Classic cars: Old bloke’s hobby or genuine investment? | Fin24

Classic cars: Old bloke’s hobby or genuine investment?

Sep 12 2017 14:29
Glenda Williams

Tommy Roes is managing director of the The Carfinders International. (Picture: Supplied)

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The notion of a car as an investment, or as appreciating asset, is perhaps a contradictory one. 

After all, the average car depreciates by around 25% annually.  

But some, depending on uniqueness and scarcity, appreciate almost from the get-go. Others do so with age.  

Often “objects of passion” that are bought with scant thought for return on investment, these splendid but mostly exceedingly expensive classic cars have, more often than not, been the preserve of “mature” high-net-worth individuals.

But today the younger generation is also along for the ride. 

The classic car market

Generally accepted as one that is older than 20 years or considered collectable regardless of age, a classic car, say experts speaking at the Value in the Classic Car Market (VCCM) conference held at Sun City in August, is one that has reached its original sales price plus inflation.
VCCM specialists say that irrespective of how many times the odometer has turned over on a truly old classic (like pre- and post-war models) this makes little difference to the value. 

The opposite is true for new collectable supercars, those with delivery mileage deriving the best values.  

South Africa has a strong classic car culture and can boast of some rare and sought-after classics. Many, though, have left our shores.  

SA is a hunting ground for collectors looking to buy good-quality cars and take them abroad, says Tommy Roes, managing director of The Carfinders International, a company that sources exotic and collectable cars for local clients. 

The net effect of this is that it has driven local prices skyward.   

“There has been a huge uptick in local prices, so much so that local prices of rare, sought-after cars are often now higher than they are abroad,” Roes tells finweek. He cites an example of a Ferrari Testarossa recently selling for the equivalent of R2.5m-odd in the UK, and points to the improbability of acquiring one locally for under R5m.  

But a global softening in the collectable car market has meant that exporting and prices have cooled.

The classic car market had become speculative and overpriced and the correction was necessary for the long-term health of the market, Roes says. That correction shifts the balance in favour of the buyer.  

What makes a car collectable?

Rare or exotic cars, both old and modern, those that are scarce due to their age or production numbers as well as open-top models are considered highly collectable.
The lower the production number (generally under 1 000), the more collectable the car.

According to the Historic Automobile Group International (HAGI) Index, sub-1 000 models produced in the 1950s and 1960s have registered the highest five-year price change at 280% with pre-war models registering the lowest at 130%. 
Some very rare and special cars like the Ferrari 250 GTO rarely come onto the market. 

Apart from two prototypes, only 39 of the legendary coupé were produced. One sold in 2014 for $38.1m, to date still the world’s most expensive car.  

The Ferrari badged simply as the “Dino” is currently one of the hottest properties in the classic car world.

Ferrari’s entry-level car was sniffed at for decades by Ferrari aficionados, but today a Dino could come with a ticket price well north of R5m.
Top collectable cars today include the Mercedes Pagoda SL, Ferrari 308/328 and Jaguar XKE.  

Uniquely South African classics like the Ford Capri Perana, Ford XR8 Sierra and Alfa Romeo GTV6 3.0L are now highly valued both locally and internationally.
In the UK, the VW ‘Kombi’ and Campervan are gaining the most value, while the VW Beetle is not far behind. 

Unsurprisingly, the SA market often mirrors UK trends.  

Interest in less exotic or glamorous cars like the Kombi and Beetle demonstrate that even models produced in higher volumes some decades back are today beginning to become more valuable as their remaining numbers decline. 

And these “modern” lower-end classics are a more affordable route for ordinary enthusiasts.

This is a shortened version of an article that originally appeared in the 7 September edition of finweek. Buy and download the magazine here.

classic cars  |  investment

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