The Drive supplement in The Press on Fridays is packed with the latest cars hot off the manufacture’s production line. But if you are looking for an investment, are classic cars the way to go? Matt Clark investigates the fun way to invest your money
Always invest in gold is a familiar mantra during these difficult times and given the lousy rates on savings accounts, stagnant house prices and a poor equity returns, it's not surprising investors look for safe havens to protect their money.
But you might be interested in an alternative to traditional safe havens – especially if that alternative is fun to own.
The Historic Auto Group’s index of leading classic car values rose 13.89 per cent in 2011, compared to gold, which was up 9.93 per cent.
And last year could turn out even better. The index rose ten per cent in the first six months – twice that of the Standard and Poor Global Index.
But before you speed off to buy a 1970s Allegro, bear a few things in mind. There is a world of difference between a classic car and an old motor that was never up to much in the first place. Not to mention a significant variation between marques and models.
To make things even harder, many classic cars are already at the top of the money.
Tim Schofield, head of UK motor cars at Bonham autioneers, said the trick is to identify a future classic – one with a heritage and name that can still be bought for a reasonable price.
“The time you make a profit on a motor car is not when you sell it but when you buy it,” said Tim. “You just catch the market at the right time, you buy well and you sell well.”
But buying a classic car can be a minefield. The best bet is go to an auction and don't be afraid to ask questions. Bonham’s are happy to let you test drive a car beforehand and that way you know what you are bidding for.
“The best bit of advice I can give you is buy the best car you can in the best condition cosmetically," said Tim. “Go and see the best car that you probably can’t afford and then judge all the others you view against it. That will help you work out where your budget lies.”
When you buy a classic car, Tim says don’t be tempted to over-restore. It may look worn, but that patina on the leather seats and walnut dashes is part of the allure. Replace with pristine materials and you will lose not only the car’s charm but most of the money you spent on it.
“There has been a greater understanding that this is the way certain cars ought to be.”
Despite the Historic Auto Group’s encouraging figure, Tim is cautious and says classic cars and investment aren’t words he’d put in the same sentence.
“For 90 per cent of the people we sell to it’s a hobby. And what you're buying is something intrinsic. You can sit there with your fine bottle of wine, pull up a comfy chair and just look at it. But a car was built to do something and there is nothing better than seeing it on the open road. That is its purpose.”
Unlike modern cars, classics don’t depreciate the moment you pick up the keys. That said, they need constant upkeep and not all make for pleasurable motoring.
So if classic cars are fraught with all these pitfalls, why bother?
“Certain cars open certain doors and will extend your social network. If you have the right car it's going to buy membership to an exclusive club and invitations to race or concours events.”
So the message is; buy a quality car, and at the very least you will have the enjoyment of owning it. At best you can make a decent return on your investment.
And the market for good cars is currently very strong.
Something else that makes classic cars look a good punt is the lack of Chinese investors due to their country's import restrictions. Once these laws are relaxed, and that can’t be too far away, it will undoubtedly result in a huge boom.
But the 65-million dollar question is, which cars are likely to appreciate in future years? The key factors to consider are production numbers – the lower, the better – good looks and driveability. Also look for cars with a competition history. They always hold their value.
“Which car will be the poster pin-up for someone who is now in their twenties really is crystal-ball gazing.” said Tim. “If I could do that, I wouldn't be an auctioneer, I'd be hiving these cars away.”
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