Enter your e-mail address below to receive our newsletter.
Classic-car business has slowed, but but wheels still turning
The Money is Good
February 23, 2009
FORT WORTH ó The wheels may be coming off of the new-car business, but the folks who cater to vintage tin ó customs, street rods, hot rods, classics and chromed-out lowriders ó are still rolling, albeit a bit slower than usual.
In January, sales dropped to $63 million ó from about $80 million in 2008 ó at the weeklong Barrett-Jackson Auction Co. sale in Scottsdale, Ariz. But cars such as the first production model of the 1955 Ford Thunderbird, which fetched $660,000, put the event in the companyís top 5 sales.
"This purchase is almost like comfort food for someoneís portfolio," Steve Davis, Barrett-Jacksonís president, said in an interview. "When people have seen their 401(k) shrink 40 or 50 percent, all of a sudden this becomes a very viable option. Now they can justify it as a hedge."
And customers are still restoring cars and buying parts, even if theyíre slower to pay or OK projects like the beauties slated to fill Will Rogers Memorial Center for the three-day Fort Worth Rod & Custom Show, beginning Friday. Organizers expect to have 275 vintage Mustangs, Camaros and Corvettes, plus motorcycles and trucks, on display.
The fact that Barrett-Jackson could broadcast 40 hours of live Speed channel TV coverage on its auction, or that people are still shelling out money for old cars instead of buying new ones, doesnít surprise experts.
"We still have approximately a year waiting list," said Gary Hatfield, founder of Hatfield Restoration in Canton. "It couldnít be any better."
Mike Millsapís Sachse Rod Shop Web site shows some of the 13 projects under way, including a 1941 Cadillac convertible for comedian Steve Harvey. Sales of aftermarket parts from his catalog operation are down, but he has a waiting list for shop work. All told, he banged out about $1 million in business last year.
"The hobby may slow down," Millsap said, "but it wonít quit."
Bobby Mikus, owner and partner of Kustom Classics on East Rosedale Street in Fort Worth, recently had to let four of his employees go. It also took nine months for him to get paid for work on a 1967 Camaro after the customer, in North Carolina, lost his job. But Mikus has eight projects in the pipeline and the prospect of some six-figure cars to come. "Anytime the weather perks up for a week, phones start ringing," Mikus said. "Weíre doing OK."
Wayne Meadlin is more focused on fixing up old cars than filling up new ones, although he works out of his Texaco station on Camp Bowie Boulevard in west Fort Worth.
One garage bay holds a 1959 Oldsmobile. Thereís a black frame under wraps in the other bay.
"Heís got plenty to do here," said John Valentine, who was scraping an old two-tone sedanís engine block for Meadlin. "This í56 Buick, it came in on a tow truck. The tank was filled up with old gas."
The valves were stuck, and Valentine said the stuff that came out of the engine looked like a chocolate shake.
"I spent 10 hours on it when it first got here," he said, eyeing the block. "All this was covered with carbon. I probably spent about two hours scraping if off with a razor blade."
A 1953 Buick Skylark convertible with wire wheels and a chrome grille needed parts for a broken hydraulic seat, but the model is so rare that Meadlin had to call a buddy in Tempe, Ariz., who owned a Skylark and asked him to disassemble his front seat and ship the parts to Texas for duplication.
New parts for the seat, made from scratch: $1,500. The Buick isnít a show car, but Meadlin could make it one ó for $45 per hour, plus parts.
"This is strictly a driver" worth about $60,000, Meadlin said. "Not even a nice driver."
Nonetheless, making the Skylark road-worthy cost $7,000.
"Customerís gonna cry," Valentine said, "but I guess he likes it." Actually, Meadlin said, the ownerís reaction to the bill was "Wow."
The South Carolina resident who owns the 1959 Oldsmobile in Meadlinís garage wants to drive it to his 50th high-school reunion, but it might not happen.
"That guyís out of money," said Meadlin, 65. "He gave me $14,000 on Dec. 7."
The carís only worth $25,000, showroom new, and Meadlin said itíll cost far more to complete the work.
Davis defends the investment aspect of old-car ownership but acknowledges that thereís an irrational element involved, too. "These are rolling pieces of art," said Davis, who took out a second mortgage to buy a 1967 Shelby GT 350 with factory supercharging. "Itís part of the family."
Regardless of where the work is done or what it costs, Millsap said you canít build a car in under 1,200 hours. Meadlin said thatís just for what he calls a "shoe-shine" car that looks good, not a frame-off restoration. That takes more like 1,500 hours. A vintage Packard restoration could involve up to 4,000 hours. The experts acknowledge that one of the reasons business is reasonably steady is that it attracts a relatively upscale customer in the first place.
