McKeel Hagerty on Auction Fixing, Porsches, and Building Your Dream Collection
When the sun is beating down on you at the Quail lodge and you’re working on your fourth mimosa just to stay hydrated, there are few things as welcoming during Monterey Car Week as the beaming grin of McKeel Hagerty. He’s the man behind the namesake automotive insurance company, and a few weeks ago I had the pleasure of sitting down and poking his brain on where the car market is headed, where it’s been, and what’s currently leaking oil in his garage (I jest!)…
Ted Gushue: Walk me through your personal collection. What’s currently in it?
McKeel Hagerty: Well, my first car that I bought when I was 13 was a ’67 911 S. Paid 500 dollars for it. Restored it in the garage kind of thing. I still have that. It’s been since re-restored by real people who knew what they were doing. Then I have some of my dad’s cars which were Ford trucks, and Thunderbirds, and the rest is really a reflection of our customers’ stuff. I try not to have anything that is too opulent or ridiculous because I don’t want to give the wrong impression. Except for my most recent, and longest, most painful restoration is my Aston Martin DB4, a 1960s Series 2. That took four years [and] ungodly amounts of money because my restorer went to jail halfway through the whole thing.
Ted Gushue: Wow. Can you go into more detail?
McKeel Hagerty: It was fascinating. Well, I was introduced to the restorer. He had done a fair amount of cars. He was a small shop. I saw the quality of his work. His work looked good. He said, “look, I know where there are a lot of barn-find like cars. I will make sure you don’t pay normal market prices, but I get the restoration work”. Found the DB4. Bought the DB4. It was a great price. Started paying him for the restoration. Started writing more checks, writing more checks, writing more checks. Restoration slows down, slows down, slows down. Then, suddenly, arrested on the spot at a Starbucks.
Ted Gushue: For what?
McKeel Hagerty: Well, I was worried about that, honestly, for a while. It ended up being fraud. L.A. Police Department seizes his shop, jumbles together the half a dozen cars that are all disassembled in there, throws them in evidence vans, [and] locks them up, including huge amounts of my car.
I know a decent amount about cars, but I honestly couldn’t tell you the sun visor bracket difference between my Aston Martin and an Alfa Romeo of the same year. It all starts looking the same.
Ted Gushue: Of course.
McKeel Hagerty: The police threw away the wiring harness because it looked like a pile of garbage. It was just, it was unbelievable. I ended up having to have it completely re-restored by a really good Aston Martin shop. I was embarrassed. It not only cost a lot of money, but I’m thinking, “this guy won’t screw me”. Of course he did. I’m glad to have it. That’s the only really, crazy valuable car. Then I’ve got the Shelby GT 500 and a couple of Corvettes—that’s [the Corvette] the most collected car in the world.
Ted Gushue: Are there cars ever cars that Hagerty refuses to insure?
McKeel Hagerty: As long as it’s not a methane-fueled dragster, we’ll insure it. We just don’t have a way of underwriting those beasts. I will say, though, that Cobra replicas became a real problem for us for a while because there are 142 manufacturers—and counting—of Cobra replicas.
Some of them are actually very fine cars. Some of them are just a platform to put the biggest motor somebody can buy, or build in. Then they’d hit the road at great speed and kill themselves. We had four very significant fatalities in about a 12 month period of time in Cobra replicas. I just said, “That’s it.” That being said, we still insure 4 or 5,000 Cobra replicas. But we have to be really, really careful.
Ted Gushue: What’s the most common car that Hagerty insures?
McKeel Hagerty: Corvettes are the most collected car in the U.S. Almost of any era, they have an audience. There’s a very good club and support system surrounding them. There are lots of shows that are Corvette only. That’s the most common. Then it’s Mustang. Then it’s Chevelles. GM falls in there pretty prominently after Mustang for the top 10.
Ted Gushue: Are there ever cars that you guys underwrite that when one goes off the radar, do you personally get a phone call? Are there any cars in the, how do I put this, in your network, that when something goes wrong with them, that there is an all hands on deck moment at HQ?
McKeel Hagerty: Like if it disappears?
Ted Gushue: Yeah. Big whales that are just like, “Oh no.”
McKeel Hagerty: Oh yeah. You get some really strange things that happen. We’ll get stories of somebody paying way too much for cars that are known to be fraudulent for one level or another. We had a modern supercar stolen not long ago. It was part of a collection.
Whatever idiot stole the thing didn’t understand that the second that vehicle was started, it connects with the factory electronically, and they have to have software updates every 4 months, or whatever it is. Those things always become the interesting stories around the office because it’s like, oh boy, here we go. We insure almost 1.2 million cars in the U.S. collector car market. Yet there are some big customers that they only want to deal with me. They want to call and talk about something.
