Who says investing can’t be fun? Yeah, sure, investments are supposed to be responsible, strategic, and well thought out, delivering a high rate of return through years of appreciation. But you can have all that investing in collector cars – plus a heck of a lot of fun.
And the appeal is spreading rapidly. The latest report by the Knight Frank Luxury Investment Index comparing the most popular luxury item investments has found that collector cars are far and away leading the race among fine wines, antique furniture, Chinese ceramics, watches, jewellery, art, coins, stamps, and gold.
Over the past 10 years – while stocks in the S&P index have secured increases of 70%, property values in the hottest international cities have appreciated 135%, the gold price is shining 225% brighter, and collector stamps are sticking to gains of 255% – the top of the line collector cars have raced ahead at a turbo charged 430% growth rate.
“Cars have a truly global international reach,” Dave Selby, senior analyst at the Historic Automobile Group International, explained the luxury investment’s phenomenal growth to the Telegraph. “When it comes to art, wealthy Russians are more likely to buy Russian art and wealthy Chinese, Chinese art. But wherever there are roads there are cars, and everyone knows and understands [them]. The reason why classic cars have gone up so much in value is because they are a tangible asset in an uncertain economic world.”
Yet wealthy auto collectors view their classic cars as more than just a sound vehicle to invest in – they consider them fun vehicles to drive around in!
Scottish billionaire businessman Lord Irvine Laidlaw, who recently auctioned off most of his auto collection worth some $27.5 million, expressed his passion to the Telegraph. “I don’t regard myself as a collector. I am a car enthusiast, and as an enthusiast I want to exercise my cars regularly, rather than gloat over them in the garage.”
The World’s Most Expensive Car
Sharing those sentiments is Paul Pappalardo of Connecticut, the previous owner of what is now the most expensive car in the world – a 1963 Ferrari 250 GTO racer he recently sold for $52 Million – who often raced his multi-million investment in charity competitions.
Source: CarBuzz.com
Powered by a 3-litre V12 engine delivering 300bhp, the racer can accelerate from 0-60 mph in 6.1 seconds and reach a top speed of 174 mph. Not bad for 1963, and good enough to carry Jean Guichet to victory at the 1963 Tour de France road race.
As one of only 36 units to be produced, its rarity contributed to the $52 million auction price, as the manufacturer highlights at its website, “It has become one of the icons of Ferrari production history, with a revered position in collectors’ circles.”
Auto aficionados like John Collins, chairman of classic Ferrari specialist Talacrest, proudly compare it to a fine work of art. “Classic Ferraris have seen more gains than others. They’re like the Picassos of the car world,” he esteemed to Mail Online.
An Investment for the Ages
Yet another fascination of collector cars that draws investors to pay small fortunes for them is their unique history. Just a small but unique historical significance can add a significant premium to the price – which grows more valuable with time.
Take the 1884 De Dion Bouton Et Trepardoux, for instance. That’s right, 1884. Most people probably don’t know they had cars back then. That’s because they didn’t, this model being one of the first prototypes. But it is a working, fully drivable car – even if it doesn’t look like one. Touted as the world’s oldest running automobile, it sold at auction in 2011 for $4.6 million.
Source: Gizmag
This model was the second prototype built by France’s Count de Dion, and it won the world’s first auto race in 1887, which was billed as “Europe’s first motoring competition.” Important to note is that it was the only automobile in the race. But it’s still the one that won.
Also known as “La Marquise,” the car could carry four people – two in the middle, two at the back, seated back-to-back – with its coal-powered, twin-compound, 40-gallon steam engine capable of reaching speeds of 37 miles per hour. Just be sure to give yourself plenty of time before leaving, as it takes 45 minutes to bring the water to a boil.
Also of historical significance is this oldest surviving Rolls-Royce – a 1904 Rolls-Royce 10hp – which sold at auction in 2007 for $5.69 million.
Source: Sports Car Market
The RR 10hp was the first automobile produced by the then newly partnered team of Charles Rolls and Henry Royce; Royce produced them in his factory, and Rolls sold them at his dealerships. Only 16 were ever built.
The engine is a water-cooled twin-cylinder 1800 cc, with overhead inlet and side exhaust valves, capable of outputting 12 hp at 1000 rpm, with a top speed of 39 mph.
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Some history-making cars still bear the wear and tear that made them famous, like a warrior’s prized battle scars won in combat. No one would ever dare smooth the nicks and dents out of this 1954 Mercedes-Benz W196R Formula 1 Racer, as doing so would greatly reduce the value of its recently auctioned price of $29.5 million.
Source: Bloomberg
Driver Juan Manuel Fangio claimed two Grand Prix victories in this car in 1954. It has a straight-eight (as opposed to V-8), 2.5 liter engine capable of reaching 180 mph.
While the Ferrari 250 GTO noted earlier is the most expensive car ever sold privately, this 1954 MB W196R is currently the most expensive car ever sold at public auction.
Classic Charm and Elegance
Of course, besides the investment appreciation and historical significance of collector autos, there is also a certain charm and elegance that are rare enough to demand a king’s ransom. I thus devote my fifth vehicle exposé to not just a car, but to a lost class of cars – the lost class of the classics.
Source: Bloomberg
This pearl white 1928 Mercedes-Benz 680S Torpedo Roadster, which sold at Monterey in 2013 for $8.25 million, won the Pebble Beach Concours d’Elegance in 2012; the silver 1937 Mercedes-Benz 540K Special Roadster sold for $9.8 million at Monterey in 2011; while the black 1931 Duesenberg Model J LWB “Whittell” Coupe sold at Pebble Beach in 2011 for $10.3 million.
They just don’t make them like that anymore.
Driving Future Returns
While these and other top-of-the-line classic collectables may be out of most people’s reach, Selby sees nothing wrong with the lower priced Porsches and other more “modestly” priced cars. You can not only get them at relatively affordable prices today, but can also enjoy them while you wait for them to appreciate over time. Though Selby does caution investors that past performance and surges in the values of collectible cars are no promise of future returns.
Even so, Greg Knight, chair of the all-party historic vehicles group at Westminster, U.K., is impressed with the rise in the value of classic cars lately. “This is good news. It means that people who are interested in classic cars keep our motoring heritage on the road, enjoy classic motoring and get their money back. It is a win-win situation,” he expressed his pleasure to the Telegraph.
Yet Knight hopes investors’ passions will be in the right place… in the driver’s seat. “I hope it doesn’t lead to speculators buying cars and putting them under cover until the value goes up. Anyone who owns a gentle car will know that gentle use is better than no use at all.”
Joseph Cafariello
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