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Vintage gold

Outpacing the general market, collectible cars have become the hottest investment among the well-heeled.
Wednesday, April 6, 2016 - 05:50

BT_20160406_MERC1_2203490.jpg
While the super-rare Ferrari race cars of the 1960s such as this US$17.6 million 250 LM Scaglietti command a premium at auction, those built in relatively large numbers such as the Mercedes-Benz 300 SL Gullwing (above), while still pricey, have seen values peak.

BT_20160406_MERC1_2203490.jpg
While the super-rare Ferrari race cars of the 1960s such as this US$17.6 million 250 LM Scaglietti (above) command a premium at auction, those built in relatively large numbers such as the Mercedes-Benz 300 SL Gullwing, while still pricey, have seen values peak.

BT_20160406_MERC1_2203490.jpg
Those seeking a more affordable entry into the market should consider "poster car" models from the '70s to the '90s, such as the 930-series Porsche 911 Turbo (above) or the Lamborghini Countach over the expensive Jaguar E-type.

BT_20160406_MERC1_2203490.jpg
Those seeking a more affordable entry into the market should consider "poster car" models from the '70s to the '90s, such as the 930-series Porsche 911 Turbo or the Lamborghini Countach (above) over the expensive Jaguar E-type.

BT_20160406_MERC1_2203490.jpg
Those seeking a more affordable entry into the market should consider "poster car" models from the '70s to the '90s, such as the 930-series Porsche 911 Turbo or the Lamborghini Countach over the expensive Jaguar E-type (above).

AMONG the so-called passion investments - placing wealth into collectible assets - classic cars have been the best performing, bar none.

According to the Knight Frank Luxury Investment Index compiled by the global property and investment adviser, classic car price levels rose 17 per cent last year and 490 per cent over the last decade, beating all other categories such as watches, art and wine over both periods.

This performance has even trounced those of traditional instruments such as the FTSE 100 equities index and London's high-end residential market in 2015.

The monetary values are staggering: in North America alone, classic car auction sales totalled more than US$1.4 billion in 2015. Eight of the top 10 most valuable cars ever transacted went under the hammer in the three years since 2013.

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Depending on the currency paid, the record holder is either a 1957 Ferrari 335 S Scaglietti Spider that won the 1958 Cuba Grand Prix in the hands of British driver Stirling Moss, sold for just over 32 million euros (S$49.2 million) in February, or a rare 1962 Ferrari 250 GTO Berlinetta - one of 39 ever made - that fetched US$38.1 million in 2014.

But even at less stratospheric levels of the market, prices are soaring. For example, you could pick up a 1960s Series 1 Jaguar E-type in the UK for about £20,000 (S$38,638) a decade ago; now, one in tiptop condition can cost you a handsome £160,000.

"There are a number of explanations for this perpetual growth, perhaps led by a sustainable market that is now driven by educated, passionate enthusiasts, contrary to the speculators of the 1990s," explains Alain Squindo, the chief operating officer for specialist car auction house RM Sotheby's, in an e-mail interview, referring to the classic car bubble in the closing decade of the last century.

He credits the rapid and continual introduction of new vintage car events and the thriving collector car community in hobby-related activities such as rallies, historic races and Concours d'Elegance for the change in the landscape.

Manufacturers are jumping into the game, too. Long-established carmakers such as Ferrari, Aston Martin and Porsche have set up heritage departments and support facilities for the cars they built in years gone by. These provide research, authentication, parts, and restoration services, and also participate in historic events such as the legendary Mille Miglia road rally.

Both these trends mean that classic car collecting is becoming more social and more feasible than previously, when it was a solitary passion with many months and even years of tinkering in a garage, hence broadening its appeal.

Not all classic cars are appreciating at the same rate, however. At the top-end of the market, criteria that determine the desirability of a car include rarity, marque, originality, condition, documentation and provenance. According to Mr Squindo, the first attribute is increasingly becoming the most vital.

He adds: "For example, Aston Martin DB5s had appreciated quite rapidly in comparison to cars with similar appeal over the last several years, and we've now seen a correction in their prices, along with those for other stand-out cars of the era, such as the Mercedes-Benz 300 SL and Ferrari Daytona. These are all core collection cars built in relatively high numbers (the DB5 approached 1,000 total units), so it is clear that rarity is coming into play more than ever before."

Those who have missed the boat and fear that they are now priced out of the market need not worry though. While the coach-built sports and GT cars of the 1950s and '60s continue to command a premium at auction, the market is seeing the beginning of an uptick in demand for supercars of the '70s to the '90s, providing a still-accessible entry point for collectors.

Fuelling this increased appetite is the rise in wealth of generations of people who grew up with posters of such cars as the Lamborghini Countach and early Porsche 911 models on their bedroom walls and are now finding themselves in the position to realise their childhood dreams.

Before jumping in, though, buyers need to do their homework. While the classic car market is generally doing well, remember that only the best examples of rare cars have seen huge gains, with the gap between these and "average" cars growing larger. Also, even among the blue chip marques such as Ferrari, whose cars dominate the record list, there will be some models that are winners and some that are losers.

Those seeking the ultimate classic car investment advice would do well to heed Mr Squindo's parting words: "Buy what you love; collector cars should be an investment in pleasure. Don't buy a car with the thought of making money overnight. Above all else, buy something you are going to enjoy driving and owning, as that's what you'll ultimately derive the most enjoyment from."

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