Investing in classic cars

Mustang

With the recent turbulence in the international stock markets and low Interest rates on saving accounts with the international banks, investors have begun to look at more creative investment opportunities outside the mainstream Stocks, Mutual funds and Property investments. Classic car values have rocketed over the last number of years especially, the high end cars.

40% increase in Classic Car Values

Coutts the UK based private investment bank has estimated that high end classic cars have increased in value by 40% in the last year and up to 400% in the last decade. Last year a Ferrari GTO was auctioned at Bonhams Auction gallery in the UK and sold for a world record $38Million.

Ferrari-250-GTO-Bonhams

Comparison of Classic Car Values with mainstream investments

If we compare the increase in the classic car values with Gold and the FTSE 100 index we can see that luxury cars or Passion Investments as they are referred to,  have outstripped these mainstream investments hands down over the last 10 years.

Increase in Classic Car Values

However, as with all investments, prices can also fall. As can be seen in the chart above, back in 2008 classic cars lost up to 50% in value. On the plus side if you purchase a classic car as an investment, if you actually drive and use the car, as opposed to a pure investment, capital gains tax does not apply on the sale.

So what are the cars to invest in?

For the average investor the high end €1Million Ferrari’s may be out of reach, however when it comes to classic cars there are a few tried and tested cars that are well known brands and are still available for less than €20K or even €10K and that even at current prices have doubled in value over the last few years but are still a good investment.

Porsches

Obviously condition and collect-ability are huge factors in terms of value and for instance Porsche 911’s are recognized by everybody and every collector wants to have one in their collection. Just 6 years ago these were available in classifieds for sub €10K. Now you’re looking at €20K+ for a good condition 911. However the price is still climbing.

Porsche 911

E-Type Jaguars

For any classic car enthusiast, the E-Type Jaguar from the 1960’s is the holy grail of classic cars. Concourse cars are now fetching up to £125K. Described by Enzo Ferrari as the most beautiful design of all time, non runners in need of a full restoration are still commanding over £20K. There are still some bargains to be gotten out there in the classifieds. For the really clever investor, importing a left hand drive roadster from the warm climate on the west coast of America can yield suprising  value for money where European brands do not command as high a price as American Muscle cars, even when you take shipping into consideration.

e-type jaguar

Rolls Royce Silver Shadow

At the lower end of the price bracket, the Rolls Royce Silver Shadow offer great value with good clean cars available for €6K to €10K. These are cars are built with the highest quality and are quickly rising in value. Large 6.8 litre engines mean that they may not be suitable for an everyday runner , but when you’re only paying €56 tax in a country such as Ireland, that’s not bad.

Rolls Royce Solver Shadow

The Landrover

At the bottom of the scale is the Land Rover. Recognizable by everyone and yet quickly becoming a sought after classic car. With parts easily available and a rugged body that can survive years rough treatment, these cars make a smart investment with the lower end. Cars are readily available from €5K upwards. The lack of power steering on earlier models make these a tough drive for supermarket trips but still a very usable everyday driver.

Landrover

Conclusion

So, if you have a nest egg of €20K and are getting 1% in the bank with inflation running at 4%, you’re effectively losing money. Would you not rather purchase a Porsche 911 and drive it around at weekends for 5 years and then sell it to double your money? I know I would.

 

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