Why Now Is The Perfect Time To Invest In Classic Cars

Summary

The classic car market experienced a decline at Monterey’s auctions, raising the question of whether now is the time to invest in classic cars.
Pre-war classics defy market fluctuations and continue to hold their value, with brands like Bentley and millennials driving demand.
Various indices, such as the Knight Frank Luxury Investment Index and Hagerty’s data, provide insights into the performance and volatility of classic cars as an investment asset class.

The classic car market recently saw a decline in sales at Monterey’s auctions, leading to the question of whether it is a good time to invest in classic cars. However, pre-war classics have shown resilience and have maintained their value. Brands like Bentley and the growing interest of millennials have contributed to the demand for these types of cars. Several indices, including the Knight Frank Luxury Investment Index and Hagerty’s data, provide valuable information about the performance and volatility of classic cars as an investment asset class.

The market at Monterey’s auctions experienced a decline in sales compared to the previous year. The sell-through rate dropped from 78 percent to 68 percent, and even renowned brands like Ferrari were affected. For example, a 1967 Ferrari 412 P, estimated at $40 million, sold for only $30.2 million. This decline raises the question of whether it is a good time to invest in classic cars.

Monterey’s Top Classic Car Sales: A Glimpse

The top classic car sales at Monterey’s auctions included a 1957 Jaguar XKSS Roadster, which sold for $13.2 million, and a 1962 Ferrari 250 GT SWB Berlinetta, which fetched nearly $9.5 million. Other notable sales included a 1959 Ferrari 410 Superamerica SIII Coupe and a 1937 Bugatti Type 57SC Tourer. Ferraris dominated the top 10 sales, which is a common trend at Monterey’s auctions. Auction houses such as Gooding & Co. and RM Sotheby’s had impressive sell-through rates of 76 percent and 85 percent, respectively. Bonhams and Broad Arrow also secured spots on the list with sell-through rates of 73 percent and 80 percent, respectively.

Although there was a decline in sales at Monterey’s auctions, classic cars from the pre-war era have shown resilience. Bentley, in particular, has seen success with its prewar continuation series, and millennials have shown a growing interest in these classics. Pre-war classics are prized for their craftsmanship, design, and quality, and they continue to capture the hearts of enthusiasts and collectors. Some notable sales in this category include a 1914 Mercer Type 35-J Raceabout, a 1933 Alfa Romeo 8C 2300 Cabriolet, and a 1912 Simplex 50 HP Toy-Tonneau. RM Sotheby’s ‘barn finds’ collection, which featured derelict Ferraris, also garnered significant attention and high prices.

Understanding The Market Through Indices:

There are several indices that provide insights into the classic car market as an investment asset class. The Knight Frank Luxury Investment Index reports a 25 percent growth in vintage cars over the past year, positioning classic cars as the second-best performing luxury asset after fine art. However, classic cars also exhibit volatility, similar to startups, which presents both potential rewards and risks. The Historic Automobile Group International (HAGI) index suggests that classic cars outperformed most major collectibles during the 2008-2010 recession, with only gold outperforming them. Hagerty, another renowned name in the industry, categorizes the market into segments and provides its own market rating. The Hagerty Blue Chip Index shows stability in the blue-chip classics segment, while the Affordable Classics Index has shown growth, particularly post-pandemic. Muscle Cars have also displayed growth and enduring appeal.

The Classic Car Connoisseur’s Guide: Brands, Trends, And Market Dynamics

Leading the classic car market are brands like Mercedes-Benz, Porsche, and Ferrari. Ferraris, in particular, are considered the “blue chips” of the sector. While Ferrari had impressive sales in 2022, Porsche had a higher volume of cars auctioned in Q4 2022. When considering future classics, sporty 90s cars like the first-generation Dodge Vipers are seeing prices increase. Recent models with luxury and uniqueness are also in demand. Classic cars are often compared to fine wine in terms of their value appreciation and rarity. However, caution is advised in this volatile market, favoring Affordable Classics and Muscle Cars. The classic car market is expanding in Asia and remains a compelling investment option for those passionate about these timeless vehicles.