Investing in a classic car could result in significant long-term returns.
Classic car investments are becoming increasingly popular, thanks to high, long-term gains. In fact, a 2016 ABC news article revealed some investors saw increases of up to 500% over ten years. So are classic cars a solid investment? And what should you know when picking an investment vehicle?
Are classic and vintage cars sound investments?
In short, yes, they can be! For example, a four-door Holden Torana A9X recently sold at auction for $365,000. The previous record for a similar vehicle was $275,000 and prior to that $165,000.
Granted, the record-breaking A9X was the first ever produced, had highly unusual historical photographic documentation and lived a life as a factory press vehicle. But if you select the right car as an investment, you too could make a packet.
What do classic car investors look for?
First things first – investors want a car that is desirable and increasing in demand. Even choosing the right colour and trim can dramatically alter the value. Investors will look through auction listings to find actual sales figures and gauge the possible demand. They also want a car that is somehow unique or rare. For example, it had a limited production run like the A9X, of which only 100 hatches were made.
Classic car experts recommend you should look for a vehicle in the best possible condition that you can afford. That means little or no rust, original factory paint, an interior in excellent condition and mechanically complete (preferably running). The better state a car is in, the more it’ll be worth. Also, look for examples that haven’t been modified or hacked around, staying true to their original factory specification.
Documentation adds significant extra value to a car. It helps an investor see how well the owner maintained the vehicle but also makes the car more desirable to future buyers. Under your ownership, continue to maintain and add to the car’s paperwork.
What additional costs or risk factors should I be aware of?
Just like any investment, purchasing a classic car as a long-term speculation can be risky. The bottom can fall out of the market and the vehicle is always at risk of damage, fire and theft. Make sure you have the vehicle insured while it’s in storage. You can compare classic car insurance on finder to get an idea of what that will cost you so you can calculate how much it will affect your possible returns. You might also look into laid up insurance.
To preserve a car’s condition, it’s imperative you have a dry storage place. Some owners use humidity tents that reduce corrosion, prolonging the car’s metalwork. It’s best to keep rubber and plastic components out of direct sunlight too, as these can degrade and devalue your investment.
Engines and other mechanical parts still require attention while in storage and should be prepared in a specific way for mothballing. There are experts who charge to care for such vehicles.
One other avenue to explore is whether to restore or preserve a vehicle. Restoring classic vehicles is a time consuming and costly process, but could add value to the car. However, it could ultimately eat into your profit. Owners may choose to retain a car’s “patina” (age- and use-related marks and scuffs).
Cars with possible investment potential
Series Land Rovers
It’s hard to believe but these ancient farm trucks have shot up in price recently and demand is high, especially in the UK. If you were willing to deal with the hassle and rigmarole of exporting these trucks from Australia to the UK, you could double the initial purchase price.
It seems that almost all classic Land Rovers have risen in value thanks to the attention generated when Defender production ended. In particular, Series One Land Rovers, made from 1948-1958 are attracting high amounts, as are Defenders.
According to Redbook, there are 1961 Series II Land Rovers available for less than $3,000, and Series I models can sell for upwards of $30,000. Selling to a North American or European buyer could land you even more as 25-year-old models are in demand.
It may be too late to find a sensibly priced NSX, as according to exotic car valuers, they rose from around $75,000 in September 2016 to $220,000 a year later. Showing the importance of choosing the right spec and body style, experts recommend a fixed roof model with a manual gearbox. An early model red manual coupe is on sale with 43,000km for $148,888 at the time of writing in April, 2018.
Mk1 and Mk2 Ford Escorts are commanding high resale prices around the world. Here, it’s still possible to purchase a Mk1 for sensible money. An Escort in good condition could make for a savvy long-term investment. Last year, a 1970 MK1 twin-cam in excellent condition sold for $52,000.
These VW campervans are proving ever popular, and values vary from $5,000 for a project vehicle up to $150,000 for a fully restored, split screen model. These campers are interesting because it’s still possible to find them in barns and decaying in farmyards, ready for you to make an offer and bring back to life.
Many experts are touting original condition, early Mazda RX7s to increase in price, in line with other RX models that have risen in value over the last few years.
Other models to look out for
According to experts, air-cooled Porsches always make a sensible investment. Experts suggest GTHO Falcons are popular too, as are the usual suspects like AC Cobras, Mercedes 300SL Gullwings, Shelby GT350s and vintage Ferraris. But we’re talking big money. The highest price classic Ferrari was a 1962 Ferrari 250 GTO that sold for a staggering US$38,560,000 in August 2014!
Whether you’re looking for a vintage car to drive daily or earn some money, you can check out the finder comparison of classic car loans to help you finance your purchase.