Investing in Classic Cars

28 September 2018
If you’ve ever bought a new car, then you’re probably aware that the moment you drove it off the lot, its value plummeted. A sports car might be cool, but they typically hold value like a sieve. However, some cars, if they are rare enough, historic enough, or if teenage boys across the world had posters of them on their walls, can increase in value – making you a tidy return.

Performance of classic cars

Classic cars have even outperformed the stock markets in recent years, with some investors seeing returns of almost 500% over the last decade. In 2017, classic cars offered a 334% return over ten years, compared to 182% for coins, 103% for stamps and just 69% for watches. Of course, your specific return will depend on a host of factors, including the condition of the vehicle, how popular it is, and even the specific colour and trim.

What to look for

Generally speaking, the value of any particular car depends on its rarity. A 2014 Toyota Camry is probably never going to be particularly collectible – there are just too many of them out there. On the other hand, a Porsche 993 GT2 can easily go for over a million dollars, as only 57 were ever made. Of course, tastes change over time, and what was seen as junk in its time may become a classic in the future.

Condition is also and important factor; a lower odometer will generally reach a higher price. Dents, rust and scrapes will negatively impact the price, and typically the closer it maintains its factory specs, the better a car will usually sell.  Restoring a beaten up classic is an option, but be aware that this can be very costly and easily eat into your profit.

A good story or a ground-breaking innovation might also make a particular car a better investment. Connections to celebrities, a racing past or the first introduction of an important technological innovation may all serve to increase a cars resale price. And of course, never discount how important the aesthetics of a car can be – a ‘cool’ looking car will likely attract a better price than an ugly one.

Haven’t found your dream car yet? Thinking about investing in shares? The table below displays a snapshot of online share trading platforms from Canstar’s database and with links to providers’ websites for ‘casual investors’. Please note that these results are based on an average of two trades per month, are ordered by star rating and then by providers’ name alphabetically.  

How to sell a classic car

When it comes time to sell, auction houses tend to be the major venues for most investors, but a private sale to a particularly keen investor isn’t unheard of. Once again, research is key, knowing what the market is interested in may help to secure a sizeable return.

If you’re serious about investing in cars, the Historic Automobile Group International can be a handy resource. Their HAGI Top Index is the benchmark for collectable cars, tracking close to a hundred years’ worth of models and makes. Sites like carsguide might also help you in researching the market, but be aware that a substantial number of sales are never publicly reported.

Before you drive off

A classic car is generally a long-term investment, and comes with associated risks and costs. Theft, rust and fire can all easily cost you your return, and the cost of insuring and protecting against such events will add up. Maintenance is another major cost, particularly for rarer models that might have very few, if any, spare parts available. You will also need to factor in storage, particularly if you’re building a sizeable portfolio.

Investing in classic cars may offer significant returns, but be aware that it is a volatile market and the costs involved can be high. Of course, owning a classic car from your childhood will always be just a little bit special.

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