A new report comparing rising prices for specific classic cars reckons they are a better bet than gold for getting a return on your money, fuelling widespread growing concerns that the classic car market could overheat due to an influx of investors and a raft of record prices.
Although it deals only with the top of the market and therefore does not reflect prices for the vast majority of classics, the Historic Automobile Group International (HAGI) report concludes that some high-end classics increased in value by 20% in 2011, while gold went up by 9.93%.
Naturally dependent for data on cars that have been sold publicly at auction, the HAGI report and analyst Dave Selby have focused on some cars whose recent price history makes fascinating reading.
Selby quoted the example of the ex-Bernie Ecclestone 1939 Mercedes-Benz 540K Cabriolet-A (above) that was bought in October 007 for £660,000 but at Coys in December, 2011 for £848,500, giving a return of 28%.
Other specific examples cited include the ex-George Harrison 1964 Aston Martin DB5 (above, with Pattie Boyd) that was bought for £220,000 in October 2007 and sold for £342,500 in December, again at Coys, a return of 55% over four years.
A 1955 Aston Martin DB2/4 drop-head coupé bought at auction in 2003 for £58,700 made £227,000 when it came under the hammer again in at Bonhams in May 2011; a return of 287%. The same car had also traded in September 2009 for £181,900; its £227,000 realisation in May 2011 represents a 25% price advance in well under two years.
Other trends highlighted by the report were:
Bentley R-type Continental Fastback by HJ.Mulliner, 1952-55 (208 produced): fine examples trading at £400,000 at the start of 2011 were commanding £500,000-plus by year end.
BMW 507, 1956-59 (252 produced): £500,000 buys fine example at start 2011; now £750,000 for best cars.
Mercedes-Benz 300SL Roadster, 1956-63 (1858 produced): cars trading at £350,000-375,000 at start 2011 now selling at £475,000-500,000-plus.
Aston Martin DB5, 1963-65 (1063 produced): prices have advanced from £325,000 to £400,000-plus for fine examples.
Jaguar XJ220, 1992-94 (281 produced): was £140,000; now £180,000-plus for best.
The supplier of the information, HAGI, was founded in 2007 by former investment banker Dietrich Hatlapa, who said: "We’ve discovered that classic cars move independently of any other investment area, and that’s a very attractive attribute for collectors and investors alike in this day and age.
"This sector has many attractions in this day and age: supply is broadly finite – they’re not making Bugatti Type 57SC Atalantes any more; the market is global; the asset class is uncorrelated with other investment classes; historic cars are a tangible asset with real asset characteristics, a highly sought-after feature since the financial crisis of 2007-'09; once a model has become collectible it’s never become uncollectible. Plus, classic cars are fun to own and drive."
The stats by no means indicate a uniform rise in the classic car market, however, with Ferraris in general increasing in value by twice as much as Porsches.
Obviously with so many sales conducted in private, plus condition and other factors having such an immense bearing on a classic's desirability, a note of caution should be sounded in assuming that the reports offers a definitive view of the market. By highlighting individual cars, however, it does offer as clear a picture of at least some parts of the prestige market as is attainable.
Hatlapa is similarly wary that the results in the report are not overstated or taken as indication of the state of the entire classic car market. He said: "Simply because a model, a marque, or indeed the overall market has performed well in the past, that does not mean it will continue to advance at the same rate in the future. Often there can be better opportunities among models that have perhaps underperformed and may therefore offer more up-side.
"This market is textured, multi-layered, highly segmented and also affected by changing tastes and fashions. However, long-term trends show that classic cars have historically provided a high degree of capital preservation, with attractive returns. Currently the market is undergoing a drive to quality and the advice has to be, buy the best in terms of history, condition, originality and provenance. Although the market experienced a dip in the second half of 2009, values for the best examples of the most desirable cars held firm."