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Classic Cars as an Asset Class

 3 min read / 

It has been every boy’s childhood dream to own a beautiful supercar and drive it round picturesque country roads. Classic cars have been up in demand as increasingly wealthy men and women in their 30s/40s start to buy their childhood dream cars such as the classic Porsche 911’s and Ferrari’s. Many of these cars have been increasing in value at impressive rates as they become collectable. According to Coutts, classic cars are the best alternative asset class returning around 257% between 2005 -2013 outperforming some of the global stock markets.

According to Hagerty, a specialist classic car insurance company, the main drivers behind the value of classic cars are the following: Rarity, History, Racing Pedigree, Condition and Practicality. But for many enthusiasts the one thing that makes a classic investable is, ‘personality.’ Some enthusiasts have the profit motive way down the list when they decide to purchase a classic car. The sheer enjoyment in driving pays dividends. When you purchase a classic car you are buying into a lifestyle. For instance, when you buy a Porsche the rational next step is to join the Porsche Club GB where you meet like-minded people from all walks of life.

Some examples of cars that have increased tremendously in value include the 1964 Ferrari 250 GTO that retailed new at £6000 could be picked up for around £32,000,000. Similarly a Porsche 911 1973 Carrera RS in 2006 was valued at £108,304 and now currently is valued at around £421,184. These examples represent the top marquee classic cars. On the other end of the scale in the classic car market, a classic Mini could exchange hands for around £500 a decade ago but now are fetching well over £4000. There are many cars in between the two spectrums that as a long-term asset can provide a great return as well as great experiences between human and machine.

When someone signs up to become a classic car owner, whether or not they have investment as the main motive, the point is that it offers a more indulgent experience than owning a stock or futures contract. Stocks and classic cars share many paradigms; the design of the car is the branding/marketing department, the engine is the work force and the steering wheel is the management. The main difference is the excitement and thrill of owning a car and profiting in the long term as demand exceeds supply. As an owner you can work on your investment, tinkering it to push new boundaries whilst also maintaining the character of the car. The reality is that there are more wealthy collectors these days chasing a finite number of cars. In any case, if the prices go down – which would appear unlikely – you are still left with an asset that is fabulous to own and drive.

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