Why do model trains depreciate?

Model Railroader General Discussion (Model Railroader)
21

As noted by many already, old train values can be all over the place. Very few appreciate in value and if you look against inflation many that are truly rare and worth much more now than when new are actually static or have held their value and little or nothing more.

If you collect model trains for investment, (brass, special runs, commemorative specials, etc), then you might not be a model railroader at all, but just a collector who chose trains to invest in.

If you are a true model rail and are looking to buy trains for running, then mint, non-brass stuff from the 50’s, 60’s, 70’s and 80’s, and I’m talking motive power here, is pretty much garbage by today’s running and operational standards. This is not to even mention true scale detail related appearance being sub-standard by today’s critical eyes. I doubt if time will ever favor these old models. Much the same for rolling stock of this period, too.

I wish I had bought Varney’s “Old Lady” back in the day when AHC sold them in their 3-4 page adds in MR as effective surplus from Varney’s closure for under $30.00, but I would still have a terrible runner, operationally, unless I dumped money into upgrading her. But… that is nostalgia.

MR stuff can certainly be or become collectable, but that doesn’t mean it is rare or valuable.

However, an old Varney or Tyco train set from the 50’s or 60’s pulled out of a rummage sale with its “Little Joe” dockside, 4 cars and oval of brass “Snap Track” is just the thing to infect a young person and make a new or budding model rail who is hooked for life. That is what is rare and valuable about old trains.

Trains are not for collecting, for the most part, but for running and enjoyment by the model rails who love them.

Richard

22

Paul,That’s not always the case…Just because a new and improve model is out at a higher price doesn’t make the older model obsolete.In fact I recently sold a Atlas/Kato N&W RS11 for $50.00.That’s far less then the newer supped up RS11 goes for.

Now the old “fatty” Athearn engines is a hard sell due to the better models available at reasonable prices.

Now,with NIB or TRO I take with a grain of salt although I’ve seen new gold box P2K locomotives in a now closed hobby shop at full MSRP.

About warranty…I doubt if the warranty for a gold or blue box P2K locomotive would be valid since Life Like doesn’t do trains now.

Yellow or Red box Atlas engines-Atlas still has some parts for these long out of production locomotives…

I recently picked up two P2K Seaboard System GP38-2s for $52.50 each off e-bay and both was indeed in mint condition and probably never been ran since everything was in its original sealed bags.

23

Yeah, if you’re worried about appreciation/depreciation, get into something other than model railroading. To try to justify what you spend on trains by what you can get in selling them is going to be a great disappointment. All those with that notion can now leave the room and head for ebay, quick, before that glut of models suddenly for sale drives prices down lower.

One thing unmentioned yet are initial sales margin for new products. As a luxury item, margins between wholesale and retail are pretty large. That’s why you see large volume retailers offering low prices while some well run LHS can still survive by selling lesser volumes at close to MSRP. There’s a lot of room for judgment there on the part of the retailer who knows his customers. Whatever the case, yeah, if you’re using MSRP to compare whether you’re getting a “deal” or not, there’s still considerable mark-up involved at retail to the consumer.

So when you’ve made your deal and got that model you really wanted at a price you were agreeable with, as soon as the deal is done it’s worth half what you just paid for it on the used market – if you’re lucky. Nothing special about that either, as it’s the same with many other consumer items that aren’t necessities. Now, if you look at food, gasoline, etc, the margins are much smaller, but the turnover is much higher. Just don’t expect that to apply to model trains. They’re a luxury with relatively slow turnover. That’s why the trend to li

24

And that’s another reason some road names are worth more then others while other road names drop in value…

25

If you are buying your trains as an investment you are living in a dream world. If you want to make money selling trains buy a hobby shop.

The value of every item, whether it is a model train or a Rembrandt, is determined by the buyer, not the seller. It is worth what someone is willing to pay for it. Not one penny more. Not one penny less. In my opinion, the average Picasso looks like it should be hanging on someone’s refrigerator, but to some people they are worth millions. I have no idea why.

26

Dave,I suspect what most of us is saying if one decides to sell their trains they should get the best price possible and not give them away below their true market value…

27

Larry,

That’s actually the point I was trying to make. When better models come out, the older ones drop in price. I didn’t mean to say you couldn’t use them, just that they sell for less.

I have a Rivarossi V&T 4-4-0 that I bought back in the 70’s. I still run it occasionally, but it has the pizza cutter wheels and tender mounted motor. Converting it to DCC would probably be quite a chore. So I doubt it’s value is much more than $25 - less than I paid for it actually. But it still runs great on Atlas code 100 track.

