Rising Dollar & Value of our Early P-Cars

[mfitton]

I didn't want to highjack the for sale thread on the '72 Gulf Orange 911T, but wanted to comment on the last 2 posts regarding the rising dollar lowering the value of our cars. I was not an Economics major but I do have a Finance degree so maybe I am missing something here. With the dollar rising I can see the European market drying up some but even though they were enjoying a nice exchange rate by the time they paid to ship a car and pay duty (tax) it was pretty much a wash over the last couple of years wasn't it? I always thought the biggest enemy of collector car values was the overall economy and the availability of disposable income. Is anyone capable of explaining the effect of the rising dollar on our P-Cars, you know "Economics for Dummies" like me.

[Macroni]

For the last 4 or 5 years cars sold into Europe @ a 20% to 30% discount.... One of the more experienced can explain the European cost side of the equation; I do not believe it can be categorized as a wash......

[mfitton]

For the last 4 or 5 years cars sold into Europe @ a 20% to 30% discount.... One of the more experienced can explain the European cost side of the equation; I do not believe it can be categorized as a wash......

Ok maybe not a wash but it is expensive to import a car in Europe right? What I don't get is the rising dollar driving our cars value down. We will be on a more level playing ground and more cars will stay here right? Like I said I need an Economics lesson.

[will hung]

I was always under the impression that another factor in Europeans buying US cars is that a combination of our climate and the fact that we don't use ours as frequently (or at least in poor conditions) results in cars in the US being in generally better condition. So you have less to spend on restorations.

[ibmiked]

Here's the way I see it, and this is just my view of the landscape. When the dollar was weak compared to the Euro, cars in the US were cheaper for Europeans than they were for Americans because their currency was stronger. Even allowing for importing costs, Europeans were incentivized to buy US cars because they are generally more available and in better condition than their European counterparts. The US was a huge market for Porsche, and based on the way we ordered cars, I would suspect that we spec'd them much better than Europeans of the day did. For example, today you can still buy a new BMW in Europe with fabric seats, something you would be hard pressed to do here. In 1968, the European 911L was significantly de-contented compared to the US model. Therefore, our current supply of vintage Porsches is highly desirable.

Now consider that the Euro has fallen significantly in the recent past. The 'sale' on American Porsches is no longer in effect. As the dollar increases further, Europeans will be faced with the reality of having to pay MORE for their cars than a corresponding American buyer would. Add to that the fact that Europeans need to pay import costs AND THEN taxes and duties with their significantly weakened currency and suddenly the financial incentive is gone. This is not to say that there won't be European buyers, the wealthy will still buy what they want, but in general European wholesalers will no longer have the opportunity to arbitrage these cars and individuals will find that their money will buy less car than it did even last year.

In any economic environment when consumer demand wanes there is a subsequent effect on prices. We often hear the term 'deflation' bandied about, which is when less dollars are chasing products and therefore sellers must lower their prices to attract buyers or end up not selling their goods. In the case of our cars I'm not suggesting that this is already happening, but it is the logical outcome of economic factors already at play in the world. Porsche as a company has always hedged itself against these currency fluctuations but the vintage Porsche market has no such collective overseer. The free market will determine what these cars, which are so precious to us, are worth.

Cheers,
-Mike

[Greg D.]

Basically early cars (and lots of other things) are priced in Euros at the same level as they are here in $, yet another argument confirming the Euro was overvalued and the $ undervalued... ;-) So yes they enjoyed a 20-30% discount for many years, but that came with risk (long distance buying), fees, shipping, some tax (actually variable per country but generally low on oldies) etc... Not a wash, but not a 30% discount in the end either. Mostly it came down to the availability of cars, there were just more in the US that hadn't melted down to rust piles yet. As for condition, you'd be surprised, I've been surfing these forums and for Euro buyers getting a "911 from america" doesn't always equate with "rust free deal" but sometimes with "lots of bondo in the restoration". I know we have excellent restoration shops in the US but by and large that's not always the impression you get from those buyers. I agree with what Mike said above... But overall I don't see that big an impact just on the $ strenght aspect. The european economy is going down the toilet anyway, it wasn't that huge a drain on our cars, and there is still tons of cash floating around the markets (Asia?) that needs to be put somewhere it can earn a better return than what banks offer. Those cars should still sell, maybe not to the same place... If the Euro tanks, we might be able to buy them back too !

[911T1971]

Dont forget Switzerland, we dont have the Euro and we did not have any economic downturn (quite the opposite, actually), but its Europe too.

On a more serious note, condition is always paramount. IMO restoration candidates or survivors will always find buyers, plus any rare (race) car offered at auctions.

[Greg D.]

Switzerland, always neutral ;-)

[platas]

Totally agree with Greg, but I suspect that the way things are going, and the prospects for the euros, almost equal by the end onf 2016, US buyers will start to buy back the cars.

Best thing about this is that the only expense is the transport, no import fees at all.

I have being thinking of sending some of my cars back.

I do see some flats line on prices, here.

Of course to the exception is always Switzerland, there economy is always good and there buying power enormous.
For the rest of Europe, we are going down!!

It will be very interesting to see the out come from the auctions, and also Essen, at least for us, since they usually mark much of the prices.

[LongRanger]

. . . What I don't get is the rising dollar driving our cars value down . . .

'Price' and 'value' are two different things

'Price' describes what it's gonna take to make a deal, complete an 'exchange' . . . how much stuff --- dollars, Euros, pigs + goats, 1st-born daughters, etc . . . a Seller wants to let go of what he/she 's selling. It's a number

'Value,' on the other hand --- is not readily quantifiable . . . more emotional than numerical. Kid's baby shoes, Gramma's wedding ring, all those kooky old photographs in scrapbooks, etc, etc. Ever heard the term 'priceless'? . . . then someone was probably describing something kept in a closet. Or a storage facility. Coffee can. It's not a number --- but people try

. . . Like I said I need an Economics lesson . . .

Very Short Lesson . . .

As the value of the dollar increases ---- it will take more Euros to buy stuff that's priced in dollars. That's all

Put it Another Way . . .

Currencies are commodities that are bought and sold --- just like coal or corn, shares in a company, or art . . . or cars. And --- just like any other commodity . . . their 'price' can change. Right now? --- the price of the dollar is up . . . if you're paying for it w/ Euros. That's all