For many, classic cars are more than a commodity. They’re a passion, and source of immense cultural and historical value. While the promise of a financial return might be something that would-be investors are aware of, it’s the idea of caring for a pioneering piece of engineering, and possibly passing it on to the petrolheads of the future, that really appeals.
With that said, it’s not as though money doesn’t matter – and the money, in many cases, can be extremely good, even when you’ve factored in the cost of fuel, maintenance and other necessities to ensure your classic car is drivable. Let’s take a bird’s eye view of this pastime and see whether it’s worth putting your money into.
Boom and Bust
Nowadays, classic cars are enjoying a boom period. The value of a top-end classic car had soared by as much as 469% over a ten year period leading into the mid 2010s. This boom has been driven, at least in part, by investors seeking alternative stores of value in the wake of the financial crisis. This is reflected by soaring property values in London.
Of course, the market has been here before; the classic car market famously boomed in the late 80s, only to slump in the 90s. So what makes the current boom different? For one thing, the customer’s perspective has changed – they’re no longer buying according to condition and performance, as they were in past decades. Moreover, the number of potential customers has expanded, as markets in China and India have emerged, while the number of cars available has remained constant (or actually declined).
These conditions are likely to persist in the immediate future, even as spending power contracts as a result of the pandemic.
How to Spot a Future Classic
Ideally, you’ll want to pick out a car whose value has yet to be widely recognised. If it were easy, however, everyone would be doing it: you’ll need to look out for a few key factors.
Cars which were around at a certain time might evoke a feeling of nostalgia among drivers of a certain age. Occasionally, you’ll have a piece of popular culture ramping up the appeal of a particular car: think the DMC DeLorean.
Certain limited-run variants tend to command even higher price-tags than their more standard-issue counterparts. The lower the supply, so goes the theory, the higher the price – but that’s only the case if the demand is constant.
The cars that everyone wants are the most valuable. Look for strong performance in the initial run, that goes on well beyond the expected shelf-life of the vehicle.