Is the Classic Porsche Bubble about to Burst?

Will 2015 be the beginning of the end for the skyrocketing values that classic Porsches have enjoyed the last few years? Auctions were crammed packed with everything from basics 912s to blue chip 911 race cars over the last few years. With guys like Magnus Walker and RWB's Akira Nakai making Porsche cool to the general public, the brand has been catapulted to the forefront of popular culture. As a result, Porsche (especially the 911) has become the current flavor of the month for Westside Hipsters that want to show how "authentic" they are by jumping on the latest bandwagon.

Porsche has always been an enthusiast driven brand, the largest maker of race cars in the world, and one of the most winning marques in history. But unlike a Ferrari, Lamborghini, or even an Aston Martin... everyone's uncle had a Porsche and that is what is going to ultimately drive the prices down and make automotive enthusiasts and fashion driven hipsters seek out something different. I mean you can't be ironically original when you park next to 15 other 911's in the Urban Outfitters parking lot.

Auctions are fun... but only one small aspect of the market.

You cry out "BUT WHY?" How could it be that Plain-Jane 911's won't be selling for $150,000+ forever? First thing you have to remember is that auctions are not the real world, you go there to sell your rare car because that is where all the high rolling Type-A personalities go... and they don't like to lose, especially on TV. Second thing you have to remember is that only the big auctions get televised and widely reported on, so that is where the big money goes, smaller auctions is where cars trade at real world prices. 

As a car hunter myself I have pulled lots of rare and odd ball cars out of backyards, garages, and storage units over the years. But when a classic car becomes popular to the point that the average man on the street knows it....all of a sudden those cars that have been in Uncle Vinnie's garage the last 30 years are pulled out dusted off and flood the marketplace. The values start to drop as listing rack up weeks and eBay auctions don't hit reserves. With Porsche that means a lot of cars that have been off the market for years are hitting the streets and classifieds.

Porsche compared to their rivals is the Ford Model T of sports cars. Lets look at 1973, a single year, total production for Porsche was nearly 44,000 units while Ferrari built just 1,772 cars total. Do you see why that 1973 Daytona is worth a bit more than your uncles 914?

This was made evident at Gooding & Company's Scottsdale auction in January, where a quarter of the Porsches that sold went for an average of 33% below their auction estimates (taking the average of the high and low) with many not even hitting their low estimate. Now you would be right to point out that at the same auction a 1966 Porsche 906 Carrera sold for $1.9 million and a 1988 959 Sport sold for $1.7 million. True, but both of those car were extremely limited production, fifty in the case of the 906 and just twentynine in case of the 959 Sport. 

Also, to my point, both of those cars landed right in the range of their pre-auction estimates, they were not shattering estimates and records as we saw in 2012-2014. In fact, at the Gooding & Company Amelia Island auction in 2012, eleven world records for Porsche auction prices were set.  This years Amelia Island saw just four records for Porsche, all within the auction estimates and all ultra rare cars.

Screen Shot from Gooding & Company 2012 Amelia Island Results

Now the ultra rare Porsches will always have a market, cars like the Porsche 911 Carrera 3.0 RSR and 959 models will be traded around the billionaire boys club in the 7 figure range for years to come. But for people "investing" in fairly common Porsches models might be in for a rude awakening when they post their car on eBay and it does not hit the reserve.

I've seen it time and time again, the car that is in vogue due to a movie or just popular culture, all of a sudden becomes the must have. They all get drug out of hiding, the vendors see the boom coming and try to keep the trend going as long as they can. Average guys rush out and buy a car that is close enough to what everyone wants, visions of dollar signs dancing in their heads. Thousands of cars are over restored and all hit the market at the same time, the inventory sits... and the bubble bursts. Projects that were started too late into the boom get parked in garages half done... after a few years they become ads on Craigslist and eBay.

Is the bottom about to fall out? No one knows for sure... but all the signs are there that Porsche's time as the "it" car is on the decline.