Classic cars are gaining traction among the rich. Should you invest in them too?

WHILE new cars depreciate the moment you drive them home from the dealership, could buying an appreciating classic be one way to drive a car for free?

It seems like an absurd idea, but SGCarmart editor Julian Kho has done it before. Hear about his experience and recommendations in BT Money Hacks. 

And he’s not alone in viewing classic cars as an investment. According to the Knight Frank Luxury Investment Index, classic cars have been one of the best-performing assets globally, sometimes outperforming the more traditional asset classes, over the years. Even during the height of Covid, classic cars were the second most popular passion investment, the top being art. Consumer and market data firm, Statista, is expecting the global classic car market to grow from US$24.5 billion in 2019 to around US$35.5 billion in 2023.

Live auctions are where it’s at

The largest live automotive classics auction event in the past year since the start of the Covid-19 pandemic generated sales totalling US$61.3 million. The top seller at the event, which took place in Amelia Island in Florida, was a pre-war car – the 1929 Duesenberg Model J Murphy Torpedo Convertible Coupe that sold for almost US$5.73 million. 

Online auctions are where younger collectors and cars from the 1980s and 1990s tend to gather. Traditional live auctions appeal to big spenders and feature dearer pre-war and 1960s classic cars.

Labour of love

Though classic cars can be a great investment, their high maintenance cost is par for the course. Classic car owners need to have access to the right mechanic, parts and the capability to house the automobile in proper conditions to ensure appreciation of their asset.

Brian Chan of David Works Garage, one of perhaps five auto workshops in Singapore that specialise in servicing and restoring classic cars, said that pre-war vintage cars require the most labour, as parts are rare and often need to be fabricated. 

But for many collectors, investing in a classic vehicle is more a labour of love than a money-making proposition.

Not your typical investment asset

There’s also a wide array of vehicle options to choose from, and some of them don’t come cheap. On top of maintenance fees, one needs to consider the taxes and duties levied on classic cars, which would affect their eventual profitability. Importing a Pagoda to Singapore, for instance, could cost about S$644,000 including taxes and fees. There are also restrictions that come with Singapore’s Classic Vehicle Scheme. Other key attributes to look out for include the pedigree of the brand, the quantity available in the market and historical milestones.  

SEE ALSO

Pre-war cars sell for roaring numbers at 2021's first major auction

Singaporean collectors continue to invest in luxury goods despite Covid-19

Old is gold, as classic cars steer towards market value of US$35 billion

Wooden it be nice to own a Morgan in Singapore?

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At the end of the day, the ability to make a return will boil down to having an appreciation for classics, making the right picks and, of course, very deep pockets.