Ted Gushue: Sure.
McKeel Hagerty: There’s one famous collector, he would just call and leave me voice mails. Usually just with the chassis serial number, he wouldn’t tell me what the car is. He’d just tell me the serial number. “I just bought,”—I remember this one—”I just bought J 111”.
Ted Gushue: And you’re supposed to figure it out?
McKeel Hagerty: I’m supposed to figure it out. I know J’s are Duesenbergs, but I’m just like, “Oh, yeah. Sure. I have every serial number of every Duesenberg memorized.” You know, he was a clever character.
Ted Gushue: What are questions that most people have when they first become Hagerty customers? What do people usually ask? What do people want to know about Hagerty?
McKeel Hagerty: You know what? They know us from insurance but, less and less now. Because of our publishing and the valuation stuff that we do, most people come to us now not because of insurance. It’s because they are coming to our valuation site or reading our value guides to try and buy a car. Then they are finding out about insurance later. That’s just a fact of how the business is working. Then, if they ask for any due diligence, it’s they want to make sure you’re real, right? We are, the company’s really out there. We attend 2,000 car events year. We do a lot of things.
Ted Gushue: With the valuation stuff, is it like managing a different type of fraud? If you have insurance fraud, then there’s also, I’d imagine, there’s collusion in the market place. There’s people that are conspiring to inflate prices of vehicles.
McKeel Hagerty: Well, I’ll tell you. Back in the 2005-6 run-up in the muscle car market, the prices of ’70 and ’71 Hemi ‘Cuda convertibles had the characteristics of a group of people trying to control and drive the price up. Now I’m not pointing fingers at anyone, but a Hemi Cuda convertible, a ’70 ’71 Hemi Cuda convertible is a production vehicle that somebody checked the box for a Hemi motor. It wasn’t a hand built anything. It didn’t have the characteristics of a multi-million dollar car. It had rarity. They had very little actual racing credibility. I think we had a couple of them insured for 2 million bucks. This guy came up and said, “That one’s worth 5. It’s worth 5.” He kept coming up. “You don’t understand why this is a 5 million dollar car? Hagerty’s a bunch of idiots.” That’s when I started getting a little nervous that they were trading cars back and forth.
Ted Gushue: Did they turn out to be?
McKeel Hagerty: What happened is all the sudden I think some scrutiny came down on them, and they stopped selling them back and forth for awhile. The last 2 sales of Hemi Cuda convertibles, the one last year, at the Mecum sale, finally legitimized the $3 million dollar price, and started bringing that market back. Now the market is risen way past that.
Ted Gushue: What other cars do you think are overvalued right now?
McKeel Hagerty: I’m looking at a Lamborghini Countach right in front of me. Look, that’s the car I had the poster on the wall of when I was a kid.
Ted Gushue: Sure.
McKeel Hagerty: You could buy them for $65,000 dollars not that long ago. Are they worth $750k, which is what some people are perhaps paying for them? It’s a questionable number. The hottest new trend in the market is ’80s and ’90s Ferraris, Porsches, Lamborghinis. That’s it.
Ted Gushue: What about ’70s Porsches? Have they peaked?
McKeel Hagerty: I think they’re just about peaked. Porsche as a brand, the last 36 months, has been the greatest strengthening of a really legitimate car brand I’ve ever seen in my life. I have to think that the Porsche company, corporation, was pretty smart in the way they managed this. They had to get sick and tired of all these Ferraris getting all the attention. Now, granted, I’m a Porsche fan, but—I will say this though. A ’73 RS lightweight is the Ferrari GTO of the ’70s.
Ted Gushue: What are the cars that you would suggest to, let’s say, a young collector looking to get his beak wet, what car could you tell him to buy that you could see in 10 years being worth $1.2 million dollars?
McKeel Hagerty: 911SCs on the European side, SCs and E30 M3s, if you can get an E30. I think we’re starting to see some lift in some of the Japanese cars. RX7s. Really good cars, and I will be perfectly honest, I just bought a 1990 Miata with 6000 miles on it.
[Miatas] are great. No power. You wish they had more power but that’s what makes them good and safe. What’s really heating up, though, is the truck market. The fastest-growing truck segment, period, is the C10 Chevy trucks. They are a lot of Fords, so it’s maybe not a city guy’s car, but it’s a great entry-level collectible. They’re easy to restore. Parts are widely available. They’re a lot of fun.
I bought randomly, at the side of the road, a ’51 Ford truck last year. Had a lot of fun with it. There was this kid who works for me, who just simply wanted it more than I wanted it. He just kept begging, “Can I buy it, can I buy it, can I buy it?” Now he is the happiest young collector alive, because he has this really cool vehicle.