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Meet the latest investment you can’t afford: classic cars

52 minutes ago
52 minutes ago

Remember when a house was somewhere you lived, wine was drunk because it tasted good, and art was something to be considered not appraised? Probably not. They are all “asset classes,” things to invest in for the reasons that you can and, perhaps one day, somebody else will pay you more for it—such as the New York apartment bought for $88 million, the single painting sold for $250 million, and the bottle of 1947 Cheval Blanc that cost $300,000. Add another beautiful example of human achievement to the list—classic cars.

A Ferrari 250 GTO was sold for more than $50 million in a private transaction in California this month, while another set a record of $38.1 million at auction, reports the New York Times (paywall). Between 1962 and 1964, only 32 were made by hand. Still, the price at auction was almost a third higher than the previous record, suggesting something else is at work here. Among the cars that set records at the auction were nine Ferrari models, a Rolls-Royce once owned by Elvis Presley, some Maseratis, and a 1962 Austin Mini. Hagerty Insurance’s Blue Chip Index of 25 classic cars rose 35% over the last year.

“A lot of people are asking, ‘Is this the next great asset class?’” Evan Beard, of Deloitte’s United States art and finance group, told the newspaper. If you want to invest in classic cars, the Financial Times suggests investment funds such as the Classic Car Fund, launched by the Count of Custoza Family Office in Zurich. However, that fund seems to have run into some trouble soon after launch. And some scoff at using funds at all. “We turn up our nose when we read about investment funds,” Adolfo Orsi, motor historian and president of Historica Selecta, told Investors Chronicle. “All the share certificates of a certain company are exactly the same.” Not so for classic cars.

Really, the ongoing low levels of interest rates and hangover from the financial crisis means that almost anything becomes appealing as an asset class. “You might buy a car for £65,000 ($108,000), and in five years it might be worth £80,000, and you’ve had five years of fun,” Paul Spires, general sales manager at Aston Martin Works told Britain’s Auto Express. “Put it in the bank and you might have £65,000—if the bank is still there.”

If classic cars are not for you, you could try to predict the next asset class and get ahead of the curve. Water? Films? Sunsets? The possibilities are endless.

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