The structure of automotive nostalgia: a hedonic price analysis of classic car model value formation

Abstract

PurposeFor several years, the classic car market has been attracting considerable media and public attention, but the research literature is virtually nonexistent. The purpose of this paper is to address the factors that determine the values of classic car models and explain the remarkable price differences among them.Design/methodology/approachThe paper develops and tests a set of research hypotheses about the effects of model characteristics on market values in the context of a generalized hedonic price model that also accounts for heterogeneity among classic car brands.FindingsIt is demonstrated that classic car model values reside at several levels and are determined by observable characteristics pertaining to aesthetics, rarity, engineering and performance. In addition, we show that classic car marques play a critical role in the determination of model values and account for considerable variation in values, even after controlling for observable model attributesOriginality/valueThis is one of the first empirical studies to address classic car model value formation. The findings reveal how measurable, observable factors determine classic car model values and augment our understanding of a very interesting but understudied market.