There are roughly 900,000 convertibles currently registered in the UK, out of a total of around 28.7 million cars. That’s one open-topped vehicle for every 75 people, the second-highest rate per capita in the world. Elmbridge in Surrey has one for every 25 residents. Lancashire, renowned for being neither dry nor warm, is the third-largest convertible market in the country by sales volume. Britain is the convertible capital of Europe by some margin.

It’s not because of the weather. Alongside the modern Minis, Mazdas and BMWs are classic cars of the 1960s and 1970s that defined an era open-top motoring. These MGs, Jaguars, Triumphs and even a few Hillman Minx are part of the family, and not for sale.

Hannah Elliott has written a fascinating piece for Bloomberg about classic cars and inheritance. Its headline figure was eye-catching: Hagerty Inc, the classic-car insurer and valuation firm, estimates that around 12 million enthusiast vehicles in the United States alone will transfer to new owners over the next 15 years in estate plans or inheritances, with a combined value of roughly $570 billion. 

The total insurable value of the US collectible-car market is now around $1 trillion. The vehicle portion of what is described as the $90 trillion Great Wealth Transfer is very large.

How much of that $570 billion will be sold? The academic literature suggests the honest answer is “less than the financial models would predict.”

Why heirs don’t sell the Jaguar

The first tradition comes from behavioural economics. In 1990, three of the most influential economists of the late twentieth century, Daniel Kahneman, Jack Knetsch and Richard Thaler, published a paper in the Journal of Political Economy called Experimental Tests of the Endowment Effect and the Coase Theorem. The set-up was simple. They gave coffee mugs to half the participants in a series of experiments and then opened a market in which buyers could bid for the mugs and owners could ask whatever price they liked.

In conventional economic theory, the mug should change hands at its market price, and roughly half of the mugs should end up traded. That’s not what happened. Owners typically demanded about $7 to part with their mug. Buyers were willing to pay about $3 for the same object. The mug, by being possessed, had doubled in subjective value. Trading volume was a fraction of what theory predicted. Most of the mugs stayed where they were.

The mechanism Kahneman, Knetsch and Thaler proposed is loss aversion, the finding that human beings weight losses roughly twice as heavily as equivalent gains. The endowment effect, as the paper named it, has been replicated thousands of times since across products, settings and cultures. Thaler, now at the University of Chicago Booth School of Business, won the Nobel Prize in part for this body of work.

What does that mean for families? As Elliott reports in the Bloomberg piece, Alex Roy still drives his late brother Max’s 1973 Citroën SM around Los Angeles, even though, on his own account, the windows don’t work, the air conditioning doesn’t work, and his girlfriend has reasonably pointed out that he should sell it. He won’t. The car was Max’s, who died of cancer in 2024. It is also, in family history, the spiritual successor to the Citroën that Roy’s father turned the crank of in 1940 at an abandoned dealership in Brussels, and drove out of occupied Belgium with his German Jewish family in the back. The 1973 Citroën SM, by the endowment effect, has roughly doubled in subjective value for the heir from the moment the keys changed hands. The market price cannot really see any of that. Selling the car would feel like losing it twice.

The same logic plays out across millions of household garages. Rory inherits the Jaguar XJ6 his father bought in the 1980s and drove every Sunday morning for 40 years. The wood veneer is cracked, the suspension needs work, and the car would fetch, on a good day, less than the cost of the next service. He doesn’t sell it. Gilles is left a Triumph Spitfire by an uncle who taught him to drive in it as a teenager. The chrome is original, the seats smell of warm leather, and 3 of the gauges no longer work. He doesn’t sell it either. The mug experiment, conducted with two-dollar coffee cups in a Cornell University laboratory in 1990, predicts every one of these outcomes.

