Despite the precautions put into place by Motorsport UK ahead of the 4th July we’ve been asking ourselves if the financial impact of COVID-19 would negatively impact the market for racing cars of all varieties.
Road Car Market
When looking at race car values 2020-2021, with regards to road cars, we were initially expecting prices to soften. However they have in fact increased in some pockets of the market. As well as positive feedback from our dealer network and we are also seeing strong auction results, some outstripping the prices previously expected by dealers pre-lockdown.
It isn’t as positive for the new car market with the SMMT expecting that one in six jobs within the UK automotive sector may be lost. Manufacturers have been pressuring government to offer incentives as a result of low sales of late. June registrations were down 34.9% compared to the previous year. The industry wants a renewal of the scrappage scheme (which has been ruled out) and the sector also missed out on VAT cuts that have been applied to other sectors.
This runs contrary to our own experience of the current market, and that of our dealers, so we can only assume that the marker for new cars and that of ‘leisure’ cars are operating at different trajectories. We think that there are two main factors creating the demand for non-daily drivers; firstly, due to government measures we feel that there are people in the marketplace who are holding more cash than otherwise would have been expected now buoyed with company bounce-back loans, tax and VAT payment extensions, and the furloughing of staff if required.
Secondly, some clients have expressed that having taken stock of their lives during lockdown they are now deciding that this is the time to re-evaluate their priorities and purchase the car that they have always promised themselves.
Race Car Market
The demand for race cars is more complex. When combined with the purchase price and ongoing costs associated with motorsport, there is a greater financial consideration. We expected to see an increase in the number of race cars coming to market as owners decided to sell rather than own cars they may not be campaigning in 2020.
This hasn’t been the case and not only have we seen values remain consistent, the number of entries for opening events in 2020 have been strong. We have been encouraged by the number of entries at a club level – the Historic Sports Car Club has reported 320 entries over 18 races for their season opener at Brands Hatch and the MGCC have 129 for theirs at Donnington which sees the Classic and Sports Car supported Equipe Classic Racing included in the schedule.
We have already seen some racing teams state that they will not compete in 2020 and will instead start afresh in 2021, as BTCC team Power Maxed Racing have done. If some privateers decide to do the same this may also mask the true level of demand within the sector so we could even see high levels of demand next year.
Despite the optimism we are still cautious about the medium term effects on the market. The government support for furloughed staff will end in October and the recent cuts to VAT and stamp duty introduced to help keep the economy afloat will come to an end next March. Deferred tax and VAT payments will also become due in March roughly in line with the start of the racing season. It is really only after this propping-up of the economy ends will we see the true impact on motor racing.
Despite the desire to compete there may come a time when for some it could become financially difficult to continue in the face of financial uncertainty. This could lead to growth in the racing events that offer the opportunity to compete at more modest price points flourish, and those which take deeper pockets to take part in perhaps begin to see lower levels of demand. This would then obviously have a knock on effect on the levels of demand placed upon certain models of vehicle which could force a price adjustment in the marketplace.
Do you have any thought on race car values 2020-2021? Let us know!