It’s no secret – the cost of secondhand cars is soaring. The value on second hand motors is the highest it’s ever been, thanks to Brexit, Covid and theSuez Canal issue holding up numerous new vehicles. So is now a good excuse to purchase the classic car you’ve been after?
Many people insist they have bought a classic car in less than prime condition and are going to do it up to sell on at a profit. Which is entirely possible. Unlike a new car, which will probably lose two-thirds of its value within its first three years, a classic car is likely to hold or gradually increase its value over time.
But the price you buy at isn’t the only consideration – investing in a classic car comes with plenty of financial risks. The cost of secure storage, of trailering it to and from the point of sale, the insurance, ongoing maintenance costs, the original or replica parts and paint to restore it – it all amounts to a considerable cost.
Which might be why an awful lot of Classic cars are ‘mid way’ through restoration and may never get finished.
What is a classic car exactly?
Depends who you are asking. HM Revenue and Customs define a classic car for company taxation purposes as being over 15 years old and having a value in excess of £15,000.
The American Classic Car Club defines a classic car as a vehicle that was produced between 1915 and 1948. Preferably in limited quantities too.
It is usually split even further – Veteran cars are usually considered to be anything made before World War I, the phrase ‘Vintage cars’ is used to refer to vehicles made before 1930, and Post-vintage cars were produced between 1930 and 1945.
Its not just age –
Cars dont just become ‘classic’ once they hit 40 though. It comes down to;
Nostalgia – did you know most wannabe classic car owners seek out the cars they loved and knew as children? Hence the trend in 70’s and 80’s cars right now.
Design – its the quirk in a design that makes a classic status. That wow factor.
Cultural impact – Top movies or TV series shape opinions on cars. Think of the classic mini in the Italian Job, James Bond’s Lotus Esprit S1 from The Spy who loved me, the Delorean from Back to the Future, even the flying Ford Anglia in Harry Potter.
Rarity – Out of production, not often seen and ideally limited edition.
How much is a classic car?
How much a classic car costs really depends on two things: what type of car it is and what condition it’s in. Of course how rare the car is can also determine how expensive it is.
You might have seen reports that a 1963 Ferrari GTO sold for a record-setting $53 million in 2013, that’s because in the case of the GTO, just 39 were ever made, making it one of the most sought-after and most expensive vintage collectible cars of all time.
So should you invest?
It depends. If you have knowledge of the market and a hefty bank account, you might find an easier good deal with cars like Ferrari or Mercedes. Otherwise its a slow appreciation of your investment compared to other investments. And the case of finding a buyer who is willing to pay more than you did. Just like all investments there is a risk, cars are no different here than stocks and shares.
But far be from us to put you off if its a classic car you are after. Perhaps more as a passion than a certain ‘Good’ investment.
Here at Almagrove we loan against luxury and Classic cars – you can read all about it here.