Classic Car Investments For Regular People

I was fascinated by a recent article I read on Classic Car Investment. Is it really possible to make a little bit of money on an expensive hobby like motoring?

It isn’t easy. Some would go so far to say it isn’t likely. But it IS possible.

If you actually select a somewhat exotic/unusual vehicle and then drive it, that could mean some serious maintenance costs. Think of those as rental fees for pleasure owning the car for a period and it makes the pill a little easier to swallow. Bottom line – pick the right car and it’s possible to buy, own and then sell a vehicle at a profit that’ll allow you to move on to something else.

The best resource I’ve found to help with this is Hagerty. It’s US-based so it won’t necessarily be completely relevant to your market if you don’t live there, but the trend might still be fairly close for the models Hagerty covers. At the very least, it’s an interesting way to pass a few moments/hours/days.

Hagerty has tools that can help you select your vehicle and track its valuation history. Just like stockmarket software, you can create a portfolio of cars and track/compare their valuations over time. They provide base indices, too. For example, are you curious as to how their basket of German Collectables has done over the last few years?

Here it is:

Hagerty German Collectables

The explanation: The Hagerty Price Guide “Silver Arrow” Index of German Cars is a stock market style index that averages the values of 21 of the most sought after cars from BMW, Mercedes-Benz and Porsche from the 1950s-70s. The list to the left (not shown here – SW) shows the cars that make up the index, while the graph above shows this index’s average value over the past five years. Values are for #2 condition, or “excellent” cars.

Let’s take a look at one of those German Collectables – the BMW 507 Roadster. It’s very rare, of course, and quite pretty. BMW made it in the late 1950s with a focus on the US market but it was too expensive so BMW cut the program after only 252 cars were made.

BMW made huge losses on the 507 but their loss can now be your gain – if you can a) find one, and b) afford it. Here’s the index for the BMW 507 since 2006. The colored lines represent vehicle condition:

BMW507values

A couple of things to notice here…

Even 507’s with some pitted chrome and cracked seats (the red one – Condition ‘D’) are still worth $750,000. That’s a lot of clams. Secondly, that graph starts a few years before the global financial crisis. As you can see, the GFC didn’t do much to hurt the value of this classic car.

Swade’s theory of classic car investment and ownership – The big money’s always been in genuine, recognised vintage classics from any generation. They will hold a certain amount of value for collectors, always. Think Mercedes Gullwing, Ferrari 250, etc.

Emerging big money classic car buys tend to be seasonal and a move with the age/generation that has the money.

The previously-accessible movers and shakers over the last 10-20 years, for example, are cars from the 1950’s and 1960’s, bought up by Baby Boomers who’d had their kids, made their money and decided to re-live a little of their automotive youth. Here in Australia, Holden Monaros and GT Falcons were relatively affordable 25 years ago. They went through a massive boom 10 years ago but have come down since. Right now, Japanese rotary-engined cars are doing particularly well.

The oldest Generation X’ers are turning 50 right now, which might mean some good news for 1970’s classics or undiscovered/overlooked 60’s cars.

Don’t have a million to splash on a rare Beamer?

Hagerty also has an Affordable Classics index, which is the one for regular guys like you and me. It’s this list that quite possibly shows where some of the movers and shakers of the future will be. Given that they’re not established classics, however, this index is a lot more volatile and cars from this segment DID suffer valuation falls during the GFC.

This list is also more US-centric, so caveat emptor. But it also includes some interesting models that weren’t just US sellers.

These are cars that might appreciate a bit more in the next 10 years either because they’re rare and they’re getting noticed a bit more, or because they’re widely liked and good examples are getting harder to find. They may not make that much money, but kept in good condition there seems to be a good chance they’ll retain their value or increase in value by a small-but-reasonable margin.

A few cars from the Hagerty Affordable Classic index and a few that I’ve chose out of my own field of interest:

Porsche 914 (Hagerty Affordable Classics)

HagertyPorsche914

Triumph TR6 Convertible (Hagerty Affordable Classics)

TriumphTR6Convertible

Volkswagen Beetle (Hagerty Affordable Classics)

VWBeetleHagerty

Ferrari Dino 308 GT4 (Swadeology pick) – the as-yet unloved Ferrari. The only one styled by Bertone instead of Fezza’s usual Pininfarina. The first Ferrari road car to use a V8, which became the basis for many of the Ferraris that followed it through the 1980’s.

