Investing in Classic Cars–Better Than Gold?

A classic car recently sold for $52 million. Of course, that was a 1963 Ferrari 250 GTO, one of only 39 in existence and had won the 1963 Tour de France road race. While that is an astronomical price for an extremely rare car, many people find themselves able to command high prices for their classic American (and Italian and German) steel these days.

Better than Gold…Really?

In fact, Historical Automobile Group International (HAGI), a research firm with expertise in classic cars, calls investing in classic cars “better than gold.” Their indices show that classic cars have outperformed not just gold, but art, wine, and stamps in the last decade, and HAGI has a very interesting graph comparing their top index to the S&P 500 from 1980 to 2008.

In total, classic car prices have doubled since 2008, and various sources have them up by 28-39% in 2013. This may sound like just another bubble, though industry insiders reiterate that because supply is so limited and finite–obviously someone can restore, but never build another 1963 Ferrari GTO–the market has a bright future, especially because there are so many more potential investors/owners than there are properties available.

Classic Cars for the Common Man?

At places like Pebble Beach in California and Amelia Island in Florida, the auction numbers are staggering, with 2013 sales-rates in excess of 90% and average prices in excess of $950,000. Obviously, such prices are beyond the reach of probably anyone who will ever read this article, the author included. However, there are segments of teh market that are very much in reach of the average investor. For instance, Hagerty has an index of the collectible cars priced below $30,000. This includes models such as the 1970 Chevy Camaro, 1965 Ford Mustang, 1972 Porsche 914 Targa, and 1967 VW Beetle–among others. The increased value of these cars since 2009 isn’t too shabby, with a 7.6% return-on-investment in less than five years.

  • April 2009:  $19,700 average value
  • December 2013:  $21,200 average value

Of course, unlike an investment like gold, vintage cars have additional costs. First you have the initial cost of the vehicle. Unless you buy a perfect example of the vehicle, you may have restoration costs–though there is certainly a market for unrestored examples. Still, you have maintenance costs, storage costs, insurance, etc. Additionally, if you intend to finance your purchase, you will have to do so through a specialty lender like JJ Best or Woodside Credit, so factor in interest paid.

On the other hand, most classic cars are not always restored and maintained with an eye to making a profit. They are simply bought for the emotional factor of owning a piece of history or a car from an owner’s youth. Classic cars may be a good investment from an emotional point of view, not just a financial one.