Why Gen Z is starting to get into car collecting

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Collecting classic cars is often viewed as a baby boomer activity. But times are changing. Gen Z is now entering the market, and they have different tastes.

Chairman and CEO of Hagerty (HGTY) McKeel Hagerty tells Yahoo Finance autos reporter Pras Subramanian there has been a shift from baby boomers controlling the market to new generations starting make their marks. He argues there is a "rebalancing ... where vintage cars, the great ones especially, will continue to hold their value, but they may not be increasing in the way they were in previous years."

Hagerty makes the case that Gen Z is still interested in driving and owning cars, which he considers "pretty good news when you think about the future of how people might collect. You start with what you drive every day. Then, when you make a little bit more money, you start owning the cars that you really want to have." What do they want? Cars from the 80s, 90s, and the early 2000s.

So what advice does Hagerty have for younger car enthusiasts? He recommends they go to car events and get involved in the automotive community. He also advises "Spend the money that you can afford to spend. Buy something that you really like. Don't worry about whether that value is going to go up very much. Just have fun driving it."

00:00 Brian Sozzi

We spoke about a month or two ago at Pebble Beach talking about classic cars as that alternative asset space there. We were kind of talking about general trends here in the space, and we kind of saw that auction values coming down a little bit, but there's still healthy demand there. What are you seeing there in that space both for, you know, enthusiasts but also investors?

00:35 McKeel Hagerty

Well, it's it's a little bit like the financial world, right? There's a rebalancing of the fun car world, the enthusiast car world, the, if you will, the generational shift is really upon us. For for many years, the Baby Boomers, the Baby Boomer generation, the largest collector generation of all time, they they drove the collecting market all the way up from 50s cars, post-war cars, pre-war cars. They were firmly in control of what people were buying, selling, the values of vintage cars, and people kept asking us, and I know we talked about it when we had a chance to get together. You know, what does the next generation think? Is the next generation into cars at all? And of course, a lot of the data post the financial crisis suggested that the next generation is, in fact, not that into cars. But the data is really suggesting otherwise, and it is a real rebalancing taking place where vintage cars, the great ones especially, will continue to hold their value, but they may not be increasing in the way that they were in the in the previous years. But we recently did a big survey of multiple generations, and what was so interesting is to see that the Gen Zers, the one, the very generation that everybody said was not into cars at all, they're quite into cars. They're interested in cars over 60% suggested that they're interested in owning cars, over 75% saying they like to drive, and we consider that to be pretty good news when you think about the future of how people might collect. You start with what you drive every day, and then when you make a little bit more money, you start owning the cars that you really want to have. So, again, rebalancing taking place, some of the older generation cars, those cars that were focused focused on by previous generations are kind of leveling off. And the new hot stuff is cars from the 80s, 90s, and early 2000s, all performance cars. So it's fun to watch.

03:50 Brian Sozzi

McKeel, let me ask you, is there one car out there that is sort of considered the holy grail for collectors?

04:02 McKeel Hagerty

Well, you know, look, across decades, the Ferrari brand has been a car that just always seems to be top of mind for everybody, and that's that's been really holding true for a long time. Even during that financial crisis, that big dip that we, you know, I mentioned 14 years ago, Ferrari prices, vintage Ferraris especially, still held strong. And of course, the modern Ferrari brand continues to, I think, bolster that. I mean, they went public, they're supportive of F1, the modern Ferrari cars are just in huge demand, they're building more of them each and every day, so they've been driving a lot. But the brand that we really like to look at and that has been really on the rise the most in the last decade is Porsche, and specifically Porsche 911s of virtually every generation of 911. They're fun to drive. They're they're not always as valuable as say the some of the Ferraris that we talked about or that I just mentioned. The holy holiest of all grails is really the 1962 Ferrari 250 GTO. But Ferraris, Porsches, and then, of course, with some of the next generation, you start seeing some of the other, some of the other marques start to come on board. So BMWs are very popular with the next generation, some of the Japanese sports cars are are starting to become more popular with the next generation of collectors. So, like I said, it's rebalancing. There's still this love of cars across generations, and you know, we kind of have a front row seat here at Hagerty.

06:24 Brian Sozzi

Hey, McKeel. So, you know, that really caught my eye with the Gen Z population. We've been told they don't like cars, they don't like driving, they like Uber, they don't have any licenses. So I'm a little bit I was I was surprised that you mentioned some cars there, makes like Porsche, of course, I love, but I want to know, what's your advice to a younger collector? What do you think they should do if they want to get into this world of classic car collecting?

07:06 McKeel Hagerty

Well, there's there's so many ways that you can learn about cars now that didn't exist when I was getting into it as a kid, and it's hard to explain to people why they like them. They just simply like them. We call them the different on-ramps into the car world, and the first on-ramp for many of the younger generation are, in fact, video games. The two major console video games, Gran Turismo on Sony PlayStation, Forza on Xbox. There's it's not just about racing, it's not just about playing a game, there's tremendous amounts of information, there's a whole community of people that are into cars that play those games, and that's the way a lot of the next generation are starting to get into them. Of course, there's so many great online resources, but we really recommend that you go out to some car events. What makes the car world unusual as opposed to a lot of other things, even very expensive things that people buy, is that car people gather, they go to car shows, there are car events everywhere. There's some new car events that are out there, a couple of that we're participating in one that is a series of car shows that are called Radwood events. Those are cars that celebrate cars from the 80s and 90s, those cars that the next generation are into. We recommend you go, talk to the owners, talk about the cars that you might want to own, ask what they are like to drive, are they difficult to repair, can you find parts? All of those things you might need to know if you're going to buy one of the vintage cars. And then the best thing you can do is just get your hands on the wheel. You know, we you're talking about data, next generation not being interested in cars. So much of that conclusion was drawn, again, after the financial crisis, when there were, you know, a whole there was a whole cohort of people who are struggling to actually make enough money to have cars. It's not whether they like them, it's just the job market wasn't very good. Well, fast forward 15 years, it's quite a different story, and more and more people can afford fun cars to be able to go out there and buy them, own them, collect them, even race them. So there's just more resources than ever out there. But my view always when you're buying a fun car, spend the money that you can afford to spend, buy something that you really like, don't worry about whether that value is going to go up very much, just have fun driving it, and then you can go from there.

09:56 Brian Sozzi

McKeel, listening to you describe those events, I think Pras just found his next story, and I'm going to insist on tagging along. McKeel, thank you so much for joining the show today. Really appreciate it.

10:11 McKeel Hagerty

We'll see you at the next event somewhere.

Watch the video above to hear Hagerty discuss the top cars collectors want and how video games are drawing more younger enthusiasts.

For more expert insight and the latest market action, click here to watch this full episode of Asking for a Trend.

This post was written by Stephanie Mikulich.


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