Duane Smith, owner of Classic Enterprises, discusses a Ford Mustang convertible restoration project with Adam Hay, one of the company’s eight employees, at the classic and collectible car business body shop on Dec. 6. PHOTO/DAVE DEWITTE

 

by Dave Dewitte
dave@corridorbusiness.com

Classic Enterprises may be a licensed car dealer, but what the aptly named company really sells are time machines.

Most of the 40-plus cars stored inside Classic Enterprises at 250 Classic Court SW in Cedar Rapids are 30-50 years old, but all look as though they could have rolled off the assembly line within the past year.

“It is a generational hobby,” Sales Manager Ronnie Craig explained. “The whole idea is that you’re vicariously reliving your youth.”

Classic Enterprises has sold cars to customers from just about every state and many countries since Curt Eilers started it four years ago with guidance from Duffy Schamberger, his stepfather. Mr. Schamberger founded the city’s first collectible car business, Duffy’s Cute Car Corner, on First Avenue decades earlier, and developed the facility that now houses Classic Enterprises before selling the business.

Recent sales include a Plymouth Hemi Cuda muscle car that brought in more than $100,000, and a ’57 Chevy Convertible shipped all the way to the buyer’s home in New Zealand.

The collectible car market has gone global, thanks to the internet. When Operations Manager Jon Bratton began his career several decades ago, the only way to advertise classic cars was through print magazines such as Hemmings Motor News. Today, cars are advertised on their website with dozens of digital photographs, available any time of the day. Although it’s unusual, some cars have been purchased sight-unseen.

Last month, Classic Enterprises and all its inventory was sold by Mr. Eilers to a new owner: TrueNorth Companies CEO Duane Smith. It wasn’t just for the experienced staff or the increasingly global marketplace, either.

“My passion has been automobiles all the way back to when I was 16 years old,” Mr. Smith said.

He bought his first car, a 1963 Chevy II, from a neighbor for $225, and upgraded its appearance with 33 cans of spraypaint from his uncle’s hardware store and a body repair kit. Since then, he has acquired a 1962 convertible Nova Protour, a tricked-out 1963 Nova, a 1967 Ford Mustang convertible and about 15 others.

“I had room for 18 cars, and it was full,” Mr. Smith said. “That was when I talked to the previous owner.”

At 58, retirement is drawing closer, although the acquisition isn’t part of any retirement plan. Mr. Smith has invested in a series of companies in different industries he found interesting over the years, always building a team of experienced managers who know more about their specialties than he did to execute the business plan.

That was a strong part of the appeal of Classic Enterprises. Almost the entire team agreed to stay on, including Mr. Bratton, Mr. Craig and sales consultant Jacob Luplow. Evan Heckart, the former technical director, also agreed to come back.

Mr. Eilers wanted to sell the business to focus on real estate, which has been a longtime passion, Mr. Smith said.

With business going well and Mr. Smith willing to invest, Classic Enterprises plans to boost its inventory by 50 percent over the next several months. That can involve hopping in an airplane for a day to scout potential purchases, or working with buyers like Mr. Schamberger, who has acquired many cars for the company from his base in Arizona.

Although it takes a variety of skillsets to succeed in the classic car business, perhaps the most critical, according to Mr. Craig, is the ability to evaluate a car and determine the time, materials and total expense required to get it showroom-ready.

“They’re 50, 60, even 70 years old, so there’s a lot of issues in them to arise,” Mr. Craig said. “Over the years, I’ve gotten a lot better at it. I still miss sometimes, but I’m usually not too far off.”

A full restoration, known as a frame-off restoration, can require 1,000 hours if the car needs a lot of work. At a shop rate of around $65 per hour, that means $65,000 in labor alone, so it’s important to know how much the car will bring in today’s market.

Although the market changes somewhat from year to year, Mr. Craig says that’s an easier thing to estimate because of the established popularity of certain models, styles and modifications.

“Models from ’64-‘72 are the majority of what we sell,” Mr. Craig said. Interest in American performance cars soared in 1964 when Pontiac introduced the GTO, regarded by some as the first, true midsize muscle car; Ford in 1965 introduced the Mustang.

The Mustang had stunning looks and was fun to drive, yet affordable. It became the archetype for a class of sporty coupes known as ‘pony cars,’ with long hoods and short rear decks. Models included the Dodge Challenger, Plymouth Barracuda, Pontiac Firebird and AMC Challenger.

Automakers competed on looks and power, and by the early 1970s, a buyer could get a car equipped from the factory with a 450-horsepower V-8 engine. The trend died down after the government took action to reduce automobiles’ contribution to air quality problems, and began requiring increasingly complex emission controls.

“The year 1972 was the last you saw anything with real chutzpah,” Mr. Craig said. Upgraded muscle cars from that golden era are known as ‘restomods,’ and often have features such as air conditioning, fuel injection and four-wheel disc brakes that weren’t available from the factory.

Many vehicles from both before and after that era also have high collectible value because of their performance, appearance, scarcity or other factors. Street rods from the 1930s and 1940s are popular, as are many early vintage models. The highest priced vehicle at Classic Enterprises this month was a 1932 Ford Sedan Delivery in bright orange with a flathead V-8 engine, priced at $75,950.

While cars are the primary focus of the business, Classic Enterprises also offers a complete package of services, from minor maintenance and body repairs to total restorations.

Many vehicles in the collection are not any more expensive than buying this year’s model of a well-equipped compact car. Although such purchases might be considered a luxury, Mr. Craig says astute buyers can come out on top.

“Most of the time, if you buy something and hold it long enough, you’ll at least come out even,” Mr. Craig said. “If you have staying power, you’ll probably make some money.”

Profitable or not, the classic car hobby is a bug that has bitten many collectors. One Arizona collector has purchased more than 40 cars from the company, often trading them back in after a year or two.

Even when the stock market is down, the business is often up, Mr. Craig said, as investors who cash out their stocks want to invest in something tangible.

With a highly visible location right off Interstate 380, Classic Enterprises showcases some of its inventory on a rooftop deck during the warmer months. Even in the age of internet-driven sales, Mr. Craig and Mr. Bratton say a motorist will occasionally see a car they want while driving at 60 mph and stop in for a closer look. Sometimes they buy it right on the spot.

“It doesn’t happen very often,” Mr. Craig said, “but it’s happened.”