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I’ve got to confess, I’m not the biggest car nerd out there, but I am an alternative asset investment nerd, so the idea of investing in classic cars is a topic that certainly piques my interest.

So whether you're a car enthusiast or lime me just looking for a unique investment, classic cars let you enjoy a tangible asset that can diversify your portfolio.

But getting started with classic car investments takes know-how. You'll need to understand the market, know what makes a car valuable, and learn how to maintain and preserve these treasures.

Let’s dive in.

I'll cover:

• Are Classic Cars a Good Investment?
• The classic car market in numbers
• Step-by-step guide: how to invest in classic cars
• Considerations (if you’re not going down the fractional ownership path)
• More resources and tools

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Are Classic Cars a Good Investment?

Mention classic car investing to many people and you might be met with an incredulous, “Isn't a car a bad investment?”

The answer is yes, mass-produced cars are almost always depreciating assets and are therefore bad investments!

However, the very opposite is true for classics, especially those that experience an uptick in demand. Those can be an excellent investment, and historical data bears this out.

The big financial upside of owning a classic car is its rarity and the value that comes with it. Since certain models are no longer in production and are hard to find, they tend to hold their value well and often appreciate. For instance, a Jaguar E-Type that was worth about $55,000 in 2000 had an average value of around $170,000 by the end of 2023, which is an increase of over 200%.

While that's an attractive return, the rarer the car, the higher the potential profit. In 2022, a 1955 Mercedes-Benz 300 SLR Uhlenhaut Coupe sold at auction for $145 million. This is an extreme example, but it shows the kind of returns classic and rare cars can offer.

Also, this is a FUN investment! Since they're tangible assets, you can enjoy driving, restoring, and showing off a car you invest in. Many investors start as enthusiasts and hobbyists, so they get to combine their passion with investing.

The numbers

OK, so the headline is that classic cars in the last 12 months, according to Knight Frank’s Wealth Report have had a tricky time. When the economy is shaky, luxury investment assets are often the first thing investors will wave goodbye to.

So with that said, classic cars was down -6% in the 12 month period (as of Q4 2023) however, up 82% when looking at a 10-year period.

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Projected size of the global classic car market in 2024

In 2024, the overall classic car market is expected to be worth $43.3 billion dollars.

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Cars have outperformed other collectibles

The market for classic cars is always changing and has done better than collectibles like coins, gold and silver over the past decade and has also beaten the broad stock index.

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How to Invest in Classic cars

Buy Direct:

Classic car magazines, clubs and shows will always have information on top models for sale.

Websites such as classiccars.com and Hemmings list cars for sale and they’re reputable sites, but you’ll also find cars for sale on Craiglist and Facebook Marketplace too.

There’s tonnes of more tailored sites too e.g. Cars and Bids for cars 80s and newer.

One very good place to look for both information and cars for sale are the forums set up for specific makes or even models.

These often feature buying guides, details of common problems and a community of people happy top help with questions. They can be found with a simple Google search and registering should allow you to talk to other members.

Auction houses

There’s a lot of them right now and you can bag a bargain, but you can also find that’s where you might pay top dollar, so caution is advised.

Here’s a few:

• Sotheby’s
• Clasiq
• Gooding & Company
• Hemmings Auctions

Fractional Ownership

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As I alluded to, I’m not a car nut, so this option of investing in classic cars is my favourite. Sites like Rally allow you to own shares in a classic car. An interesting snippet from its website:

A 1955 Porsche 365 Speedster, similar to one Rally holds, sold in 2002 for $71,800 has had its price appreciated to $480,000 in 2021, marking a 568.5% gain.

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How it works:

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Considerations (if you’re not going down the fractional ownership path)

Future CostsIt’s easy to be seduced by apparently affordable classics in the classifieds, only to bring home a money pit. Make sure that you have funds available for maintenance, a figure that will vary wildly from marque to marque but that will never be cheap unless you are willing and able to pick up a spanner yourself.

RestorationCars that are sold as ‘projects’ are in abundance these days and often appear as the result of someone else losing momentum or realising the job is just too big for them. A full restoration is not something an individual can usually manage, and as soon as you start paying a third party to carry out major works the bills mount up.

Even if panels or parts are cheap and available, the sort of specialist labour required to fit and finish them is unfailingly expensive and very quickly a cheap classic can get into the automotive equivalent of negative equity.

Insurance and additional costsInsurance for classic cars is generally extremely favourable, based upon the fact that you are unlikely to be driving your car frequently or over any great distance. Limited mileage polices are available from a wide variety of specialists, but it is worth taking the time to ring around for the most competitive quote.Many of these policies will include some form of breakdown cover, but check the details. You will want a comprehensive plan that includes home start and unlimited roadside recovery.

Support

You’ll have noticed by now just how many times owners’ clubs get a mention. This can and perhaps should be your primary source of support for classic car ownership. Highly knowledgeable and usually very approachable, these clubs offer very specific advice, fine-tuned over years of personal experience. And they are in it for the same reasons you probably are, so the advice you’re getting is good, impartial and free.

Do not discount the internet, however, where there are many useful owners’ forums and video tips on repairs and maintenance, but treat the information you acquire here with a little more circumspection.

PartsThe availability of parts is a major consideration when entering into classic car ownership.

Many of the larger marques have impressive resources of old or ‘new old’ stock, and it is usually possible to track down anything, given enough time, resource and expenditure. But more obscure manufacturers, and especially cars built in limited numbers, can catch out the incautious. Again, owners’ clubs can be helpful in sourcing scarce parts, and it is not uncommon for members to group together to mitigate the expense of having certain essential components remanufactured.

StorageUnless your classic is going to be in near daily use, it advisable to garage it. Cars left out in the elements deteriorate at a remarkable rate when not driven, and can quickly become a source of anxiety rather than pleasure.

If you do not have a garage, explore car storage facilities local to you. The right set up will come at a cost, but for that you can expect far greater security and peace of mind.

SellingThere are two main choices when it comes to moving cars on. You can sell privately, off your drive, or put the car into an auction.

The private sale will enjoy less foot fall, and you are wide open to time wasters, but the figure you eventually agree is just that.

An auction house will have fees to consider, and those attending the sale will invariably be looking for a bargain so you may not achieve the best possible price, but it is here that you have the greatest chance of a quick sale.

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Resources & Tools 🧰

So first-up is a super useful valuation tool from Hagerty - allows you to filter by car brand and see current market prices

A very interesting thread on the future of of the classic car market

Jay Leno’s Garage YouTube channel - covers classics and restoration projects

Hope you feel a bit more savvy on the world of collectible cars.

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Jason

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DISCLAIMER: None of this is financial advice. Finbrain is strictly for educational purposes.

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