Thursday July 28, 2016
Ever hear that 80’s Black Friday joke about the bankrupt Hedge Fund Manager and the pigeon?
The pigeon could still leave a deposit on a Ferrari.
These days Hedge Funds are actually looking to classic cars as a way of gilt-edging their investments, with a recent Knight Frank wealth report (June 22 2016) showing ten year ROI of nearly 470% on some quality classic stock like Ferrari & Porsche.
So if you’re lucky enough to be ‘that guy’ it means the £100k Maserati you mothballed in 2006 could now be worth something over £450,000.
This kind of growth is of course more relevant to collections or the wealthy enthusiast with a Ferrari 250 for each foot and a spare one for Sundays, but the inflation at the top end of the market has a knock on effect further down. Just think what you’d have paid for a Sierra Cosworth ten years ago. £20,000 maybe? And then consider that a good one now is going to set you back £80k or more, and you see the effect.
Even further down the scale, a low mileage Mercedes W124 300te 24V in concours would still set you back £10,000 or more today, yet cost only £3650 ten years ago. At least mine did.
Traditional hedge funds over the same period are showing pretty poor growth of just 8% overall, with specialist funds like antiques showing anything up to a 25% loss, which may not be enough to make a broker pawn his Rolex, but is still considerable.
Coins, art and wine have all performed well over the period, although they’re still a long way behind classic cars. And let’s face it, you can’t drive a Rembrandt or a bottle of Chateau Lafite.
Keeping It Real
At the more realistic end of the spectrum, if you have a Triumph Vitesse or Mini Van (A ‘van ordinaire’ if you like), you may not have made enough to buy a three bedroom detached house in Surrey in the last ten years, but a gain is a gain, so it’s still good to know what it’s really worth.
If you’re buying then whatever car you’re looking at is only actually worth what you’re prepared to pay for it at that time, especially if it’s for you to drive, rather than as a collector. But an authentic valuation, either from a car club or an insurance specialist like Lancaster Insurance is an excellent benchmark for your negotiation with the seller.
As a seller the benefits are clear. An agreed valuation from a classic car insurance specialist or car club might well help you to get as close as possible to the maximum market value for your car, and also gives your buyer the confidence that the car does have at least some degree of provenance.
And of course if you don’t have an accurate price on your car now, how will you know what kind of money you’ve made on it in ten years’ time?
Generally speaking I don’t think the majority of us own old cars for the purpose of making money on them – we like to drive them.
But it might well be another reason that every time you meet a fellow classic car enthusiast, they’re smiling!