Investing in Classic Cars

Sleek fender lines, chrome grills, plush vintage interiors... No wonder the international designer Ralph Lauren once described classic cars as "moving works of art."

Classic cars are items that inspire the imagination like nothing else. The ultimate symbol of luxury, they continue to fascinate collectors with their aesthetic beauty, engineering brilliance and historic importance.

And the investment market surrounding these magnificent vehicles is equally inspiring.Underpinned by an efficient combination of passionate collectors and the world's wealthy elite, it offers an array of choice and prices to suit almost any taste in an investment area that historically moves independently to any other.

According to the UK's Telegraph newspaper, failing to invest in the classic car market is one of super-investor Warren Buffett's biggest regret. In 1980, the world's third richest man was offered the entire Harrah Collection of over 1,400 classic cars for less than $1m. In 1984, the collection sold for over $69m, with Buffett left feeling a sharp pang over the rare missed opportunity. 

And values are on the up. In recent years, the global recession and ongoing stock market volatility has encouraged an increasing number of investors to place their money with classic cars, which in turn has caused values to rocket.

Reasons to invest

The market is in good shape: Prices for the leading classic cars fell by 0.06% in the five months to May 2014, with the market normalising following record-breaking results. This is great news for those concerned with an unsustainable price bubble, with values still remaining high.

Pleasure of ownership: A classic car provides one of the few investments where you can fully enjoy your purchase without significantly decreasing its value. Many classic car collectors choose to race at track days and find infinite enjoyment in learning the history of their vehicle, as well as how to lovingly repair and restore it.

Diversity: With the current volatility of the stock market, there has never been a more crucial time to add some much-needed diversity to your portfolio. The top classic cars are far more likely to hold their worth than stocks and shares in the current climate and provide a solid asset that you can touch, rather than a promise which could collapse at any point.

Chinese market set to explode: With very few investors buying classic cars in China solely due to restrictions on importing used vehicles, a relaxation in the laws will undoubtedly result in a huge boom in their classic car market - something that dedicated enthusiasts, hungry investors and eager sellers are currently working on.

Historical performance

The world record price for a classic car at auction has soared from $10.8m in 2008 (for a 1961 Ferrari 250 GT SWB Cal Spyder) to an impressive $29.6m in 2013 (for a Mercedes W196) - that's a 22.34% per annum increase.

The HAGI Index of classic car values has risen 49.3% since it began tracking the market in January 2009, showing a 12.13% pa increase.

In 2011, the top 50 collectible classic cars rose by 13.89%, while gold - considered a reliable alternative investment - showed a growth of just 9.93%.

The 1929 Birkin Bentley became the world's most valuable British car in June 2012, selling 78.6% above estimate for £5m ($7.8m). It beat the previous record for a British-made car of £3.5m ($5.5m), achieved by a 1904 Rolls-Royce in 2007, by 42.85%.

Results from the Historic Auto Group Indexes show that top quality Porsche models are up 2.32% for the year-to-date (May 2014), while Mercedes has seen an increase in value of 2.58% in the same period.


Thinking of investing in classic cars?

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