Best Collectible Investment of 2014?

Classic cars get the checkered flag

Best Collectible Investment of 2014?
August 7, 2015

According to the Knight Frank Wealth Report, classic cars were the top performing collectible investment in 2014, posting gains of 16 percent. While that figure narrowly beat art (15%) and coins (13%), it left stamps, jewelry, wine, colored diamonds, and watches in the dust. In fact, cars have held the pole position over the long term. They have posted the best 10-year performance—with cumulative gains of 487 percent.

Expert consensus is that the collector car market is reaching a peak and will have a difficult time maintaining this strong appreciation, so it’s important you

are careful in how you select your next collectible automobile. Much of the strongest appreciation has been focused on 1950s and ’60s European sports cars, such as Ferrari, Porsche, and Mercedes.

Top 5 Collectible Sales in 2014

$38.1mm 1962Ferrari GTO
$26.4mm 1964Ferrari 275 GTB/C Speciale by Scaglietti
$18.3mm 1954Ferrari 375 Plus Competizione
$15.1mm 1961Ferrari 250 GT SWB California Spider
$12.0mm 1965Ferrari 275 GTB Competizione Clienti

While impressive, these top-end sales are limited to elite buyers and sellers. More typically (and depending the auction), you will see the automobile prices between $100,000 to $250,000, with some of the more popular European cars reaching north of $1mm.

There are some more reasonable vehicles that have been on the move that can not only be fun to drive, but may still continue their strong appreciation. Examples include:

Worth a Second Look

  • Early Lamborghini and Alfa Romeo models
  • 1955-63 Mercedes 190 SL ($75k–$200k)
  • 1966-72 Porsche 911s ($90k–$230k)
  • 1976-79Porsche 930 Turbos ($85k–$175k)
  • 1984-91 Ferrari Testarossa ($75k–$120k)

Why do people select particular cars to collect? Various reasons. Quite often there was a previous connection to these cars growing up, either from a cool uncle with an amazing car, to that muscle car you always wanted in high school. Three key factors play into determining the right vehicle for your collection.

Rarity

Select a vehicle with lower production volume. Like any collectible, the more rare, the more valuable. Production of a 1966 Ford Mustang totaled one million cars built, in contrast to the 1966 Porsche 911 with only 3,724 built that year. The Mustang sold new for $2,652, whereas the Porsche 911 was priced at $4,295. Today a clean ’66 Mustang sells for $18,000 and a standard 1966 911 sells for $125,000, and the more rare 69-71 911S has been recently selling for as high as $250,000. Many of the most valuable collector cars today have total production of less than 200 cars, and some have production levels in the single digits, quite often driving these values into the multi-millions.

Condition

The overall condition of the car can often be a big factor in the value of the vehicle you are purchasing. Quite often, the cost to restore a vehicle can far exceed the value of the car. More often than not, the difference between the cost of a restored car and a fixer-upper is a fraction of the cost to complete this same work. To restore a classic car to Concours levels, typical restorers will estimate between 1,000 to 3,000 hours to complete their work. At hourly rates between $80-$150/hour, you can spend between $80,000 to $450,000, as is the case with an early Mercedes 300SL.

Cost

One of the attractive aspects of collecting automobiles is the broad range of values, giving virtually
everyone the ability to participate in the hobby. There is really no minimum entry point with vehicles like M.G.s and Triumphs starting as low as $5,000, to vintage Ferraris running as high as $50mm. The real decision is determining the right price point for yourself and then searching for the right fit. One thing to keep in mind before starting your collection is that these older cars require a higher level of maintenance and repairs than their new counterparts.

One trend that has been very popular over the past few years has been the premium placed on unrestored, original condition cars, also known as “barn finds.” These are vehicles with the original paint, interior, motors, and even tires. Quite often, these specimens are dragged out of garages covered with dirt and cobwebs, and left this way for the auction block. These time capsules have attracted big money at auctions, sometimes exceeding the value of a restored car. Many buyers like the idea of these vehicles being original only once and will pay big numbers for the originality.

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