Love cars? Maybe you could think of investing in classic cars. Not just a hobby, an investment!
Investing in classic cars powers ahead
“The Hagi Value in the Classic Car Market conference provided some valuable insight into investing in classics, writes Mark Smyth
If you are fortunate enough to be an ultrahigh net worth individual (UHNWI) you are worth at least $30m excluding the value of your main home.
To give you some idea, Chicago has 135,300 of these wealthy individuals compared to 145,100 across the entire Africa. Most of those are in SA, where there are 40,400, an increase of 8% over the past 10 years and up 5% in the past year alone, according to Andrew Shirley, editor of the Knight Frank Wealth Report.
These figures explain in part why SA has the highest number of private jets in Africa at 161, but it is not all about the UHNWIs. In Johannesburg alone, Shirley says there are 18,200 dollar millionaires and across SA 39% of wealthy individuals have a collection of luxury investments.
Shirley was talking at the inaugural Historic Automobile Group International (Hagi) Value in the Classic Car Market SA conference alongside the Concours SA at Sun City.
Organised in partnership with The Car Finders SA, Knight Frank and Nedbank, the event provided valuable insights for those who are keen to invest in classic cars.
And invest you should because the statistics are astonishing. In the past 12 months, wine has provided the best investment return at 24% globally, but it is collectible cars that have powered ahead over the longer term. Over the past five years, the Historic Automobile Group Index shows that cars have provided a return of 129%, much more than wine in second place at 55%. Over 10 years, collectible cars have generated a return of 404% compared to wine at 256%.
What about traditional investment returns? Well, over the same 10-year period, gold has returned 195% and the JSE All-Share equities just 82%. Classic cars — 404%. We had to say that again because even we are astonished and we are classic car enthusiasts.
What is a classic?
So what constitutes a classic car? Dietrich Hatlapa, the founder of Hagi, explained at the conference that while most used cars depreciate, if a model appreciates then initially it is labelled a future classic. Should its value surpass its initial purchase price plus inflation you have a proper classic car. Generally the best-returning collectible classics are those from the 1920s, ’30s, ’50s and ’60s but then you have to add in the supercar phenomenon.
Supercars contribute about $25bn to the global $100bn classic car market although some, such as the Ferrari LaFerrari, McLaren P1 or Porsche 918 Spyder, might be termed as future classics while still being highly collectible. They can still be referred to as investments but especially in this segment you have those who seek return on investment more than just the return in terms of enjoyment.
It is important not to confuse collecting with investment, says Steve Linden, cofounder and chief information officer of Chrome Strategies Management in the US. He says knowing about cars is very different to knowing about investing in classic cars. A prime example of this is that many investors put their investments into storage, but Linden says storage is more important than many realise. People store improperly too often or do not use the car, which then deteriorates, negating the investment.
Many see the classic car market as an investment mechanism just for enthusiasts, but that is oversimplifying things.”
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Classic Cars: Is it worth the investment? – Wheels24
“Cape Town – Have you ever thought about buying a classic car but wondered if it would be a worthwhile investment? Here’s a guide you might find of interest should you consider purchasing that timeless classic.
What makes a classic car?
‘Money-pod’, a UK-based finance provider, created a guideline on what you should analyse when it comes to buying a classic car and also showed examples of good and bad investments.
According to the guide, the five points to look out for when buying a classic vehicle include looks, notability, rarity, innovation and reliability.
Also, one of the investments that paid off was the Aston Martin DB5 which was a classic car that exponentially increased in value over the years. Given its status as ‘the most famous car in the world’ at the time, following its role in the James Bond Goldmember movie, the DB5 quickly became a collectible.”
Visit the site to see a pricing guide.