Golden wheels: The classic cars putting other investments in the shade
Tempus columnist Graham Rowan on the classic cars outperforming every other asset class
While art came in top of Knight Frank’s 2018 Wealth Report with an average of 21% price increases for works sold at auction, there’s no doubting the star performer over the last decade is classic cars. Nothing comes close to matching the 334% gain from what you might call automotive art, with prices of the rarest classics continuing their journey into orbit. Competition provenance always adds to a car’s value, as proven by the $22.5 million paid for a 1956 Aston Martin DBR1 raced in period by Sir Stirling Moss.
It’s hard to lose money if you own a classic Ferrari, with one lucky investor trousering $18m when his 1959 250GT California Spider LWB came under the hammer at Sotheby’s. Choose carefully and even a ‘modern’ can make a mint, none more so than a 1995 McLaren F1 that was recently bid up to $15.6 million at Bonhams. Those of you with long memories will recall that we’ve been here before. In the ‘greed is good’ years of the 1980s we saw prices of Ferraris and Porsches zoom up like a spaceship then burn out like a supernova. Lots of city traders who thought they were onto a winner learned a sharp lesson that the price of cars, like stocks and shares, can go down as well as up.
Back then there was a small pool of investors chasing a relatively large and expanding classic car market. Today, the pool of cars remains static – but the whole world is chasing them. There were few, if any, Chinese, Russian or Indian billionaires in the 1980s. Today they predominate and, like all freshly minted generations, like to accumulate the finer things in life. Things like art, wine and Big Boys’ Toys. According to Knight Frank, capital appreciation ranks second to the joy of ownership when people decide to buy classic cars. Yes, they want a safe haven for their capital and a well-diversified portfolio, but they also want to impress their friends. And nothing makes a stronger or a louder impact on arrival than the accompaniment of a Ferrari V12 engine on full song.
The question is, how can you join this four-wheeled party? One approach is to put down a deposit on a limited-edition supercar and flip it just as you take delivery. When Ferrari introduced the F12 TDF as a homage to their success on the automotive Tour de France, the list price was £339,000. Production was limited to 799 cars and today you’d have to part with £1,050,000 to have one on your drive. Another strategy is to find the most undervalued classics and snap them up before the rest of the market catches on. Some are saying the original 2006 Bugatti Veyron is the top of this league – you can grab a great one for around £1.1 million – though do be prepared for running costs that include £24,000 for a set of tyres and around £100,000 for an annual service.
Contacts in the trade are telling me that Aston Martin DB7s are just turning the corner from their lows and starting to appreciate. High mileage examples in OK condition are hovering around the £20,000 mark, while £25,000 or so will secure a very nice DB7 that could be worth putting in dry storage for a year or two. Want to go even lower on the classic car limbo? How about a 4.2 litre Jaguar XKR turbo from the early years of the new millennium? Grace, space and pace were Sir William Lyons’ watchwords and one of these modern- day classics could be sitting in your garage with a 6 month warranty for less than £15,000. Choose your classic well and you could join the 334% club with your golden wheels.
Graham Rowan is a London-based wealth coach and chair of the Elite Investor Club.