While the hype about houses, bitcoins and securities is now waning in view of the turnaround in interest rates, crises and low profit prospects, investor interest in old cars, the so-called garage gold, remains high. But if you now smell the great return opportunity: the form of investment is by no means suitable for everyone, and by no means every classic car promises profit.
Although the sums achieved at classic car auctions have long since reached dizzying heights, there is no end in sight to the highly speculative willingness to invest, as a number of superlatives from the recent past prove. Last May, for example, a Mercedes 300 SLR Uhlenhaut fetched 135 million euros. It was the first classic car to sell for a three-digit million sum at auction. The previous record holder was a Ferrari 250 GTO with a comparatively modest 48.4 million dollars. Apart from these extremes, there is still great interest in classic cars on the international auction floor. In August 2022, for example, a new record proceeds of around 456 million US dollars were achieved at the entire Monterey Auction Week, which exceeded the previous record result of 2015 by almost 16 percent. The fact that Monterey 2022 was no exception was also shown by the comparatively small Concours d’Elegance on Amelia Island, which, according to Frank Wilke from the market observer Classic Analytics, achieved an all-time high of 178 million US dollars in March 2023. In addition to the continued lively interest from international At the same time, according to Wilke, the high society is also continuing to be very active in the classic car trade, especially in Germany: “After the pure investors have largely withdrawn from the classic car market, the classic car fans there are among themselves again, which strengthens confidence in the stability of this market overall. Bids are lively at international auctions and increasingly high prices are being achieved, especially for sports cars from the 1980s and younger. At the same time, we notice from the volume of evaluations carried out via our network of experts that there is also lively trade in Germany – because a vehicle is often evaluated when it has just been sold. Wilke suspects an interplay of various factors behind this: “In addition to the established and stable nature of the classic car market, there is a general trust in real assets. With the topic of e-fuel, the operation of cars with combustion engines seems to be guaranteed, at least in the medium term, and in everyday life classic car drivers experience much more sympathy for their cars than the reporting on climate activism would suggest. You shouldn’t underestimate the ‘right now’ mentality of some car fans.” No guarantee of rain of money However, anyone who believes that buying old cars will automatically lead you onto the highway in the direction of happy returns could quickly end up on the losing side. The investment in classic cars is and remains risky. According to Wilke, the majority of the precious automobiles traded at auctions are priced beyond the 100,000 euro mark anyway. You first have to raise such large sums and be able to cope with possible losses. The latter can be lavish, as the lists of the biggest winners and losers in the 2022 classic car market published by Classic Analytics at the beginning of 2023 make clear. In the case of inexpensive vehicles, losses remain manageable, such as for the Alfa Giulietta built between 1959 and 1963, whose value has fallen from 24,000 to 20,000 euros. In the case of more exclusive vehicles, however, the absolute losses can be enormous. The Ferrari 330 GTS sports car from the 1960s, for example, was valued at less than 2.2 million euros in early 2023, which corresponds to a loss in value of 345,000 euros. In one year. On the other hand, the evaluation also shows that significant increases in value are possible. An Abarth 595 SS from the 1960s, which was still listed at 34,000 euros in January 2022, increased by almost 65 percent and increased its value to 56,000 euros. In addition to names such as Lamborghini or Aston Martin, average types such as the Ford Taunus 1600 (+33.3%/+2500 euros) or the Opel Olympia 1900 S Coupé (+30.8%/4000 euros) also appear on the list of winners.You also need luck The classic car market offers opportunities and risks at almost every investment level. However, the common notion that cars automatically increase in value as they get older is wrong. Even if some old irons or heirlooms are already allowed to carry a Classic tag, they will not fetch higher prices per se. Many models and series remain only moderately interesting for collectors and enthusiasts for decades and their prices remain largely unchanged in the long term. And should some of them eventually achieve cult status, for example through an appearance in a Hollywood film, you might be able to get a good price if you wait long enough for the right buyer. Or not. In addition to risky willingness to invest, above all special knowledge, skill, the right instinct as well as passion and luck are required in order to be able to participate successfully in this market. Tips for investing One possible strategy could be to spread risks. A diversified, long-term maintained and fluctuating vintage car fleet offers more opportunities. If you put together a colorful portfolio of brands and types, you could sit out potential losses or compensate by selling a vehicle that is currently in demand. But if an old car is to be a good investment, it also has to be invested. Care, maintenance, repairs and parking space cost time and money. The effort can easily cannibalize the possible additional yield. There are always collectors who accumulate old cars in the hope of being able to sell them at a profit one day. However, there is often a lack of time and know-how for a restoration. At some point, the supposed sweethearts broke down and became worthless. Does it really pay off? Vintage cars are therefore particularly suitable as an investment for enthusiasts, in whose hearts the rolling antique can also ignite a fire of enthusiasm. Cool computers will still hardly be able to warm to old cars. Fritz Cirener, who is in charge of the department for historic vehicles at the German Association of the Automotive Industry (VDA), therefore wants to turn his gaze away from auction vehicles worth millions and greed for profit towards the cultural value of the classic car scene: “I see the emotional leisure activity and even more the preservation of the classic car of cultural property. The idea of investing is less relevant. No owner who does this emotionally will be annoyed if his vehicle has an increase in value. However, in the large number of vehicles, the increase in value is in the magnitude of the parking, insurance, operating and maintenance costs experience. Regardless of the price level of the vehicles, the focus is always on the enthusiasm of the car fans. Rarity, a curious CV or a condition that is as perfect as possible are rewarded. And as a result, the question of value and the prospects for increases in value quickly arises. (SPX)