Paul

28

Absolutely…This opens up possibilities for those with limited budgets.I have bought several older locomotives like those P2K GP38-2s I mention.

29

For a model locomotive to appreciate significantly, one of two things has to happen.

  1. Initial demand (sales) is low when the model first comes out. This discourages the importer/manufacturer from producing more runs of the same locomotive. But a few years later, demand for that model picks up. The relative scaricity drives the price up.

  2. Initial sales are good, and demand stays high. But for whatever reason, no subsequent production runs are made. This was done deliberately with some high-end brass locomotives.

In almost every other case, if the manufacturer senses sufficient demand, additional production runs will be made. After all, the tooling is paid for by the first run. The second and subsequent runs are almost always more profitable (and less risky for the importer/manufacturer) than the first. The additional production runs soak up the demand that would otherwise drive appreciation.

my thoughts, your choices

Fred W

30

Paul, great points, And I will give the OP a living example - I hardly ever buy anybodies used stuff. So most of it has ZERO value to me once it rolls out of the hobby shop.

I am very selective about buying “new old stock” or previously owned “new in the box”, and it better be a deal or I’m not interested.

And, I agree with Paul about “dumped” prod

31

Sheldon,

I think you’re thinking P2K is still pumping out tens of thousands of BL2s, but those days are pretty much over. Yes, some models in some roadnames do end up in the deep discount bins, but that’s getting much less common. Some vendors are more flexible, others have very tight production ordering. More and more, if you miss out on something popular, you’ll have a hard time finding one later on, sometimes even on delivery if preorders soak up a larger percentage than expected by the importer. And those produced above preorders get fewer and fewer.

I do agree that when that deep discounting happens, it does affect pricing for some years on those models. But I’ve also seen it rebound as another generation of modelers and model RR authors rediscover old wine to put in new bottles, although specific examples are escaping me right now.

I don’t say any of this with the acrimony that some do. It’s just a fact of life in an interconnected world where information drives decisions at all stages of the game. You’re either in or you’re OK with taking your chances on finding what you want, which is OK, too. Those who produce these items are getting better at managing their costs and inventory. Getting exactly what you want every time is going to cost a little more, but having a good dealer who offers reasonable discounts and makes sure to cover your orders faithfully minimizes that, in my experience. I’ve got no complaints about pricing with most things except not having enough money[xx(]

32

Maybe it’s just best to buy high and when one’s broke, sell the item at a low price. This way one avoids the capitalist label and everyone will know how stupid one was to buy it in the first place.

Modeling is a passion for me, not an investment. If it was about money, I’d close my latest n scale project of 3 years and start doing jig saw puzzels I guess.

Ron

33

That is the one I was looking for. No one wants to pay list price for 1983 technology. I mean the Kato driven Stewart F units of the day are still great runners, but when one considers the lack of detail and molded on hand rails compared to the stock Genesis and Proto-2000s there is no contest and no question why the price has dropped.

And don’t get me wrong the Stewart’s had their day. I remember a time when the Kato driven Stewarts were going for $240 each on eBay (4x the original list). So they greatly increased in value before they depreciated…

34

TZ,

Yep, the Stewart F units had quite a ride. And I did retire mine to ebay and did OK when I went with Genesis and then the latest P2K F units.

That brought to mind another factor with ebay. It brought a whole new group of buyers into the US market. Folks that never had a chance to get that special loco when it was released back in the 90s can now find them on ebay. That person never could have done that before, short of buying an airline ticket and coming here. So there are LOTS of factors that go into pricing. Ultimately, it’s what someone is willing to pay.

35

seems just my luck that anything in the SP&S roadname used is well super inflated $70.00 for an SP&S RS1 made by atlas in the '90’s. it’s just my luck that decals are sparse and undecorated locomotives cost just as much.

36

When ever one sells a item-even a finished jag saw puzzle in a picture frame they should seek to get a decent return instead of giving them away well below their true value.

No,not a investment like you think but,getting the best price.

Or is that old fashion thinking? [*-)]

37

You get what you can. [tup]

Rich

38

Hopefully it will be a decent price…[tup]

Yes,I learn the hard way to check the going prices before selling-my lost their gain.

39

Well, true value all comes down to what a buyer is willing to pay.

Without that information, value placed on anything is just perceived and untested.

Sad, but pretty much a truism…

40

I don’t disagree with any of that, I was just describing what has happened up until recently.

BUT, I still think the “limited” production, sell out the whole run, don’t put inventory of dealer shelves, everything sells at some sort of discount price, business model is bad for the more “modeler” side