Is investing in vintage or classic cars a sport for rich people? This question dominates the thoughts of every car enthusiast who is dreaming of having a vintage Ferrari or Porsche in their garage. The answer to this question is that it is true that investing in cars isn’t the cheapest type of investment, however if you make the right moves you can get a real classic car in your garage for a fragment of the actual cost.
Over time, vehicles tend to lose their resale value slowly. It’s safe to say that the older they get, most cars are worth less each day. But there are certain cars that defy this trend. Their values increase with age. A vehicle which is unique or rare, and which is also highly desirable, may increase its overall value. As a result, these cars can become great tools for investment. People remember cars and vehicles from their younger years in life and in later life they have the funds available to purchase them, creating a demand. If the supply of the vehicles is limited, then the vehicles start to spike at price as they are bought up, creating a scarcity in supply.
Belief in classic cars has grown tremendously over the past few years. This passion was motivated by an increase in the number of enthusiasts and, among some, a belief that historic cars are a viable asset class. According to the Knight Frank Luxury Investment Index, appreciation of the value of classic cars has handily surpassed that of art, wine and coins over the past decade.
There are many ways in which car collection is rewarding, starting with the fact that a prized vehicle can last a lifetime. Viewing cars as a central component of your investment portfolio may not be such a wise thought. Any money you earmark for automobiles should come only from surplus funds after the base and core elements of your portfolio have been set.
A red 1962 Ferrari 250 GTO was sold for a record-breaking $38 million at the annual Pebble Beach Concours d’Elegance show in August 2014. The fact that this was the highest valuation ever for a vintage car at an auction speaks volumes for the vintage car industry and the profits one can reap by investing in one of these models. The rising income levels of aspiring buyers, who might not have been able to afford these cars previously, is helping the vintage car market expand. All this, despite the fact that maintenance and sourcing of parts remains a challenge. However, while the last few years have seen a rise of investment in vintage cars, one must keep in mind that it is a time consuming and costly process.
Men love cars and petrolheads adore classic cars such as the 1965 Ford Mustang, Ferraris and older Lamborghinis. Driving these cars means that you separate yourself from the crowd, but it can also mean that you are an investor with an eye for alternative investment solutions.