During the crash of 2008-9 where the so-called trusted banks let us all down and created the gravy train for bankers, but for investors and others the framework they leveraged in our name was built on sand and accordingly, it all came crashing down.. Like on a number of occasions over the years, Classic and Collectible cars kept their values and became vastly inflated at the top end for certain marques and models. These values are evident now with Astons selling in the millions and Ferrari 250 GT’s in the tens of millions. This was detailed in an interesting book by Dietrich Hatlapa in 2011 ‘Better than Gold’ in which he sets out that Classic and Collectible cars had held and grown their values even more than the historically safe fall back of bullion.
Not all manufacturers were are sure fired investment vehicles and neither were all their models, but certain ones have been blisteringly successful for owners and the new bunch to our sector, the ‘Investorcollectors’. Those with money, sometimes unlimited money to buy cars for pure investment and in many cases, these new owners and investors are not enthusiasts and have no clue at all about the cars they were buying. You dont need to be a professional appraiser of the metal to invest at the entry and mid-level of classic and future classic ‘Collectible’ cars (You do at the top end of over £200,000 values!). The SVA has some top tips which in our view will allow someone with some reasonable and easily sourced due diligence to invest in a classic car which should be a safer bet than the crashing shares and poorly returning deposit accounts.
Important note from the author readers should consider..
‘Investing’ in anything can be a gamble! Whichever way one considers the concept of investing where the main sum itself is at some risk, it is not recommended without serious investigation, consideration and without seeking expert advice. Classic and Collectible cars have historically increased in values generally, however there are no guarantees.
Before we start, lets quantify the terms ‘Classic’ and ‘Collectible’ sometimes called ‘Modern Collectible’
Classic: This is relatively simple and is based on their insurability as a specialist car, the car will be over a certain age, usually over 15-20 years as a starting point. The car will also be a Second vehicle, this means it cannot be used as the daily family car and must be owned in addition to another. Limited mileage is used, the limit recommended is usually around 7,000 miles however, the actual mileage can be agreed to reduce your insurance premium. It is not recommended to then exceed that figure! For some specialist insurers, cars over 30 years can be used up to 10,000 miles per annum and some without limit. Remember though, the more that ‘Classic’ car is used, the value will reduce and the car will wear and tear! The car must also in most cases be garaged, although some insurers will permit a behind gates drive stored and fully covered vehicle.
Modern Collectible: A modern car viewed as ‘Collectible’ for insurance and investment purposes is a slightly more difficult beast, in most cases, the manufacturer will be the deciding factor, also the number produced. These cars can also be insured as Modern Collectible from new, provided a number of other limitations are applied: The Car must be again a second vehicle and not the daily runner to increase the mileage the average of 10-12,000 miles. (No matter how much you love driving it!). I once arranged cover for an owner of a 1 year Lamborghini Aventador with an agreed 4,000 miles for the year, within 3 months he called me to say the insurer wouldn’t insure it with more miles! Of course not, because the insurer was a specialist that only works with underwriters and owners treasuring their cars for the future owners. That particular owner was driving down the condition, value and life of his Lamborghini. The car must also be garaged, if you live in London and want to keep your car on the road dont bother, it cannot be insured with such risk and it wont be Collectible for long!
Some SVA tips to investing in Classic & Collectible Cars
Do your research using specialist sources, magazines and expert contributors and advice
- There are a number of experts in the sector that will provide advice, vehicles and search service. These will usually be at the very top end of vehicle values, generally over £200k and some level of charge may be asked for their services, where these are used engage, an experienced legal office to manage the transaction to ensure safety. See below a selection of cars from Gary Knight International who regularly deal at this level..
Buying from a quality dealer of Classic and Collectible cars
- A specialist dealer such as those listed below will have fine cars suitable sourced and prepared with the right provenance and documentation. The garage will provide advice based on your interests, your budget and what the car is needed for, an E-type might sound a great idea to tour Italy but a Grand Tourer will provide more space and comfort for munching those miles!
