Investing in Classic Cars and Supercars
Alex Prindiville, Founder of Prindiville, advises EAUX
readers on how to invest in classic and supercars
Classic cars and supercars offer a potentially lucrative return for investors, and although you can view them as a tangible asset, what really fires the market here is passion. Cars have a very special way of getting under your skin, of making one person feel they need to pay more for a particular model than the next person; emotion is a powerful motivator for buyers accustomed to getting what they want.
My view is that you should invest in a car because you like it. Combine pleasure with business. It takes away some of the sting of putting down the money in the first instance, then gives you enjoyment while you’re waiting for your investment to mature.
There’s no magic wand to finding the right car. Do your homework, make sure the car is certified accident-free and you know its history. The classic car and supercar markets are niche arenas and you may well find that the knowledge and contacts of a professional broker will be invaluable in helping you spend your money wisely. But if you’re determined to go it alone there are some basic rules to follow.
Always buy the best you can afford. But before signing on the dotted line, have the car professionally inspected to ensure you’re buying what you think you are. Stick to cars built in small production runs, nothing too mass-produced. For example, the Ferrari 456m. This car still has lots of legs left. It’s the last production Ferrari with pop-up lights, running with a fantastic V12. With 550s changing hands for up to £150,000, these cars are still great value at £60,000 – £70,000. Check the Internet forums, read the specialist magazines, find out what makes the car desirable.
How rare is it? How many were produced in that colour combination? What is its provenance? Has it been owned by anyone famous or used in a film? An Aston Martin DB5, produced between 1963 and 1965, sells for around £800,000, almost double the price of its successor, the DB6, because it featured in Goldfinger and has since become synonymous with the Bond franchise.
There will always be a good market for classics; in difficult times investors shift to tangible assets, which are beyond the whims of financial markets and which governments can’t touch. And you can trade them in any currency. To be termed classic, a car must be over 40 years old. Classic cars are exempt from UK capital gains tax and road tax if bought as investments.
After its stellar performance over the last decade the classic car market is levelling off. Without a doubt it will bounce back, however, the market for supercars shows no sign of abating. Look out for the ultra-rare numbered models, such as the Ferrari LaFerrari or the McLaren P1, where production was very tightly limited. Rarity can double the price.
The LaFerrari was Ferrari’s first hybrid sports car and benefitted from lessons learned from the company’s Formula One operations. It’s a phenomenal car with probably the most desirable badge in the business. They originally sold for £1m, now they’re fetching as much as £2.8m: they’re an exceptionally rare beast and I’ve already managed to sell one of them.
Now you’ve invested in your car, it’s time to think about insurance. Flip to page 118 to read Scrutton Bland’s insurance advice for classic cars.