Classic Cars For Sale: How To Choose
When a 1962 Ferrari 250 GTO sold at auction for over £22 million in the summer of 2014, the story made global headlines. Those in the know, however, were not surprised. Once reserved for the uber rich, car collecting has gained traction with the masses in recent years. In particular, the enormous baby boomer generation has entered the classic-car market tout suite. Whether for nostalgic or investment reasons (or both), these new buyers have sent valuations skyward. But are they making the right bet?
The market
Just like any other collectible, from art to comic books to sports memorabilia, vintage cars are extremely sensitive to economic conditions. When the economy is healthy, there are typically more buyers and more demand, which often results in rising prices. It is therefore important to note that the value of vintage cars actually increased by 21 percent during the global recession, according to the Historic Automobile Group International (HAGI). While that fact alone does not guarantee that every buyer will make money, it is a fairly good indication that the market is for classic cars is on the upswing.
What are vintage cars?
For the average car owner, it might seem strange that some automobiles can actually appreciate in value. After all, most cars lose about 20 percent of their retail price in the first year of ownership alone. But antique or vintage autos are different. To begin with, these vehicles are at least 25 years old. Most are also extremely rare and in excellent condition. Last but not least, they often bear the emblem of a revered, world-famous carmaker, such as Porsche, Mercedes Benz, or Ferrari. As such, many collectors consider them to be as stable and secure an investment as commodities like silver and gold.
The risks
Like other collectible assets, owners of classic cars must pay to maintain, insure, and store them. And in many cases, new buyers also pay to have these vintage rides restored to their former glory, or they do the work themselves. Either way, the costs can be considerable when compared to paper assets like stocks and bonds. There are also buyer’s premiums, taxes, and other fees if you purchase the classic car at auction, which most buyers do.
The rewards
There is no doubt that buying and reselling cars for a profit, better known as flipping, can be a lucrative business. How do we know? There are several programs on television where automotive experts do exactly that. But in most cases, those experts complete costly restorations on their own, which is well beyond the ability of most car owners. It is therefore not at all uncommon for buyers to purchase a classic car at auction and spend more than they paid for it to restore the automobile to mint condition. With that said, there are many other reasons to invest in a vintage vehicle.
Conclusion
For the average owner, purchasing a classic car and returning it to its former glory is a labour of love. Whether they sell the car or not, most recoup their investment with long drives through the countryside or by attending car shows with other collectors. In other words, they get enjoyment out of owning the vehicle that cannot be quantified in terms of pounds and pence.