The Insider’s Guide to Investing in Classic Cars

1. Would you advise investors to purchase a classic car, even if they are not particularly interested in cars?

“I would not particularly recommend investing in classic cars if one is not knowledgeable on the specificity of the asset class and the various parameters surrounding its fluctuation in price. Many other efficient investment vehicles would offer kind-of-similar payoff. One has to be passionate about cars to invest in them and collect them. Passion should definitely come first. In a different approach, an investor could pick a classic car fund to diversify his investment and give the management of the assets to professionals.”

2. Is specific market know-how necessary in order to invest in a classic car?

“it depends on how one would like to invest. When collecting classical cars, one has to know exactly what he is doing in terms of what brands, models and years he is investing in. Knowledge is key to making the right investment. It is a specific sector and it takes time to get around it. The collector who is not in the game to make profits could be.”

3. What do you need to keep in mind when buying a classic car?

“Investing in classic cars do not come without pitfalls. The main ones are; liquidity (it could take a great amount of time to sell), time horizon (it is a long term investment and turnover should be low) and high transaction fees (the main auction houses will on average charge 10% to the seller and 20% to the buyer). The cost of “holding” classic cars include storage, maintenance, insurance and represents on average an additional 2% per year of the asset value. They also generate no dividend income, so all the return has to come from price appreciation net of costs. All that said, investing in classic cars is a great thing to do and will bring great lots of joy.”

1. Would you advise investors to purchase a classic car, even if they are not particularly interested in cars?

“Yes. In a way, it is almost better that they aren’t emotionally engaged with the car because you need to make pragmatic decisions when investing. If you love cars then this becomes harder. The usual rules apply, though – be clear why you’re making the investment and what you expect to achieve, take careful advice before buying a particular car and understand the risks associated with classic cars and certain models. But if you can think that clearly and have a love for cars, you’ve got the best of both worlds and can enjoy the rewards of classic car ownership.”

2. Is specific market know-how necessary in order to invest in a classic car?

“Yes. If you don’t feel you have this, find someone who does. While certain models and makes may be safer investments than others, individual cars may not fit the profile. Provenance, condition and the quality of previous repairs can all seriously affect a particular car’s investment potential.”

3. What do you need to keep in mind when buying a classic car?

“On paper, certain cars can look like they have great investment potential. But you need to buy wisely: restoration costs can quickly exceed the value of the car, swallowing up any profit and pushing you quickly into a loss. Even if you are knowledgeable I recommend having someone on hand to prevent emotion overtaking rational decision making. If you’re buying a classic as an investment you need to consider your payback period. For example, some cars like the Aston DB7 represent a long-term investment potential. Others, like the Aston DB6, are a short-term opportunity as they are arguably much closer to their peak value. Be clear about your objectives, particularly the balance between dispassionate and passionate investment, and ensure you have a good supplier network around you to assist with good quality maintenance and repairs.”

1. Would you advise investors to purchase a classic car, even if they are not particularly interested in cars?

“Ironically, not being passionate about cars may prove an advantage if you are simply looking at the car as an investment "vehicle". It may offer you an edge in considering your purchase without bias and with a view to its generational interest, previous results and hence how easy it will be to resell. On the other hand, a deep understanding and knowledge of the classic car market whilst hard to attain is naturally priceless and this is usually only gained by having followed your favourite marques over the years.”

2. Is specific market know-how necessary in order to invest in a classic car?

“As above and for any investment, prudence and research are recommended. TCCF offers a safety net for those wishing to dip a toe into this sector and enjoy the performance (and in some cases drive the cars) without having to worry about storage, maintenance, insurance and administration of vehicles.”

3. What do you need to keep in mind when buying a classic car?

“There are plenty of potential tripping points when purchasing and lots of different reasons for a purchase, each needing different buy priorities. TCCF grades cars prior to potential purchase and looks for already restored and in general peak of condition cars save for those that have an exceptional provenance and further historical value. Many purchase to restore for example or to complete a collection and these would all require different variables. For investment purposes, judging upcoming trends such as iconic young timers or perhaps the next Ferrari to gain recognition in the market are handy insights to have tuned before searching for your next piece of petrol history.”

1. Would you advise investors to purchase a classic car, even if they are not particularly interested in cars?

“Yes, but only if it’s a high-value car with a track record of market demand and is in excellent condition in every way.”

2. Is specific market know-how necessary in order to invest in a classic car?

“Yes, especially if you are tempted by a car not in the category in the answer above. Some of the biggest returns can be made by identifying a car which is currently undervalued and whose value may well rise dramatically, but this is a high-risk approach for which market knowledge is vital. You don’t necessarily need this knowledge yourself, but you need to know and trust someone who has it.”

