RSS

The Principle of Substitution

Posted by David Kinney

There's an old marketing principle called "the wheel of retailing," the wheel turns when originally low-priced retailers upgrade their merchandise and services thereby creating a competitive opportunity for new discounters and thereby continuing the process.
 
There's an analog in the old car hobby called "the principle of substitution." Like the wheel of retailing, when one particular car goes upmarket, it creates an opportunity for the lower-priced "next best thing," which in turn causes prices to rise for the substitute causing a search for the next, next best thing.
 
Recent examples are easy to find: About five years ago, as collectors began to find their combination of looks, performance and user-friendliness irresistible, C2 Corvettes started to soar in value. When prices for air coupes and convertibles doubled, a lot of Corvette fans found themselves priced out of the market.

Attention then turned to the early C3 "mako shark" cars that shared the same underpinnings and initially, the same powertrains as the C2. And at the time, they were less than half the price of the earlier C2. As demand went up, so did prices for pre-1972 C3s. Now Corvette fans on a budget are starting to take a harder look at 1973-75 urethane bumper convertibles.

Want further proof of the principle of substitution? Look no further than the Mercedes-Benz 190SL. The 190SL is heavy, underpowered, and exceedingly expensive to restore. Probably the most noteworthy thing about the 190SL is its very pretty styling, which is quite similar to its "big brother," the 300SL. As 300SL roadster prices went through the roof, Benz roadster fans who were left behind took a second look at the 190SL and prices of great examples roughly doubled. Now the Pagoda roof 230/250/280SLs are hot.

The trick is to use your imagination and move quickly when you get priced out of the market. For example, have you always fancied a 1965 Buick Riviera GS? After years of head scratching over how cheap they still were, suddenly, truly great ones are $50,000-$60,000. For the time being, the 1966-67 Riviera GS (which some deem even handsomer than the earlier car) is still quite affordable. See the opportunity here? Care to take it one step further? The boat tail cars of the early 1970s are still practically free. Opportunity knocks.