Worth more than money: classic cars ‘can be very expensive hobbies’, but are highly sought after
Investing in classic cars may be profitable, but it can be a risky and difficult process
It may be the most beautiful car that you’ll never get to drive – unless you have a spare US$19.8 million rattling around in your pocket. That’s what a 1939 Alfa Romeo 8C 2900B went for under the hammer at a Sotheby’s sale in Monterey, United States, in August.
The high price tag came as no surprise, says Ian Kelleher, managing director, RM Sotheby’s West Coast Division – the Italian-made touring sports car, of which only 12 of the original 32 still exist, is very special, even for a classic car, he explains.
“Cars of that quality, cars which have that place in automotive history, don’t come up for auction that often. They usually remain as the centrepieces of individual car collections,” says Kelleher, who is based in Culver City in California. “The Alfa Romeo is a spectacular car in terms of its design and its appeal. If you own this, you don’t need much more.”
With the market prices of top-range classic cars being so high – valuations can range from hundreds of thousands of US dollars for a 1926 Bentley Tourer to around US$30 million for a Ferrari 250 GTO – vintage motors may look like a good investment. That is true up to a point. The value of rare classic cars has risen over 500 per cent since 2005, according to the Historical Automobile Group’s HAGI Top Index. But while those trading at the very top of the market can make a profit, experts agree that buying cars purely as a financial investment is generally a risky business.
Classic cars may be works of art, but investing in them is a much different process to investing in artworks. Once bought and stored correctly, paintings can generally be left alone. That’s not true of a car. “You can hang a painting on a wall, not look at it for five years, and it will be fine,” Kelleher says. “But if you leave a car alone for five years, it will likely devalue.” Cars suffer from ailments like rust, and need constant maintenance from specialist mechanics, who can be expensive. They have to be driven, too – like a body, cars must lead an active life to keep in shape. Consequently, any increases in value are likely to have been eaten up by maintenance costs.
Vintage cars are very much an emotional purchase, and most of them are bought with discretionary income
“There has always been some investment, and there are always some buyers who have that aspect in the back of their minds,” Kelleher says. But collectors usually buy cars more for love than money, he says: “Vintage cars are very much an emotional purchase, and most of them are bought with discretionary income. Buyers want to enjoy them as much as invest in them.”
Laura Gilbert-Burke, spokeswoman for the British classic car racing event Goodwood Revival (see sidebar), agrees that fun usually trumps finance. “The joy of owning classic cars is being able to tinker under the bonnet. They can be very expensive hobbies if you aren’t able to keep them repaired and running yourself, and not all models will sell for more than they have cost you,” she says. Having a high-profile car is one way of pushing the price up, she adds: “Certain classes we celebrate at the Revival tend to then enjoy an upsurge in value afterwards. The Ford GT40s became very sought after when we started featuring them at Goodwood.”
It’s a communal experience, he adds: “Many collectors find ways to enjoy their cars as part of tours with other collectors. The owners, often husbands and wives, stay in nice hotels, have wonderful dinners, and see beautiful scenery while connecting with other collectors. That type of ownership experience is attractive to a lot of people. If people see others enjoying their cars, that generates interest from potential collectors.”