ferari Index fell 74% peak to trough and again took approx 15 years to recover.

For the people with vast experiences in thePorsche world does this sound right? If it does there is a lesson in there for all of us that it isnt a one way street and like any bubble it will burst at some point unless its a car with a serious racing provinance.

[210bhp]

The previous cycle, i.e. pre 1989, was also approximately 15 years.

Regards
Mike

[mersea]

Your findings are in line with the current feeling of the reconised Europe / UK lending houses on classic car finance.
Warnings have been sent internally to both lenders and there so called valuers
are being very carefull.

Major concerns that the prices of early 911 are about to level of and that in some cases will drop, this is aimed at the recent market rise on the most desirable models.

There will obviousley be circumstances that will have a greater bearing ie
previous history etc,etc.

I am sure this will attract various replys,but the fact remains that lenders are on red alert and history has proven that this is always the first sign of pending adjustment in the market place!!!!!!!!.

[Disco]

thanks for the good news.

[Bruce M]

This discussion about restoring cars to sell/profit reminds me of the first rule of dog breeding.......

"If you are making money........, you're doing it wrong"

[Barry]

That's a good one: I've not heard it before, but should think that there's more than a grain of truth in it. Amazing how much a 'proper' breeder has to do these days for their money.

[sng45]

Not sure if the index you're referring to is the "HAGI" index - it features in "Octane" magazine each month re prices for classic cars....

detail here if that helps

http://www.historicautogroup.com/

Steve

[Barwaut]

All the professional restorers are laughing their pants off. Of course they are complaining along with the customer about the prices, etc, etc.

But in the end they are just selling their labor hours... Easy as that.
Better than than sell your hours in a factory. They can play with shiny Porsche parts...

I write computer software for 100 UK pounds an hour. Don't get me wrong, I love it, but in the end I don't care what the customer wants to see on his screen. And I am not milking them of course, I offer honoust inside knowledge and advice. There's work enough, so it doesn't matter if a customer spends 30 hours or 300 hours...

[gridgway]

All the professional restorers are laughing their pants off. Of course they are complaining along with the customer about the prices, etc, etc.

But in the end they are just selling their labor hours... Easy as that.
Better than than sell your hours in a factory. They can play with shiny Porsche parts...

I was also wondering if restorers get to charge all the hours they work?

I write computer software for 100 UK pounds an hour. Don't get me wrong, I love it, but in the end I don't care what the customer wants to see on his screen. And I am not milking them of course, I offer honoust inside knowledge and advice. There's work enough, so it doesn't matter if a customer spends 30 hours or 300 hours...

Nice work! That seems quite a high rate. I assume you are a contractor?
Graham

[Barwaut]

No, like all self-employed they are not able to book all their hours. That's quite normal. But still...

If I could hop around classic Porsches asking, something like 60 pounds (as it is now in Holland, the US rates are around $100, which is 60UK as well) and can book 30 hours a week... Not bad for a mechanic.

And this is labour alone. Ofcourse some overhead, but still...

OK, what do I know... shut up...

[Disco]

I write computer software for 100 UK pounds an hour. ...

wow. 800 quid a day is a pretty good rate for a contract developer - are you sure you arent back in 1999 re-writing cobal for airlines?

in the end I don't care what the customer wants to see on his screen. ...

I cant imagine that you have many returning customers if at 800 quid a day you're not interested in what they want. IMHO the key to any successful transaction in business is getting what you want whilst providing what they want in return ( or visa versa ). Maybe I'm out of touch, or maybe I should move to Italy ... this time next year Rodney... we could be millionaires.

[DustyM]

Of course some overhead, but still...

That's a bit of an understatement, most workshops will have significant overheads - Rent, rates, insurance, utilities, equipment rental or replacement, etc, etc, as well as un-chargeable hours. All this has to come out of the hourly rate before their "take home" can be calculated.

I would think most smaller workshops do it because they love the work not the money, there are much easier ways to earn better money, writing software for example

[Barwaut]

Like I said: what do I know...

I am in a niche market with special skills... Just got lucky...

And about me not caring: the customer decides in the end, I give advise, they descide. That's what I mean with 'not caring'.

Ok, let's stop this and let's talk CLASSIC PORSCHEs.... YES!! I love them...

[40 scout]

£ 100 p hour and two 912's

Sorry - couldnt resist it!!

Steve

[Barwaut]

I know Steve,

912's are great to enjoy the classic 900 body and doing your own maintanance on a very friendly engine...
And besides, and that's COMPLETELY MY finding, it seems that 912 owners are less prone to showing off. It's not about speed or gadgets or money.
Too many times I encountered 911 chats which were about: "O, you have a T (sorry), My E is...."

But I like underdogs / no frill products.
My opinion is that less is more...
Same with my watches and other hobbies.