- Howard Wise Cars UK
- Evoke Classics UK
- The collection GB
- Martin Lane Classic Cars UK
- Classicmobilia UK
- Survivor Classic Car Services (USA)
- Suburban Exotics (USA)
- It is also relatively easy to buy the car you seek from another country and have it transported safely by professionals who do this regularly. The SVA has a range of transportation providers we recommend in our ‘Search engine’
Buying from a real or Online Auction house
- Buying from an auction can be a good idea and actually enjoying the experience with a good auctioneer is a really enjoyable if slightly fraught experience. Firstly look at the consignment book and chose a small number of cars you are interested in, list them for easy of finding as the day progresses. Set your budget! Its very easy to get carried away when competitive bidding so set your budget using the guide from the Auction house, do your research too on other like for like condition cars and their advertised values. (Remember that a value displayed in a private or auction sale is NOT always what the car will actually be sold for!) Real auctions have all the relevant documentation and will assist you to buy.. The Auctioneer will also know the difference between a ‘Bid’ and ‘A scratch of your nose’ so relax. And dont forget there will be a ‘Buyers fee’ to pay in addition to the buying price you pay. Digital or Online auctions are now increasingly popular, they can be excellent sources of good value cars and they do offer very detailed background on the vehicle for sale, but unlike a real auction you cannot view the vehicle in real time as easily, some Online auctions will logistics permitting arrange a viewing. The SVA has
- The Market
- Classic Car Auctions
- Historics at Brooklands as Auction houses at this time and recommend them both for the quality of cars and service they provide
Get to know the values of cars and insurance for them
When we say ‘Do your research’ its easy to be confused with the validity of the source and author, this should not be a real issue with some simple effort, for instance two of the SVA specialist insurers can offer owners and prospective owners some insight to guide you. Classic Insurance Services insure only high end vehicles and collections from £250k to tens of millions, if you call CIS and explain you are planning on buying a specific car or you own a car at this level, ask what the premium will be and importantly what the ‘Agreed Value’ they will accept. Hagerty Insurance insure cars in all sectors from £3,000 entry-level classics to high net worth vehicles and collections, Hagerty also have a clever valuation tool owners can view and see values of thousands of marques and models www.hagertyinsurance.co.uk/classiccarvalue
Agreed Values
This is a very important aspect to Classic and Collectible car ownership, whether you plan to drive or store the vehicle, an ‘Agreed value’ is exclusive to Classic and Collectible car insurers and is not something provided by everyday insurers on everyday cars. When an insurer ‘Agrees’ the value that is the price they will pay in the event of a theft or write off, the insurer will in some cases ask to see photographs of the car and for its condition to set the value they will accept. Remember, what was spent on a car is not necessarily its actual value, Agreed values are based on availability, condition, age, mileage and several other things. The average premiums for Classic and Collectible cars is also much lower pound for pound than everyday cars at between 1% and 2% of the values depending on the owner and car profile.
Do some research to target specific marques and cars
Our advice is always to do some research and due diligence when buying a Classic or Collectible car for investment purposes, part of that is in reading the views of those expert in their fields and who can be found in any number of magazines across the sector. The SVA is an official partner to the Guild of Motoring Writers, this august body of experts are an excellent resource to contact and ask advice or their views, many will have written books on a variety of specific cars and manufacturers.. We also have a number of publishers listed below that will provide a widely available resource of books such as the Rinsey Mills recently published tome of a book ‘Shelby Cobra Daytona Coupe‘ by Porter Press International. The book provides a very detailed view on this particular car where only 12 were ever built, that fact alone means the car will be valued in the Millions of pounds and as safe a bet as one can get for secure values in the long term.
An excellent resource are articles by journalists including Quentin Wilson of ex-Top Gear fame. Quentin writes prolifically on a variety of platforms and particularly in the Classic Cars magazine. The March-April edition features him as the front cover with his ‘Top Tips’ for 2020, the feature mentions 5 varietals in this case. They do include some cars where prices have dropped, hence our advice to do your research in some depth..
- Citroen 2CV: 2014 value: £3,500 Present value £5,500
- Mercedes R107 SL: 2014 value £15k Present value £26k
- Ford Cortina 1600E: 2018 value: £11k Present value £16,875
- BMW E28 5 Series: Values now around £10-£12.5k up from around £7k
- Morgan Plus 8: Values down overall by around 6% although concourse cars will no doubt be of more interest and therefore value
- Porsche 911 3.0 Sport Carerra: Several years ago clean ones £17k with present values at around £30k and concurs ones over £50k
Like anything collectible desirability is the key, so limited runs, lower productions where a model didnt sell well at the time so there are less around especially with low miles, well maintained with lots of documentation and even a good provenance or celebrity ownership will all add value to your investment. If in doubt, dont jump in, do some more due diligence, get advice and do some leg work and your purchase will grow in value. And remember, the cherry on this investment cake is that at this time, there is no corporation tax on owners selling a privately owned Classic or Collectible Car! Good luck and be safe..
Martyn Raybould Managing Director SVA