Classic and collector cars are a sound investment

Published by JGS on

Classic and Collectors cars (C&CC) are an established asset class and there are no shortage of funds offering investment opportunities in this, as well as other high end assets categories.

Cross-referencing the Knight Frank Wealth Report and the FT and Bloomberg reports shows that C&CC have been the best performing asset class over the last 10 years, returning averages of over 30% per annum. During the 2008-2011 financial crisis the K500 Classic Car Index outperformed all investment benchmarks.

The recent Gooding & Company “Passion Of A Lifetime” sale held on September 5, 2020 at Hampton Court showcased only 15 selected cars and set seven new world records totalling $45.3 million, with an average sale price of $3.2 million. The new world records include the marques of Bugatti, Rolls-Royce, Vauxhall, Lancia and Lamborghini. In the future expect to see other great blue-chip marques setting new world records.

The right C&CC can be a great hedge against the devaluation of currencies which will continue as a result of the central banks’ policies. Investment diversification and the fact that the right cars are a movable asset that can be transported to almost any part of the world are of equal importance to the would-be investor.

As with all investments, there are a number of considerations to take into account and expert advice is even more important given the particularities of the automotive sector.  

Everyone with a nominal interest in C&CC knows that not all cars are equal. From an investment perspective, however, one of the most critical requirements is to consider only the best in any one marque.

There are big differences between the investment potential of different marques and some are considered  the blue-chip of their era, e.g. Ferrari, Bugatti,  pre-war Alpha Romeo, Hispano-Suiza, Duesenberg, to name just a few that have withstood the test of time, compared to some of the lesser iconic marques.

Chosing the right examples in any mark is important.

Below are three examples of Ferrari cars appreciation in value over the last 10 years. We use these examples, in US$s, because of RCIC’s founder’s track record in collecting and reselling best-in-class Ferraris over a 50 year lifespan.

A good example of a 250 GT/L Lusso purchased in 2010 for $550-600K is, at today’s market valuation, worth $1.5-1.6 M

A 275 GTB/4 would have increased from $1M to around $2.8M

A F40 would have increased from $450,000 to $1.3M

Investment potential can be affected by a number of variables such as whether the car has a special body, is of limited production (here less is more and if it is a one off, all the better), has had an interesting ownership, is recognised in the pantheon of important benchmarks of design, technology, race history or other notability, and of course its condition and originality.

Today originality is often considered more desirable even than a well-carried out restoration.

All these factors can affect the value dramatically and both in-depth research and unbiased expert opinion are critical to the potential investor.  

We could not emphasise enough that the best and most unique examples are primarily traded “off market” from private collector to private collector or through ultra high-end brokers.

 In conclusion, true investment blue-chip grade cars of all eras can act as a good hedge against future currency fluctuations and devaluations, with the great advantage that they can be enjoyed and used more than any other investment class.

RCIC is not a fund. We are not a special interest club of which there are many.

We are a private community of collectors and investors, as well as hand-picked top advisors and consultants offering a unbiased combined expertise of the automotive market.   

The RCIC members and advisory body understand the investment opportunities, and appreciate the social aspect of belonging to a peer-only club. 

Members can choose whether to invest in a specific car or not and they can liquidate their holding at any time by offering it to other members in their circle.

The opportunities to participate in private gatherings, enjoy part ownership of iconic cars and generate an important ROI, based on industry insiders’ expertise and off market deals are the key reasons for being a part of RCIC.