Official: classic cars a better investment than gold

2

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."

Comments

Golfboy

So what classic would you recommend to buy this year as an investment then?

harris speedster

I guess that I am one of the old dogs.
Ferrari was mentioned above as moving on the market place (monetarily) faster than Porsche.
There are many other automobiles, pre-war & post war, that have kept pace with ferrari.
Perhaps it is best to go back in the 80's to truly look at what caused or created the feeding frenzie!
Yes, the market was alive and well, old Duese's, Bugatti, Mercedes, Ford, Auburn and on and on.
But all of a sudden the collector car market "ignited".

It seems that when Enzo passed, Ferrari cars in general led the pack for increased value's and desireability.
The old addage; sh"" rolls down hill applies here ?

Race cars led the field, history and wins seemed to add $$ to any which make. One off's in specific cars also took off>. special bodied by numerous coach makers, short w/b versus l/wb etc.
Ahhhhh, that crystal ball, would of, could of, should of syndrome !!!

Just as I mentioned and others in the Miata topic herein CSC, the topic here reflects the same thought, originallity reigns superior?
Add for rarety and a Stars name, which is a no brainer in thought and investment.

As most of us, including me, can not lay down hundreds of thousands or millions, we are stuck in the masses trying to find direction.

Good bets through my eyes, pay attention to what the public makes an investment car, usually not a special edition of any newer breed of any car though. The public dictates this !!!
The crystal ball for the masses, perhaps a P-1800 Volvo, an early 240Z,
early 50's fiberglass cars on ford or Jag chassis, a one off early build anything, 90-93 Miata which the masses have deemed collectable, MG 6 cyl models, and just about any make that lends itself to a sports car>> another old addage>> when the top drops the price doubles>. this does prove itself in basics through history.

For the middle class that has more play money; 50's and 60's xk and xke, Shelby's, some Astons, some Ferrari's, some 50's-60's early Mercedes SL's, Hemi cars in general, This list is almost endless, a buyers eye is what determines their own thoughts.

For the elite and rich, well lets say, the 31 million dollar Bugatti, the Ferrari Tr at 16 Million, the Cobra Coupes at 10 million etc.
This elite group of people can do whatever they want !!!

Perhaps a real drive for many of this group; a 10 million dollar painting is cool, a Gold reserve is cool, millions in the bank is cool, BUT, you can not put them on display in your garage, yard or at a Prestigious Invitational>> point being, you can show off your wealth and have tons of fun doing so.
REALLY would like to hear others thoughts here, as I may break into my meager piggy bank !!
warmest regards,
John

Home of the exotic 1935 Harris fwd speedster

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