HagertyFerrariDino

Porsche 911 SC (Swadeology pick) – the 1982 model has an average sale price of around $17,000. That’s an affordable classic and as you can see, it’s holding that value in good condition.

HagertyPorsche911SC

And of course, my current ride – the Alfa Romeo GTV6

HagertyAlfaGTV6

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The key to doing this, as with any investment, is buying low and selling high. There are a lot of things that influence a vehicle’s value and they’re infinitely variable and their relative weight will change with time.

Popularity – this is a supply and demand situation. The more popular the vehicle, the greater the demand. You can’t do much about this except try to track it and predict it. Blue Chip classics are regarded as being ‘Blue Chip’ because they’re more predictable. A Ferrari is typically always going to command good value. A Datsun’s a bit more hit and miss.

Condition – The better the condition, or perhaps the more original (and good) the condition, the high the value. Restored cars can be tricky because some people restore them to their tastes rather than to factory condition. A mint condition factory car should generally be favoured, but they’re very hard to find. If you’re going to restore, the best bet is to do it to factory specs or with original enhancements.

Provenance – If the vehicle’s history is known, documented and most of all, interesting, the vehicle can demand a higher value. The former Pope’s VW Golf sold for nearly a quarter of a million dollars 6 years ago. Your grandma’s Golf is unlikely to fetch as much, regardless of condition (unless she’s more famous than the Pope).

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Have fun over at Hagerty’s website.

I’m going to figure out how much I need to put away each week to get myself one of those Dinos – along with a house where I can garage it properly…..

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The Affordable Classics Gallery

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PS….. None of the above should be construed as financial advice. I’m not qualified to give financial advice. This is just an interesting topic. Do your own research and come to your own conclusions about whatever vehicles you might be interested in.

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6 Comments

  1. As a long-term investment, I would try to get a car that is near the bottom of its depreciation curve.

    Here are a few suggestions:
    Integra Type R
    NSX
    Golf VR6
    Viggen and/or any Saab convertible
    1980s 911
    M3

    The trick is to get an un-molested example. Most of these cars have been “tuned” or badly maintained, which means that the good ones are much more rare than they appear to be (in other words, they are under-valued). It won’t be long before the general perception goes from “I can get one on Craigslist” to “Oh my God, I haven’t seen a good one of these in years.”

  2. That’s a good list. You wouldn’t get many takers for the Integra here at this point, but the NSX is far more desirable. It’ll be interesting to see what happens with Saab Convertibles here. There are only two classic 900 Convertibles (which I think will always be the most desired) for sale here at the moment and they’re $2K and $7K respectively. Good ones will hold and maybe rise a little.

    The 911 might be the one to go for and I’ve been watching those for months. Classic style, a real-world great driving experience and a pretty robust vehicle, too. The trick is getting one that hasn’t been modified. There are so many with swapped engines or bodies.

    1. the classic 900’s seem to already be turning the corner: used to be you could get one for a couple hundred bucks with something not too bad to fix to get it back on the road for peanuts, or worst case, a parts car for cheap… now they come up less frequently and asking prices are escalating. It is all supply and demand. I think the most valuable collectable SAAB a decade from now will be the SPG (or Aero outside of North America), not the vert… the verts are collectable also, but more of them were garage queens from day 1, whereas many SPGs got used up (aka driven 400k miles in winter salt etc)… the SPG is an icon for SAAB, and as fewer and fewer are left, supply and demand will kick in. These cars are still a bargain compared to many of the plots in your article, and where they are relatively easy to repair and restore, they make fantastic drivable collector cars. Something like a 911 has so many good examples available around the world (and again, mostly not driven in salt and snow), it wouldn’t surprise me if someday an SPG was worth more (though at least for the moment, more of the general public would be interested in a 911)…

      I’ve got a couple lowly c900 sedans, and even those seem to get a lot attention these days… people frequently come up to me who have never owned a SAAB, admiring the car, asking where they might find one! crazy – you couldn’t give them away a few years ago…

  3. I would add the Honda S2000 to the list as well. Great car and will continue to be more and more appreciated (that and a restored V8 MG).

  4. Interesting piece swade.

    One of the things I think helps maintain appeal is if the car is specced well to suit an enthusiast driver. This might mean a manual ‘box – which is not always common. For instance, BMW 840 or 850 coupes mostly seem to have come with an auto box but there are manuals and they generally command a premium. Same goes for the NSX. Moreover, a manual box will usually last longer – or at least be cheaper to repair – and this adds appeal.

    of course some cars only came as autos but I hope you get my point.

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