"We donít fit everybodyís budget," said Hatfield, whose staff of 15 has restored cars for events such as the prestigious annual Pebble Beach Concours díElegance. "I always tell a customer itís cheaper to buy this car already done."
Dan Hudachek directs automotive restoration development at Kansasí McPherson College, where students can earn four-year degrees in automotive-restoration technology. He sees economic caution in the business, but not a crash. Even though people are not spending as much, the passion for collecting is still there.
"Vehicle prices and level of interest have waned a bit in the past six months, but the bottom has not fallen out of the industry," Hudachek wrote in an e-mail. "From what I have seen, the large and/or high end restoration shops have as much work as ever. Small, mediocre shops seem to be struggling a bit, though.
"The demand for collector cars in the $35,000-$80,000 range seems to have shrunk considerably since the average person doesnít have the expendable income to put into collector cars. Therefore, shops catering to that caliber of cars are getting hit hard," Hudachek wrote. "Judging by the trends of the major car auctions held in the past few months, people are being less frivolous about their collector-car purchases. They are buying cars because of their investment potential, sentimental value or collectability.
"Cars with documented history are still faring well, while clones and replicas are doing poorly. One of the pluses in the poor economy is that now is the time to buy if you can. Many investors are viewing collector cars as a relatively safe investment right now, but like any smart investor they are being very careful about where to put their money."
Thatís why Davis put more midlevel cars worth $50,000 to $150,000 in the Scottsdale auction instead of loading it with more costly cars. Although the average carís sale price was down, 70 percent of the sales were to first-time buyers who accounted for 30 percent of the bidders. Davis said some of the best deals are in the $25,000 to $50,000 range. Pickups from the 1950s did particularly well at the Scottsdale sale too, he said.
"You can buy a beautiful 1965 Mustang for $12,000 to $15,000," Davis said. "Itíll not only retain its value but provide a platform to make it better."
Old Air Products of Fort Worth specializes in custom air conditioner and heater systems for street rods as well as vintage, antique and classic vehicles. The shop employs 20 people and makes original replacement A/C and heater system parts for vehicles from the í50s to the early í80s.
Darrow Cowart, president of Old Air, said business is down 17 percent over the past 90 days compared with the same period last year. But the economy hasnít forced layoffs there.
A competitor, Vintage Air in San Antonio, employs 87 people. The company makes high-performance air-conditioning components used by hot rodders and other special-interest car owners. The 33-year-old companyís sales are in the $8 million to $10 million range, said Rick Love, Vintage Airís vice president.
The company hasnít had layoffs either. But instead of hiring seasonal workers as the weather heats up, it will make do with the employees it has, he said. "People tend to let the hobby be the last thing to go," Love said. "But itís definitely slower.
"Weíve done a wage freeze. Weíre watching our advertising dollars."
Steve Coonan, publisher of San Francisco-based The Rodderís Journal, said that unlike newspapers and many periodicals, most of his income comes from readers, not advertisers. But the car photographer-turned-publisher acknowledges that heís felt the recession.
"We think thereís a chance the magazine may be countercyclical, but itís certainly not true of advertising," Coonan said. "Itís tougher to sell ads than it was a year ago, but subscriptions are holding steady."
He sells about 35,000 copies of the slick quarterly magazine. It focuses on vintage hot rods and custom vehicles and goes for $14.95 per issue at the newsstand or $48 for a one-year subscription.
John Sabedra is one of the guys who continues to support the old-car business, even though he was laid off as a Verizon manager in September.
The 53-year-old Arlington resident owns a 1969 Chevrolet Impala lowrider. The car caught fire and underwent major surgery, including grafting the old front end onto a donor body and two paint jobs, before he was satisfied with it. Sabedra was so committed to saving his ride that he put the salvaged door locks from his original car in the rebuilt Impala.
"For $20,000, I could have bought a really nice car, but me and this car have history," Sabedra said. "Iíll bet you with everything, Iíve probably got $30,000 invested in it. As we say in the lowrider world, weíll pay the chrome bill before we pay the phone bill."
Not everyone feels that way, of course. Meadlin said one customer refinanced his house to get money for an old-car renovation without telling his wife. When she figured out what heíd done, the woman gave him two weeks to get rid of the car and put the money back into the house.
"He sold it at the Dallas auto show for $56,000 two weeks after we finished doing it for $126,000," Meadlin said. "Now he donít do cars no more."