A look at investing in classic cars

Ever since the world economic crisis of 2008 people have been wary of placing their money into the financial markets. The bubble well and truly burst in the property market, meaning people are more reticent to look at buy to let investments, as well as more reticent to go into stocks, shares and corporate bonds. This has led to a lot of high net worth individuals investing in fine art and yes, classic cars.

Over the last 3 or 4 years we have seen some amazing price rises with classic car models, with, according to thisismoney.co.uk, cars from the 50s and 60s seeing the biggest gains. In an era when people don’t know where to put their money, it seems that people are turning to the things they love and cherish, seeing that the value of these things is intrinsic to them, and therefore more likely to hold. The truth is that over the years we’ve seen very few cases of classic cars losing value.

Gary, auto expert at All Drives and Controls, explains that “the classic cars of the past didn’t benefit from the technology that we have today in our factories. Unitronics and other efficiencies are relatively new to the market. However, every car received an attention to detail that isn’t always present in the automated and mechanised car factories of today. It really isn’t surprising that people love to keep hold of the older, beautiful classic cars of the past. I think they will always be a great investment.”

The biggest winners

According to the article on thisismoney.co.uk many cars have tripled in value over the last few years. The Jaguar E type has gone from £30,000 or £40,000 to a value of £120,000 since 2011. The Aston Martin DB 5 sports saloon has seen similarly impressive returns going from £140,000-£320,000 in the same period.

The Bentley S2 Continental Flying Spur has seen impressive gains going from £44,000-£70,000 in 3 years. The Triumph stag has doubled in value from £5000-£10,000.

Identify a bargain

Investing in classic cars means identifying a bargain that you feel offers value in the current marketplace. The aforementioned cars have seen such rises in recent years that they perhaps have appreciated to their limit for now. A better bet may be to look at cars that haven’t yet seen such price rises and are therefore likely to appreciate as demand in the classic car market increases. The Telegraph has done a fantastic list of potential future classic cars that may offer value.

A turning economy, a further rise?

An upturn in the economy will see an increase in disposable income around the country. What are people going to do with this money? If they are fearful of investing in the market is, have gone off investing in gold, have seen the dip in value of oil and are generally in uncertain mood. It stands to reason that they will look to luxury items to bring within their possession. There is a logic to this. If you’re buying shares, then you don’t have any natural affiliation to the paper that you purchase. The success of gold has in no small measure been down to the fact that people have loved to hold their own gold and feel that they are in something of duty and value. Similar drivers are at play in the classic car market

Risk vs reward

With every investment you have to balance the risk and rewards available. If you are happy to take a small drop in value because you truly love a car, then the risks are somewhat diminished. As with any long-term investment classic car should be seen as a 5+ year investment. Punt on value and something you love and you are unlikely to lose big.

If you are buying a classic car for regular use, and not just investment, then make sure you check out our used car buying tips.

Leave a reply