The economics of restoration.

[Colin Caygill]

If a fully restored  car is worth £25000 and the market value of a rusty wreck, same model, is £8000-£10000, how the heck is it viable to have one professionally restored? Ive finished my latest rebuild and am potentially looking for a new project but they don't stack up anymore. I did all the work on mine myself except obviously the cylinder head machining but I'm still only just under the market value in money spent.  I've done quite a few cars and motorbikes over the years and although I love doing them I can't afford to lose money on them. Is it linked to the number of TV programs giving a rose coloured view of the hobby? Of course the market will dictate prices, but has anyone else been dismayed with the number of 10 grand basket cases of quite ordinary cars. I'm not talking about Aston or Ferrari here. 

It's hard to buy something for the right price. Maybe I've done my last resto after 40yrs!!!

 

Edited January 5, 2022 by Colin Caygill

[Clive]

Paying to restore a car is almost never good business sense. There was that GT6 that sold recently for £30k+, but the chap had spent 3x that on the car (goodness knows how)

So yes, financially not viable, but people rarely restore to try to make money. 

To make money it is about flipping cars, buy low, do a few things to "add value" and sell for top money.

 

[RobPearce]

It has NEVER made financial sense to have a car professionally restored. The same is true of most things, to be honest - repairs or improvements to your house will always cost a lot more than they add to the value. If you're in the classic car market with a view to making a profit then get out, you're wasting your time.

At times, there have been people who "restored" cars to make money but there are two very big caveats: first, they did all the work themselves and the money they made wasn't exactly top dollar per hour. Second, they generally cut so many corners that the "restored" car fell apart with a couple of years' use.

My GT6 owes me nothing - its current valuation matches what I've spent on it over the 30 years I've owned it. Of course, that's not accounting for inflation. But it's never been an "investment". I bought it because it's fun to drive and I've had a lot of enjoyment from it. The Spitfire is similarly huge fun (that was a car that had been "restored" before my brother bought it, fell apart in two years, then took me 30 more years to rebuild to a decent state). The Vitesse had been professionally restored for the owner before last, then was garaged and unused for a few years before being sold for a quarter of its restoration cost. Since then it's had a lot of use and given a lot of fun... and needed a fair bit of work. It's currently off the road having significant bodywork done, but given that the restoration is now older than the car was at that time, I'm not complaining.

[Roger Keys]

Its not viable at our end of the market. Never has been.

You dont do it for its "viability".

 

[Ed H]

Hobby economics are way different from rational business economics.

It is possible to restore a car and not be under water at the end, but not easy.  You have to buy the car right (or, as in my case, buy it when It's worth nothing, and store it for 30 years), do almost all the work yourself, and bias toward refurbing parts rather than buying new.   

If you do end up selling the card for a small profit,  don't even try to figure what your time investment was worth.  You don't want to know, and It's not the point anyway.

Ed

[Colin Caygill]

Yes, I agree with all the above comments, but why then are there people buying fairly mundane cars and getting them professionally restored? My doctor always wanted a Stag. He was going to go that route but I told him to just pay £18k for one of the best ones and save himself time and money....which he did. ( This was a few years ago). 

I'm happy as long as I don't lose money on a restoration and up to now I never have, but my original point was that it's difficult to buy stuff now for the right price. Don't get me started on the quality of new parts. 

 

[Bish]

I guess it’s a case of supply and demand. There are more people out there wanting a classic these days, and only so many good cars to go around. I agree that the rising number of people wanting to own a classic has been driven partly by the plethora of tv programmes which paint a rosy picture of classic ownership, and claim that there’s money to be had by buying any old classic as an investment. 
 

Your right, times have changed. It’s good that more people are enjoying the hobby, but prices are crazy and look like they are here to stay. 
 

Triumphs are still good value, but don’t go telling everyone! 

Edited January 8, 2022 by Bish

[yorkshire_spam]

I think there are 4 logical reasons to buy a car as a restoration project (as an enthusiast, not a business):

1) Rarity - if you can't get the car you want in a restored state 

2) Enjoyment - if the end result isn't the point, but you enjoy the process

3) Cash on Hand - buying a project and paying for restoration will cost MORE, but if you can't afford to pay for it all up front it's like a savings scheme for the car you want

4) Obsession - not sure this counts as a logical reason, but if you really really want a particular car (childhood memories or something?) but it's not a "usual" classic. Like some of the concourse examples you see at Festival of the Unexceptional. 

As a business it makes sense to restore a car if you can use it to soak up dead time for the mechanic/bodyworkers/painters that you can't get a paying customer to pay for. Provided the finished car is valuable enough.