£39 million is an awfully large sum of money, it could buy you an exceptional penthouse in London with uninterrupted views over Hyde park, or, if you prefer your views a little more mobile, it may stretch to buy you entrance to the world’s most exclusive automotive club: Ferrari 250 GTO ownership.
From 1962 – 1964 only 39 examples were built of Ferrari’s mythical homologation special (GTO stands for: Gran Turismo Omologato) and only on rare occasions do they ever publicly come up for sale. The last time was 2018 when one such example sold at auction for the aforementioned record-breaking $48.4 million (c £38.8 million). Nick Mason of Pink Floyd famously paid just £35,000 for his example in 1977 (pictured above) and even then he thought he had overpaid!
According to the Knight Frank Luxury Investment Index (KFLII), the classic car market has risen by a healthy 194% in capital appreciation between 2010 to 2020. However, when looking more recently, there has been a fall of 7% in the last 12 months. I expect this downward trend to continue due to the ongoing impact of the Covid-19 virus combined with a cooling of the classic/premium car market in general. The advantage of this is that it puts buyers back in the negotiating driving seat and away from the super rarefied world of Ferrari 250 GTO ownership and other classics that inhabit the Concours d’Elegance meets around the world, there are still purchase opportunities that exist that will help you avoid the imminent price corrections that are already occurring in the conventional classic car market.
Linking the above with the two questions I get asked the most, namely: “Is there still merit in investing in the classic car market in light of recent falls?” and “What cars should I be buying now?” My answer to the first question remains yes, but it depends upon your objective. If your hope is to buy now whilst the market is depressed and then double your money in a matter of years, then look elsewhere as those days are long gone and will not be repeated. If however, you have always hankered after a particular classic and want somewhere relatively safe to invest your money, insulated from the effects of depreciation, then read on.
In terms of what cars to be buying now to enjoy depreciation-proof motoring, with the ‘possible’ scope for gradual value increases then attention must be on the last generation of analogue cars (think normally-aspirated engines i.e. no turbo combined ideally with a manual gearbox) and the so-called ‘Youngtimer’ / ‘Modern Classic’ market (cars from the 80’s, 90’s and early 00’s). Whilst ignoring the over-heated (read: over-priced) Supercar Market from these eras, there are still some car models from the eighties to the noughties that offer good opportunities for a safe investment. Rather than go into specifics, I have instead listed my top five attributes of what to look for in order to help keep your investment secure:
1. Limited Edition – Make sure the car was built in limited numbers. Any of the following Porsche models are good safe havens for your capital: 987 Boxster Spyder/Cayman R or alternatively, for a true analogue race car for the road, the Porsche 996 (911) GT3. Priced from £40,000 (Boxster Spyder/Cayman R) or £65,000 (996 GT3):
2. Star of the Show – If a car has starred in a famous movie/TV show or adorned the computer screens of countless Millennials this will certainly help. James Bond’s Aston Martin DB5 is a perfect vintage example of this, but values of these have already skyrocketed and are due a correction. The later DBS model especially in manual form from the 2006 Casino Royale blockbuster is a better bet or a V12-Engined Vantage model, again in manual form. Priced from £85,000 for a desirable DBS or V12 Vantage example:
3. Manual Shifting – A car with a manual gearbox (if it were available with one) will always be worth more than the equivalent paddle-shift/automatic gearbox as it offers a more analogue driving experience. A Ferrari 355 (also of James Bond Goldeneye fame) with a manual transmission is worth about 25% more than an example with the early F1 paddle shift box. Desirable models are priced from £80,000:
4. Last of its Kind – If the car is an end-of-the-line model it will help to resist the effects of deprecation with possible future growth in years to come. The 1997 Bentley Continental R Mulliner was one of the last Bentley models manufactured independently by the company before it was later taken over by Volkswagen. Priced from £70,000.
5. Brand is Best – Having a desirable badge on the front hugely increases the chance of a car being deemed a classic in time, which will certainly help to protect any investment. According to HAGI (Historic Automobile Group Index), classics with a Porsche badge on the front have performed the best in the last ten years with on average a 24.2% rise in value:
Some notes of caution though, give careful consideration on how you intend to use any ‘Modern Classic’ as you may well find that you have to pay a premium to drive the car into urban areas, London being a prime example of this with the recent creation of its Ultra Low Emission Zone (ULEZ).
The ULEZ commenced in April 2019 and is set for further expansion in 2021 and applies a daily charge of £12.50 to cars built before 2005 due to their associated higher emissions (classic cars built before 1979 have an exemption). The daily fee is in addition to the Congestion Charge and they both share the same area of coverage. It is worth noting that I expect other cities in the UK and in Europe to adopt similar measures in time and therefore you would be best to enjoy any modern classic (pre-2005) out on the open road instead.
Finally, cars are temperamental beasts that require plenty of specialist care to ensure that they remain fighting fit. Therefore, an annual slush fund relative to the car’s original value is a must to cover annual maintenance and unforeseen costs. Just because a car is now relatively cheap to buy does not mean it will be cheap to run. A lot of our clients will engage us to arrange secure storage and conditioning so that they can rest easy knowing that their pride and joy is tucked up, plugged-in and regularly exercised. Others will wish to use their car to its full ability and be trained on how best to do this, which is why we can also arrange one-to-one driver tuition should a client wish.
No matter which vehicle you choose this is one piece of art that can literally move you in ways that no static piece on the wall can compete with, so buy what you like and what you will enjoy using.
For further information on any of the above, or how we can assist you in sourcing any of the listed vehicles or any other classics, then do not hesitate to contact us.
© Nick Johnson, Car Consultant & Founder of AutoPrivé
