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Tuesday, June 3, 2014

Classic Cars: Should You Invest or Not?


Diversifying your portfolio has never been quite so pulse-racing. With values for more volatile commodities like fine art and precious metals on the skids, some investors have been bolstering their earnings by buying into classic cars. Maybe you should too, just make sure to do your homework.

This growing trend is best emphasized by the Knight Frank’s Luxury Index (KFLII), which monitors a handful of selected collectibles and their shifts in value. Over Q2 2013 (the most recent survey), classic car values jumped an impressive 28 percent while fine art dropped six percent and – most importantly – gold plunged from $1,600 per ounce to a low of $1,223.

This goes to show the extreme volatility of the market, but it also paints a picture for some potentially lucrative investments. Over the past five years, the KFLII estimates that highly collectable autos have gone up 115 percent in value, and looking back ten years sees owners banking an enormous 430 percent leap in perceived worth.


So if you’ve got an eye for spying the future classics and can buy-in before the balloon inflates, then this might be the investment for you.
Imagine for a moment that you bought into a 1958 Ferrari 250 GT LWB California Spider about ten years ago. With its sleek lines and 220-horsepower 3.0-liter Colombo V12, you knew it would be worth some big bucks in the near future, and well – it was. The 11th of only 50 long-wheelbase Spiders sold in January for $8,800,000 at RM Auctions Arizona.
Affording one of these high-luxury collector cars might be a bit tough given its enormous initial investment, but if you can front the money – in some ways you can’t afford not to.


Sticking with classic Ferraris, there is an extremely limited population to pull these collector cars from, conversely increasing the value. A 1963 Ferrari 250 GTO sold for a record $52 million in 2013, one of only 39 GTO cars put into production.

 Normally, these models are either accounted for, lost, or destroyed, so unless a giant barn full of mint-condition ‘63 GTOs is found in Maranello, Italy…the value of these vehicles should remain safe.

“You never know how the collector car market is going to go – it does change based on the economy and trends,” commented RK Motors’ marketing director Jeff Spiegel. “But right now it seems to be on fire, and that’s a good thing for investors.” The Charlotte-based car firm recently sold a 1967 Ferrari 275 GTB/4 for $2,999,900.

There are certainly much safer ways to invest than in a classic car, but if you assume the risk and can spot a deal before its upswing, this investment might yield some impressive returns for you. Just make sure you buy the right car.