Is now the best time to be investing into classic and modern classic cars?
When it comes to investing there are plenty of options to choose from.
With options like your standard low-yield ISAs and Bonds whilst in general are a very safe investment, they aren't particularly exciting. Whilst crypto-currency seems alluring with it's almost 'too good to be true' returns, it is unregulated and highly volatile and there's is every possibility you could walk away with nothing.
Enter 'alternative assets'. From whiskey, watches and wine, to fine art and collectibles there are plenty of asset classes to invest in. But there's one in particular that some people may initially overlook...
Most peoples first thought when talking about investment isn't a classic car but the thing is ,cars but classic and modern classic cars can be a strong investment in years to come if you net the right one.
Luckily we made a handy little guide of how we select our own cars for the CarCrowd platform which could help you find your next appreciating asset.
If you're an automotive enthusiast or just a savvy investor looking to diversify your portfolio then read on...
A Quick Side Note
Before we continue on it's important to note that as with all investments there is always a risk involved. Please make sure you do your research and seek professional financial advice before giving it a go yourself.
Reasons To Invest Now
In the last decade classic cars as a luxury asset has provided 193% in returns over the last decade* based on data from this KnightFrank Report. Out performing other asset classes and the stock market over the same period.
Cars as an asset class is considered to have low volatility, the prices will never hit zero. In general, cars have shown resilience in periods of high inflation with strong consistent returns, making it appealing to all types of investors wanting to diversify their portfolio.
An added benefit with tangible assets such as vehicles, they typically provide investors with protection against unexpected inflation variation as well as diversification benefits.
What Are the Risks?
As with any investments your capital is at risk and your investment can go down as well as up however with cars there is a unique factor to be taken into account:
Restoring a car to concourse condition (essentially as it left the factory) is no small feat and can quickly run your bills into tens if not hundreds of thousands in repair and restoration costs. There are also the ongoing maintenance costs; as with any car they need to be properly serviced at least each year. Couple this with the storage and insurance costs and things can stack up pretty quickly, so its important to do diligent research not only into finding the right asset but also the overall maintenance costs for keeping said asset.
Heart VS Head
It's easy to make an emotional choice when it comes to cars, but its important to know that not all classic cars will go up in value and it's important to step back and take a more data driven approach and make a decision based on facts and figures rather than sentimental value.
As part of our own market research it's important to try and identify 'tomorrows future classics'. In short, the cars that are yet to realise their true potential, acquiring these cars before prices rise to sharply when the market realise how scarce they have become is key to maximising potential returns.
We think these are cars to watch in the near future:
Alfa Romeo - Brera 24v V6
A simply breath-taking car. Ask any Alfa owner, and they'll tell you that you can't be a proper petrolhead until you've owned one. That may be true but from an investment standpoint we think the mighty Brera has been overlooked. hark back not too long ago to the 156 GTA a similar story, a beautifully designed body with a roaring V6 squeezed under the bonnet. The 156 has seen prices fall towards the end of 2019 with a sharp rise at the beginning of 2020 and now on a steady progression averaging over £10k. We feel the Brera is soon to follow suit in the next few years.
McLaren MP4-12C
McLaren's first 'go it alone' supercar they ever made. Fitting their own
engine, a 3.8 Litre twin-turbocharged engine and body lines that have aged very well since it was released in 2011 it has all the makings of a fantastic supercar. Admittedly it had a rocky start with electrical issues and other gremlins however
McLaren recalled and rectified all their 12C models. Their current market price ranges from £70-80k which for a genuine supercar makes it seem like damn good value and we're certain once the market catches up and realises how great the 'first ever McLaren' really is, values will start looking towards six-figures.
Lancia Delta - HF Intergrale
A true rally icon, we feel the Lancia Delta Intergrale is a pretty obvious choice especially the EVO I as this car had the true rally pedigree as it was the homologation car for Lancia to enter the World Rally Championships, granted the EVO II has the rarity being there was around 2,500 models made plus the
added reliability over the EVO I. In comparison the EVO I had to make 5,000 units in the first year alone. However both generations have seen prices double and even triple in most cases, the Delta still has room to grow in our opinion.
BMW E92 M3
The coveted M3 badge, first introduced on the iconic E30 it takes BMW's base saloon car and beefs it up to the max, creating a legendary driving machine. The E92 however, is different for one special reason. Its engine a naturally aspirated V8 is the last to be fitted under the bonnet of an M3, with emission laws forcing manufactures to down-size their engines and fit turbo-chargers. Which from a performance perspective makes it more economical and faster than previous generations, but it takes away the raw driving feel and the drama that goes along with it. The stunning coupe body style in our opinion, is one of the best looking BMWs and it being the last 'big engined' car makes it one to watch...
Do you agree with our predictions? what cars do you think have a good case for appreciation and why? drop them in the comments below!