While most people just accept that their car will continue to depreciate in value from the moment it first hits the road, there are those for whom investing in cars is a passion and it can be a lucrative one if you choose wisely.
Interest in classic cars has increased quite dramatically over the past few years, and collectible cars are beginning to be seen as a viable investment. In fact classic cars are now providing better returns than a few other traditional asset classes, particularly in the realm of ‘investments of passion’. For instance the Knight Frank Luxury Investment Index reported that in 2017 the return on investment for classic cars was twenty eight percent over the course of a year, compared with collectible coins at ten percent, watches at four percent and wine just three percent.
As with any investment, you need to choose which cars to invest in wisely, and be aware that the market could change at any moment. While collecting cars can be very rewarding, there are no guarantees financially, so choosing collectible cars as the principal component in your investment portfolio may not be wise. If you are someone who appreciates classic cars though, you can still get a lot of enjoyment out of this hobby. As long as the money invested is surplus to your requirements and you won’t be financially ruined if the market changes, you could still stand to make some good money and have a lot of fun in the process.
Choosing which cars to invest in
When it comes to deciding which cars to put your money into, there are certain models which are safer to invest in than others.
Classic Porsches have historically performed well as investments and so may be a good option, with a range of price zones to choose from too. The Porsche Boxster 986, launched in 1996, is relatively affordable with prices ranging from about five thousand pounds for one with high mileage up to twenty thousand. As with any collectible car you need to bear in mind that what looks like a bargain could turn out to be an expensive exercise in repair, restoration and maintenance costs. Choose classic colours such as black, grey or silver and opt for a manual. Even if your car doesn’t appreciate significantly it will likely at the very least maintain its value.
A more significant but possibly more lucrative Porsche to invest in is the 993 Carrera 2. A low mileage example that would have cost around forty five grand a few years ago could now be worth in the region of fifty five to sixty five grand. The Porsche 997 Gen II (2008 to 2011) is another example which could be likely to rise in value.
Another make that has produced a few classics is BMW, with the E30 M3 increasing in value considerably over the past few years. Special edition BMW E46 M3s are also very much in demand and if you’d bought the very rare CSL (for fifty thousand pounds) a few years ago, it could now be worth seventy to eighty thousand pounds. The 2002 Turbo (1973 to 1975) is another example of a classic car that is also very popular at the moment.
Mercedes and Aston Martin have of course also produced some iconic cars that are very collectible. These are just a few examples, and ‘new’ classic cars are emerging all the time. The best advice is to do your research, looking at how prices have changed over the preceding years and what types of collectible cars are starting to become fashionable again. Once you have your vehicle, it’s incredibly important to keep it well maintained in order to protect your investment. Regular servicing is as must!