INVESTMENT GRADE CLASSIC CARS

Investing in Grade Classic Cars

So there you are at a car show or a motorsports gathering and the thought hits you! Based upon what is happening in the markets and with the classic and collector car hobby, is it time to move from simply an aficionado into an investor? Would diversifying into a well selected classic car make good investment sense? It is a thought that is occurring more and more often. And for good reason.

The value of rare classic cars has risen in value more than 500% over the past 10 years, according to the Historic Automobile Group's HAGI Top Index. Several major things factor into the market surge. Among them are:

  • The growth of wealth internationally and a low interest rate environment for investors
  • A desire by investors for more stable assets or currencies
  • Classic cars can be easily transported internationally based upon favorable exchange rates
  • The increase of the collecting lifestyle
  • The fact that classic cars as an available asset group is shrinking

    However, these are only the empirical reasons. There are a number of more subtle reasons that also inform the behavior of both enthusiasts as well as investors.

    Greatest among these is the explosive growth of the internet and the unprecedented access to the type of diligence and information that has the potential to change the face of all types of collecting. Every classic around the world can be as close as the click of your mouse. And the level of detail and diligence can be just as good as seeing it in the driveway next door. And to be sure, collecting cars has become more than just fashionable and cool. Nowadays, if you pick the right vehicle; the equity growth and return on investment could serve to make your investment expertise the topic du jour in the Wall Street Journal.

    BUT, BE CAREFUL OUT THERE!

    While it is true that the sales of certain cars have gone through the roof, that doesn't necessarily hold for all classic cars or classic car genres. Even-though many observers expect continued growth in the marketplace, everything will always depend upon the particular vehicle you acquire. One very interesting thing does tend to stand out however, when observing the current super- heated market. And that is that the majority of people buying classic cars over $100,000 now are investors, not necessarily collectors. And many of them are from overseas and looking for a safe place to park their money. What this tells us is that there is an investment quality to some of these vehicles if you approach their acquisition which an investor's and not simply an enthusiast's mentality.

    SO IF YOUVE DECIDED TO BUY

    Remember that these behaviors can improve the viability of your classic car investment, and may even make it wise to leverage your ability to invest with some well placed debt:

  • Provenance and pedigree - Who owned it, who worked on it and who raced it! And, how much supporting paperwork documents the history of the vehicle. In this case, the more documentation, obviously, the better.
  • Trends - Certain vehicles go in and out of style. This can impact the equity growth and the term of your investment. If you cannot hold the vehicle for the long term, be very aware of the values, much like the stock market. Such market knowledge will protect your investment.
  • Become an expert or hire one. If you don't know everything there is to know in order to make the right investment call on a particular vehicle, find someone who does possess that knowledge. This is a case where a few dollars for an appraisal or pre-purchase inspection is the best insurance you can buy.
  • Don't forget the other costs involved with owning a classic. Insurance, maintenance, storage, transportation; they can all affect your opportunity cost.
  • Also, keep track of the numbers, they do not lie. Just like the financial markets, you must always be aware of the various indices which could affect your investment.
  • And lastly, when it is time to sell, contact Specialty Sales Classics.

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