Should you invest in classic cars, and if so, which are wheels of fortune?
By Caspar David
Investing in the classic car market has proven to be a profitable investment decision for many collectors over the years. While not often considered a traditional financial instrument, the current poor return on cash investments and a desire to diversify portfolios has led to an increasing trend to invest in classic cars.
A 2020 study revealed that over the last 10 years, a host of classic cars have significantly outperformed gold in terms of investment opportunity, in some cases almost tripling in value. Some huge successes have been witnessed, including the sale of a 1962, pastel green Ferrari 250 GTO. Once owned by Sir Stirling Moss during the height of his racing career, the famous car sold in 2002 for $8.5m, re-selling 10 years later for $35m.
In 2019 the Aston Martin DB5, used in the promotion of the Bond 007 film ‘Thunderball’, sold at auction for £5.2m. Not a bad price for a car that never actually featured on the silver screen.
For those looking for a more modest purchase, in 2019 the Queen’s 1984 Daimler Double Six saloon, complete with custom seats designed for her Corgis, sold for £80,000.
With collectibles exchanging hands at such high values, it’s easy to see why classic cars are a popular way to vary investment assets, while also indulging a love of cars. While classic cars in general gain in value more than other types of collectibles, the market can be a tricky one to navigate. In the same way that you’d seek advice from an expert in relation to a pension or equity investment, it’s important to do the same with classic cars.
One expert who can offer help and guidance is Robert Bentley, managing director at Classic Automobiles (classic-car-london.com) who has over 40 years’ experience in the industry. His family-run business recently relocated fromsouthwest London to the Hampshire countryside. A key driver for the move was to allow expansion of their showroom, which is currently home to over 100 of the most prestige classic cars.
The team at Classic Automobiles fully understands the whole lifecycle of classic car ownership and can support with sourcing sought-after cars, negotiating profitable acquisitions and disposals, as well as overseeing restorations and on-going maintenance and storage. It’s this level of expertise and personal touch service that means many of Classic Automobiles’ sales are from lifelong clients who return again and again.
Robert explains that his clients make purchases both as short-term investments and with a medium-to-longer term view. With those looking to make a more immediate profit, a popular choice is a restoration project, taking an often rusty, unloved shell of a classic, and restoring it to its formal glory.
Robert advises that the attraction for him as an a classic car enthusiast is that as opposed to modern cars which lose value immediately, classics often gain in value over time due to their rarity, performance, or special attributes.
So popular is this ever-growing market that tracking benchmarks now exist, such as the Historic Automobile Group International (HAGI™) Indices. These measure the classic markets, similar to a more traditional index such as the FTSE100.
Lots of factors affect the desirability and value of a classic car, but the key is historical importance. The most valuable cars are ones that have a story to tell, that bring back memories and create a sense of nostalgia.
Supply is inherently limited and as a result the classic car market continues to thrive. Clients often prefer to acquire tangible assets as opposed to more traditional investments, especially during times of an uncertain or volatile economy.
There are of course penalties involved if you get it wrong and financial gain is dependent on picking the right model that has potential. You should always seek the help of an expert in the trade, who can align your investment decision with your appetite to risk and investment aims.