3. What do you need to keep in mind when buying a classic car?

“Once you have decided what type of car you want, which ought to be a decision of the heart much more than with a modern car, do lots of research: buying guides, past road tests, websites. Inspect a car thoroughly - take an expert with you if necessary - and don’t be blinded by desire when you look at the first car in your search for the right one. The market places great value on originality, unbroken history, correct and authentic parts and low mileage.The best investment cars score well here. A really good original car, even with some patina, will always attract more interest and a higher price than one which has been so comprehensively restored that little or none of the original car’s surfaces remain. Bear in mind, too, that cars which have been used regularly will always drive better than those that have been stationed for long periods. So, if you want to enjoy driving your potential investment you have to strike your own compromise between enjoying your purchase on the road and keeping its mileage down.”

1. Would you advise investors to purchase a classic car, even if they are not particularly interested in cars?

“Purchasing a classic car on its own may not be a sound investment for the same reason that purchasing an individual stock is risky. You might get lucky and the classic car might increase in value. But, given the thousands of different makes and models and years of classic cars available on the market, it is unlikely that you would get lucky by purchasing one classic car. As with any market, understanding the investment is of paramount importance. If an investor is aware of the investment potential of classic cars, desires to invest in that sector, but does not have a knowledge or ability to purchase and care for a classic car, then a classic car fund would be a preferred approach for an investment of this type.”

2. Is specific market know-how necessary in order to invest in a classic car?

“I think that specific expertise about any market is important when considering an investment. Many investors do not have this know-how and that is why experts exist in virtually every sector in which one might potentially invest. As applies to classic cars, not only is an in-depth understanding of the market trends and values critical but so is the knowledge about the cars themselves. Nuances abound and the value lies in these nuances.”

3. What do you need to keep in mind when buying a classic car?

“If you would like to buy a classic car for enjoyment, do so! If you buy a good car, you might even make a few dollars. But in addition to the cost of the car, be sure to factor in the cost of storage, insurance, maintenance, repairs and the opportunity cost of the money that has been spent on the car. It is not unusual to find that these costs can exceed the purchase price of the cars in a relatively short period of time.”

1. Would you advise investors to purchase a classic car, even if they are not particularly interested in cars?

“Not every old car will appreciate in value to a significant degree and the costs of maintaining an old car will be significantly higher than other investment options. So, it may not be wise to invest in a classic car purely for financial gain. It’s far better if you are actually going to use and enjoy your classic car, with the possibility of it appreciating in value over time.”

2. Is specific market know-how necessary in order to invest in a classic car?

“Absolutely. As mentioned, not every old car is going to become a ‘classic’. Some cars were bad from new and haven’t got any more desirable now that they are old. Knowing what sort of car to pay and how to ensure it is properly maintained is essential if you want to earn a profit from your investment.”

3. What do you need to keep in mind when buying a classic car?

“If you have a significant amount of money to invest and are looking at blue chip classic cars like old Ferraris, the market is currently very good. But there is no guarantee this will continue – classic car values have risen and fallen over the years like many other investments. Values for classic Ferraris were very high in the late 1980s, then plunged along with everything else after the Wall Street crash of 1987. It’s only in recent years that value has exceeded those 1980s prices. If there is another market fall, classic car values may well suffer once again.

The best advice for most people is to buy a classic car that you will use and enjoy. If it is a car you have admired for a long time, there is a good chance that others will have too and the values will be more likely to increase over time, but this is not guaranteed. There will also be significant costs along the way and you will have to spend money to maintain the car properly, which is essential to ensure its value is as strong as possible when you come to sell it.”

1. Would you advise investors to purchase a classic car, even if they are not particularly interested in cars?

“Classic cars are a very good option, but it must be driven by the head and not with the heart. Investing in the wrong classic car bit back if not careful. The right car in the right condition will reward your time, so advice from an expert is 100% necessary in all cases.”

2. Is specific market know-how necessary in order to invest in a classic car?

“Yes every way, it helps if there is a little understanding, but market know-how and understanding is a great advantage.”

3. What do you need to keep in mind when buying a classic car?

“Check the markets, the trends the downfalls with some cars. Limited number cars, hand built cars and most desirable or the ones to focus on. If you have no understanding, do your homework, speak to owners clubs and read the classic car magazines.”

1. Would you advise investors to purchase a classic car, even if they are not particularly interested in cars?

“No, that is buying a classic car for all the wrong reasons. It is impossible to stop anyone from doing that, but this is how classics disappear into private collections and may rarely be driven again. That’s bad for classics cars and the classic car enthusiasts.”

2. Is specific market know-how necessary in order to invest in a classic car?

“If you are buying purely to invest then, it is. People should always buy a classic car because they want to enjoy it. The money is irrelevant. A buyer should be able to afford every penny they pay for a classic car and still be able to smile.”

3. What do you need to keep in mind when buying a classic car?

“Never buy a restoration project unless you realise it will probably cost twice any realistic quote to make roadworthy. Only buy a car you will enjoy driving, so hire or borrow an example to try first. Learn as much as you can about the classic and look at as many as you can before buying.”