as of August 2009
CLASSIC CARS AS AN INVESTMENT
In this time of economic uncertainty it is more and more difficult to be sure where to invest what little bit of spare cash we have. With property prices continuing to drop, stocks and shares being so volatile, Bank interest rates on term deposits being almost non existent and currency exchange so unpredictable, where do we turn? Collectable items seem to be the obvious answer, but which ones? When buying antiques or collectables, a certain amount of product knowledge is a must. It is easy to fork out thousands of dollars on a painting of a reputed artist only for that artist to fall from grace a few years later for no obvious reason. Furniture? Yet again know your product, you can be easily trapped on a piece of antique furniture to find out it is a knock off when you go to sell it. What about the Classic Car?
The thing about the motor vehicle is it is practical, almost every home around the world has at least one, it is the second biggest investment we make next to our home, yet, we don't look on it as an investment. The motor car loses us more money on depreciation, servicing, tax and insurance etc than any other investment we make and we don't seem to have an issue with this. What if you could own a motor vehicle that has minimal cost to service, actually appreciates in value and gives pleasure at the same time? Na, can't happen says you. Well skeptic or not, read on and see if you can agree with hundreds of thousands of investors world wide.
Some cars built today have the wow factor, but very few and usually cost 100,000 or more to buy not to mention the cost of service. A few examples would be Ferrari, Lamborghini, Aston Martin, Porsche, Bugatti, Rolls Royce and a few others. The days of Mercedes Benz and BMW's wowing us are gone, they are as common on our roads as Toyota's or Peugeot's, but depreciate faster. It has become apparent that there are trends to investing in classic cars in the same way there are trends in the stock market.
In the last decade (Since 2000), the 60's cars have taken the biggest rise in prices. These cars have now had there biggest momentum in increase and there value curve will slow down to the usual 10%-15% per year. It is usually the sports cars that accept the largest hits and there is not many unrestored examples turning up due to rarity. Some examples of this would be MGA in tidy condition in 2000 would cost 6000, today 15 - 20000. Austin Healey 3000 in 2000 would make 10000, now 30000. If we look at the more exotic vehicles, a tidy Porsche 356 would have cost 20000, now 60000, a Ferrari 250 GTO would have set you back 150000 today the same car will hit 350000. However not all 60s cars have done as well. It is usually sports cars that do the best, but even the odd 4 door motor vehicles of the 60's that were available for around 5000 in 2000, today would be 15000.
The decade of the 70's produced motor vehicles that will keep up comfortably with modern traffic. The 70's cars are starting to gain momentum in value in the last 2 years. This will continue to increase rapidly in the next 5 years before slowing up to the usual 10% or so. Some examples of this would be MGBGT's which can be picked up for about 2000 in driving condition to 8000 in restored condition, will move up to around 15000 restored in 5 - 6 years. 70's Porsche 911's can be picked up for around 15000, this will double in 5 years. Exotics are always a good investment, Ferrari's like 308 GT4's could have been bought for as little as 12000 five years ago are now fetching 25000. Maserati Merek's were fetching 10000 four years ago are now around 35000. Jensen Healeys in 2000 were being sold in tidy condition for 1000, these cars are now up to 10000 and will continue to grow in investment due to scarsity. There are still opportunities available for excellent returns with 70's vehicles. MG's, Jaguar's, Lotus, Jensen, Mercedes and Triumphs and a few others of the mid to late 70's are still available at good prices but early 70's cars have shot up considerably, some examples would be E-Type Jags which are fetching 20000+ where as XJ-S's are still available for 5000, Triumph TR6's are around 10000, the later model (TR7) can still be bought for 1500, convertible for 3000, 5000 for a nice one.
The cars built in the 80's are available for small money currently and will be for another few years. A Ferrari 308 GTB of 1985 is cheaper than a 78 GTB by about 10000. The cheapest Ferrari's, the 400 and Mondial in tidy condition are available for under 20000, 10 years will see these cars double maybe treble in price. A dark horse could be Toyota's MR2 series 1. An 1984 car in reasonable condition can be bought for 2500, these cars will probably jump to over 5000 by the time they reach 30 years old. Of course this is only of interest if you are prepared to sit on it until then. Early 80's (80, 81, 82) are the best option at the moment due to coming up to 30 years old. The advantage of a 30 year old car is the tax is reduced to 48 with no restriction on engine size. The insurance drops considerably but restricts the mileage you can do each year in the vehicle to under 5000 or 3500 dependant on policy. An NCT is not required at all on vehicles over 30 years old however it is a good idea when having the vehicle serviced each year is to have the safety features checked, i.e. brakes, suspension, wheel bearings etc.
There are a few steps which need to be taken to protect your investment. You are best to invest in a restored to 70% of concourse sports car that was a limited run where they didn't build hundreds of thousands of the vehicle into the 90's. It needs to be serviced yearly but in most cases this is not expensive. They need to be dry stored in a garage or car cover. Do not take it out in the rain if you can help it but do drive it regularly to keep the brakes etc from binding up. If the car is looked after it will give many hours of weekend pleasure and then give a good return on investment. For those looking for the pose feature down the golf club, a 5000 MG or Porsche 924 will give more creditability than a 100000 Mercedes without the huge deprecation.
In summary, if you want a character filled little motor vehicle for little money that you can use regularly, save you money on tax etc and give you a great return on investment, by a late 70's sports coupe, but be quick there going up.
If you would like to invest in a Classic Car and or avail of our brokerage facilities please give out investment expert Patrick a call on 086 1040306
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