Why families lose what they pass on

There’s a body of business school research on this. The IMD Global Family Business Center in Lausanne, founded by Professor Joachim Schwass in 1988, has spent nearly four decades documenting what happens when family-controlled assets move from one generation to the next. Their data, corroborated by the IESE Chair or Family-Owned Business in Barcelona and HEC Paris’s family enterprise work, shows that roughly 70% of family businesses do not survive the first generational transition, only around 30% make it into the second generation under family control, and only about 12% reach the third.

The phrase the field uses is “shirtsleeves to shirtsleeves in three generations.” It applies to classic cars too, in a slightly different gear. The endowment effect keeps the car in the family in the short run. The IMD-style research suggests it determines whether the car ends up cherished, neglected, sold under duress, or fought over.

The studies converge on a small number of factors that distinguish the 12% from the 88%. The successful families talk about succession early and explicitly. They separate ownership from operation. They run family meetings with agendas. They write things down. They acknowledge that some heirs care about the asset and some don’t, and they avoid forcing equal allocation onto unequal interest. They tell the story behind the asset, on the record, while the older generation is still alive to tell it.

The Bloomberg piece is a series of small-scale family business succession case studies. Joel Clinton in Sydney was given his father-in-law’s 1992 Subaru Brumby while the older man was still alive, in the car his wife had driven as a teenager. The Clinton children are now learning to drive in it. That is the IMD playbook in miniature. The anonymous man in the piece who spent $40,000 on a 1965 Studebaker before finally selling it earlier this year, on the other hand, never wanted the car in the first place. The asset never carried the family weight. The endowment effect cannot defy gravity forever, and in his case it didn’t.

What the financial models don’t capture

The advisory industry has built sophisticated tools for the financial parts of the transfer. Tax-efficient structures, estate-planning vehicles, charitable trusts. None of those models has a satisfactory way to value the Brussels escape story, the cross-country trip that Alex and Max never got to take, the sound of the Austin Healey that races around the French countryside. Yet the endowment effect research suggests this is exactly the part of the transfer that determines whether the asset is kept or sold, and the IMD research suggests it is also the part that determines whether the next generation feels held together or pulled apart.

Amanda de Cadenet in the Bloomberg article became a grief counsellor after her father’s death. She has noted that the smell of old leather and petrol can help a grieving adult feel regulated in the way a teddy bear or blanket helps a child. There is no line item for this in the Cerulli model.

Practical advice for inheritance

For anyone in the line of an inheritance, classic-car or otherwise, the research suggests three practical things. The first is to have the conversation now, while the older generation is alive to have it. The second is to write the story down, in whatever form is natural: a letter, a notebook, a voice memo, a marginal note in the V5 logbook (the UK’s vehicle registration document). The third is to be honest, with siblings and with oneself, about who actually cares about which object. Forced equality among unequal interest is, in the IMD data, one of the most reliably destructive things a will can produce.

One Wharton MBA has built a business that takes those behavioural insights seriously. Sarah Powers, who graduated from Wharton in 2023, founded Nemu after watching her mother try to divide her grandparents’ estate under the combined pressure of grief and logistics. Her data suggests around 45 million families will inherit $4 trillion of heirlooms over the next 25 years, almost all of them facing a small-scale version of the same problem the Bloomberg piece describes. 

Nemu’s app puts emotional value at the centre of the allocation: each family member records an attachment score for every item, and the system divides the estate so everyone ends up with an equal share of what they actually care about, rather than equal numerical shares of things some people want and others don’t. As Powers told Blue Sky Thinking in 2024, “I knew that there had to be a better way for [my mother] and millions of others to go through this experience, especially during difficult life stages.”

Britain’s 900,000 convertibles, on this evidence, are mostly staying where they are. Some of them will be inherited and quietly loved by the next generation. Some will be inherited and quietly resented. A small number will be sold to clear a probate bill or fund an unrelated dream. The endowment effect and 40 years of IMD research will, between them, predict which is which. 

The economists finally have something useful to say about why we keep the cars our parents loved, even when the windows don’t work and the weather refuses to cooperate.

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