You Gotta Know When to Hold ’em.

One good way to judge when a car becomes collectible is to simply note when its value rises above the original purchase price

Part I: Defining the Collectible Porsche

Why do some Porsches accelerate quickly in value, while others languish? We can all agree that pedestrian models, such as the 924, will never be worth big money. But how do we identify the interesting Porsche variants that will appreciate modestly, if at all, and separate them from those that rise quickly in value and become "collectible?"

Car values follow certain common patterns. Most used cars display a lower value each year, falling eventually to a terminal value as scrap. Luckily for us, many Porsches-even mundane models like the 924-continue to be enjoyable and rarely end up on the scrap heap. However, they still end up with low market values. We call this the "Used Car" pattern, as the value depreciates with years and miles.

Dealers can still hope, can't they?

There is a second group of Porsches, at least in theory, that display the exact opposite pattern, a concept I call the "Dealer's Dream." In this trajectory, the value of a new Porsche goes straight up from the first day you buy it. It flies in the face of all reason, and almost never happens. It's important to note that most of the great collectible Porsches, such as the 4-cam 356 Carreras, the 911 Carrera RS, and even the 904 GTS, have not followed this pattern. But the dealers can still hope, can't they? After all, that's the logic behind their advertising centered around a car being an "Instant Collectible."

A third pattern of price behavior starts out with a standard used car, whose price rises after a while. These cars represent "Strong Values." Examples are a 1972 911E coupe or a 1964 356C coupe. These cars don't display huge gains; you can look forward to gentle, easy upward prices and limited downsides, although in a wild market, values can go down.
But collectible cars display a different pattern. A select group of Porsches enjoy a much greater rate of appreciation and the status of a "Collectible Car." While there is no set definition here, one objective way to define a true collectible is when its value grows to a point that certifies there is something special about the car. How to set that price? When does a car go from just having strong value to being collectible?

One good way to judge when a car becomes collectible is simply to note when its value rises above the original purchase price. That makes the car very special, as it signals people will pay more for a used car than a new one. But inflation changes the value of money, as do floating currency exchange rates and general economic trends. So we need a value that will incorporate the purchasing power of the dollar as it changes.

The collectible test

Take a 1958 356 Speedster. It cost about $3,500 when new, so it's no great achievement when the used car price passes that barrier 20 years later. It's a sign of strong value, but not the final push into collectiblity, since $3,500 isn't what it used to be. We need a way to adjust 1958 dollars to today's purchasing power.

To do that, let's equate a 356 Speedster to the closest car to it in the line of new Porsches. Since the Speedster was the lowest priced Porsche of its day, we'll use a Boxster. Since Speedsters today are selling for more than new Boxsters, it's a good bet Speedsters are true collectibles.

Being a collectible car is a powerful statement about the desirability of an old car. Most people would rather have the status and trouble-free high performance of a new car than an old one. You'd rarely pay more for an old car, unless it wasn't just an old car. Collectibles have to stand the test of time, and that seasoning is one of the important reasons why cars hold their value once they enter the "collectible" category.

Why bother with this distinction of a "collectible car" versus one with "strong values?" A collectible car has strikingly higher value, costs more than a similar new car, rises faster in a strong market, and keeps that high value longer in times of market downturns. The difference can be
illustrated by debunking of one of the great myths of collecting cars.

The decade of the 1980s was the beginning of the modern era of car collecting. It was a one-time move when values exploded. But they didn't explode in an even way. Some cars went stratospheric, others just climbed a bit. When the bust of the 1990s came along, the drop in the market was attributed by some to older collectors dying and values on older cars dropping. But this wasn't actually what happened, and a proper understanding of what did happen sets up the important distinction that defines collectibility.

Duesenbergs symbolize collectibility

Jay Leno wasn't a teenager when Duesenbergs were the standard of the world, yet he is still attracted to them. And he isn't the only one. Dueseys, Cadillacs, pre-war Mercedes and other "certified collectibles" remain of great interest to enthusiasts of all ages who have spare change to invest $800,000 or more in one of these giant pieces of automotive excellence. Let that price roll around in your mind a minute or two, just to get the feel of it.

It's more than almost any Porsche, unless it won at Le Mans. It's a big number, and symbolizes what happens when a car becomes collectible. The old saw that demand will trail off with the passage of time doesn't seem to hold if the car is collectible. Wealthy new entrants in the collector car market are interested in the best machines from every era. The best cars have become collectible for a complex set of reasons that bear further analysis.

Next month, I'll examine why it takes more than rarity to define a collectible Porsche, and attempt to catalog why some Porsches become collectible and others don't.