Over the last decade the classic car sector has risen in value by an astonishing 179%, whilst the market grew by eight per cent in 2017 alone.
Those figures from Knight Frank‘s superb Luxury Investment Index underline how vintage car investment has yielded far greater returns in recent years than putting money into art, watch collecting or the stock market. Indeed, for anyone considering dabbling in classic car investment Knight Frank’s quarterly reports are essential reading.
To get a first feel for some of the best classic vehicles to buy check out some informative lists from the likes of Autocar, Top Gear and GQ. Unsurprisingly GQ highlight some of the cooler models in the marketplace, from the £15,000 Alfa Spider to the £700,000 Ferrari Daytona
GQ also point out the rapid rise in value of certain models in the buoyant classic car investment sector. A nice low mileage Porsche 993 Carrera 2 would have sold for £45,000 in 2015, yet just three years later they are hard to find anywhere under £55,000.
A key point to establish when you first set out on the journey of buying a classic car is your main motivation for doing so. If it’s purely investment with an aim to resell within a specific timeframe then that should inform your purchasing pattern.
If you really want to own a specific model for nostalgic reasons or simply because you love a certain line, that’s great, but you may not make money in the long term.
The aforementioned Porsche 993 Carrera 2 is relatively easy to maintain in practical terms, though expensive to insure and drive. Keep it locked away in your garage and its appreciation will be more significant but you will get less joy from owning it.
Likewise, if you buy a run-down classic to restore yourself or with a friend, purely for the enjoyment of doing so, that can be positive, but not necessarily profitable. If you are a retired mechanic it’s a different story, but with many out-of-condition vintage cars it can take month or years to get to a point where the car is roadworthy.
In addition, it’s also hard to calculate the (often significant) costs and time required for restoring an old vehicle yourself. A cool, rare, but unroadworthy 1970s BMW purchased as a ‘project car’ might cost £25,000 to acquire, £25,000 to restore and then only be worth £40,000, even after countless hours have been spent on it in the workshop.
Buying a highly sought-after car in an already perfect condition costs more upfront and makes it easier to sell at a profit further down the line.
It’s also important to figure out where you are going make the investment of the classic car – or cars – to enhance your portfolio.
Buying at auction can be exhilarating and bargains can be found. However, the downside at auction is there is very limited scope to inspect the vehicle and verify 100% all the claims that are made about its specifications.
Purchasing from a dealer is not a bad option, especially as any good dealer will permit an in-depth inspection process. They may also be open to dropping an initial asking price by 20-25% to a smart negotiator.
Acquiring classic cars via the private sale market can be a highly fruitful endeavour when a few logical best practice guidelines are followed.
If the seller is a long-time owner who wants the vehicle to be well-cared for in the future and has intimate knowledge (and documentation) of the service history the signs are good. If they are also willing to be flexible on the sale price this is a bonus. However, with classic cars in particular it can take weeks, even months of scouring private sale adverts and talking with sellers to find a car worth buying and someone worth buying from.
As with any investment due diligence and extensive market research are required. Strive to verify everything the sales literature and seller say about the car and take a qualified vehicle inspector or mechanic with you to look over the vehicle.
Having this cool-headed third party with you might cost a small fee but could save you thousands of dollars and should help you curb an impulsive purchase of an overvalued plaything.
Finding a trustworthy inspector or a mechanic with specific knowledge of classic cars is not complicated. Joining a classic car club, attending classic car shows and visiting well-regarded vintage car dealerships should be standard practice for anyone looking to start a car collection as an investment.
In these circles you will meet passionate, knowledgeable individuals who can provide priceless advice on which models to buy and which to avoid.