By JOE CASTELLINO Director,
Le Riche Automobile Restorers (C.I.) Ltd
THE CLASSIC CAR
As an Alternative Investment.
Whenever a classic car is sold at auction, there is often plenty of interest, especially if the vehicle was once owned by a film star or, even better, actually driven by one in a movie. A good case in point is the the Aston Martin DB5 once used by Sean Connery in Goldfinger and Thunderball (complete with those nifty machine guns and the ejector seat). It fetched £2.6 million. And a few years ago, the auction market witnessed the sale in Italy of James Coburn’s Ferrari 250 Spyder, which was bought by Chris Evans the BBC Radio 2 DJ for £5.5 million, about double what was expected. If you think these cars expensive some cars fetch absolutely enormous prices, almost like collectible high end fine art, such as a Renoir or a Edvard Munch. Early this year a 1963 Ferrari 250 GTO (one of 38 cars built) sold for £26 million pounds and the famous Grand Prix racer Juan Manuel Fangio’s Mercedes Benz W135 went for £19 million!
p “Estimated values of 25 of the most
opular collectible cars, increased more than 161% from September 2006
”
Of course, these are the headline-grabbers. Many other classic cars do not fetch such a high price and the sector has not been totally immune to the recent financial turbulence. Five years ago, Christie's, the auction house, ceased to be involved in selling classic cars as a distinct line of business as part of a restructuring of its operations citing concerns for the viability of the market (a view that mystifies some specialists).
The world of investment in collectables, however, remains vibrant; objects such as classic cars are, like fine wines or art, seen as a potential hedge against
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economic woes. To own something that is tangible i.e. it is in your garage, attracts many investors wary of stocks and shares and the continued bank vulnerability and their seeming inability to deal with corruption, market manipulation and sleeze, while holding onto your money. Stanley Gibbons locally is a case in point, an old business house specializing in the rather stuffy field of postage stamps collecting or philately has gone from being a bit of a boring hobbyist valuation and trading centre to something quite racy, with state of the art adverts and presentations enticing investors to secure their wealth for the future in little paper squares.
If cars are your thing however, or you see a need for diversification, be aware that the market for vintage and classic cars is complex, multilayered, dependent on many variables and definitely not one you should venture into without some guidance and advice. However it is not something that you should therefore avoid, as the same applies if you want to invest in equities or bonds. Seek out a specialist with a good reputation and working with them, buy the car of your dreams as an alternative way to store your wealth.
While there are no sophisticated valuation tools and there is not the same sort of market volume to provide liquidity, there are now indices and specialists who are providing a disciplined approach to historic car prices and individual sector valuations which show for one thing, a relatively consistent trend of value appreciation. Take for example the HAG (Historic Automobile Group) which runs a database of more than 100,000 transactions every year. The HAGI Top index made up of the world’s most prestigious and collectible cars has consistently outperformed every other asset class, from diamonds to wine, to gold to art, to even the best hedge funds, for over 10 years in a row.
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