5 Expert Tips On Investing In Classic Cars

LUXURY INVESTMENT / Classic Cars

5 Expert Tips On Investing In Classic Cars

With the value of classic cars rising nearly 500% in the last 10 years, there is no question of their attractiveness – but how do you start investing in them?

Written by Kenneth E.Y. Wong on 9 May 2017

Classic cars have been making headlines with record-breaking auction results worldwide – outperforming wine, watches, and even fine art. In fact, the value of classic cars has risen nearly 500% in the last 10 years and there are no signs of fading. However, not all cars are made equal. Here are the top five things you should know before starting your own classic car portfolio.

1. Buy what you like

Start with the dream car of your childhood. A classic car is a passion investment – you can drive it, be seen in it and (most importantly) enjoy it. Like any other passion investment, always buy what you like. Regardless of whether it turns out to be the right investment choice, you still would have enjoyed the ownership experience. Just like investing in wine and whisky – even if it doesn’t make you money at all – you could still enjoy a bottle or two on special occasions if you bought what you like.

2. Do your research

Learn everything you can about the car you would like to buy and find out the investment potential from all available sources. Buying a classic car doesn’t require an extraordinary amount of money. My childhood dream car was a Porsche 911 (Type 993). I bought a used one that cost around one-third of new Porsche Boxster, the cheapest Porsche at the time.

Although the value of Type 993 at that time hit an all-time low, I learnt that it was the last generation of air-cooled Porsches – which led me to suspect that it would be sought-after in the coming years. I was right – I made some money when I sold it three years later.

3. Buy the very best you can find

There are many factors that can affect a classic car’s value – its interior, exterior, mileage and mechanical condition. But intangible things such as originality and provenance (record of ownership) affect a car’s overall value too. If you are in the market for a particular classic – whatever the price point – pick the best you can find. Even if it costs more, the returns will be higher in the long run.

4. Buy something special

Special edition cars have a limited production run (less than 500). These cars always have an engineering, mechanical or historic significance that is sought after by collectors and will appreciate a lot more than their regular counterparts. Sometimes, a particular car has limited right-hand-drive editions. In other instances, the manufacturer might have tailor-made a few manual transmission cars due to special requests.

Think supply and demand – due to their very limited supply, they can always command a premium and thus may appreciate a lot more in value.

5. Factor in all the costs

When investing in a classic car, bear in mind that you’re not buying a new car – it doesn’t come with a warranty, so a lot of work and money need to be factored in along with the initial purchase price. You need to maintain your classic car in order for it to appreciate in value – consider insurance, restoration, routine repairs, and storage.

The bottom line

Classic cars represent a unique asset class – they are both an investment and a passion. Now that you have learned how to successfully invest in them – find the classic car you love, drive it, treasure it, and enjoy the ride.

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