Buying a beautiful car that speaks of a bygone era of motoring style is for many people the fulfilment of a lifelong dream — an emotionally driven purchase to be made with a windfall bonus or inheritance, perhaps. But the well chosen and well cared-for classic car can also be a very sound investment.
Anyone thinking of venturing into this recherché market for the first time should either find a dealer they are comfortable with or sit through an auction and study the prices realised against the estimates. Buying through a dealer with a workshop has the advantage that you are able to inspect the car thoroughly, often over a period of several weeks, and that they will continue to service and maintain the car for you.
‘The dealer’s got to have as much provenance as the motor car,’ says Wimbledon-based dealer Joe Macari, who has been in the business for 25 years and is a collector himself. ‘The reason you buy from a proper source is that you also want the car to work when you drive it. Most dealers are purely commercial, but there are a few of us out there who have classic cars of our own, enjoy them and want to share that experience with the client. There’s an emotion behind it that’s extraordinary.’
Once upon a time, classic-car auctions were a domain for the trade, but today’s auction buyers are predominantly end-users and prefer to do their own research.
Since 2000, the classic-car market has demonstrated a steady upward trend in prices, with occasional spurts of remarkable growth. Total sales at primary auctions around the worldwent from $144 million in 2000 to $281 million in 2006. In 2008 they reached $457 million, dipping back to $421 million in 2010 following the global economic crisis (though fewer cars came to market in those years, prices did not fall significantly). In 2012 sales reached $610 million, then last year they soared to $1.16 billion.
Jamie White, director of the motoring department at Bonhams (who provided the figures above), has been in the business since 1984. He recalls the last period of boom and bust, back in the 1980s and ’90s, and attributes the bust to the fact that many buyers back then financed their acquisitions at a time of high interest rates. The early 1990s recession brought a lot of forced sellers into the market in the UK at a time of already diminished demand. In the last few years, he says, ‘we have sold a lot of cars to people who are liquid’ — and not mainly to Chinese and Russians (‘they have contributed but they’ve not been the game-changer). The growth has come from the traditional markets of North America and Europe.’
Classic cars were ‘once the best-kept secret in the motoring world’, says Macari. ‘People always admired them but thought they would be unreliable or were “out of my league”. With the internet getting stronger, the world becoming a smaller place and more classic-car rallies happening, people are having their eyes opened to the fact that there’s a life after death for these cars, so to speak. There are more people out there who are starting to enjoy these cars and that has moved the market far too quickly.’
The last six months has seen a correction in the market, but ‘blue-chip, super-valuable cars with race history or in excess of £5 million: those are still moving and always will’, says Macari. ‘There are so few of them out there that there’s always going to be a demand.’
The most desirable of all classic cars are the sports cars of the 1960s, probably because they were the prettiest cars ever made. ‘Some people like Fifties sports cars,’ explains Macari, ‘but they’re a little bit more cumbersome to drive, because the change from 1957 through 1960 was vast in terms of motoring technology. The engines were fairly bulletproof from 1960 in Ferrari, and everyone else was about five or six years behind. So if you’re not buying a Ferrari you’d be buying late-Sixties sports cars from British manufacturers such as Aston Martin or Jaguar.’
Indeed, the value of these cars is almost index-linked, argues White. ‘At the top of the tree you’ve got Aston Martin, then you’ve got Jaguar, then AC, then Austin-Healey, followed by Triumph and MG. In broad terms, there’s a pecking order. Astons are exclusive and bespoke, with a hand-built feel about them, not to mention acertain secret agent who’s done a lot for the brand. In broad terms… he who can’t afford an Aston will say I might as well look at a Jaguar.’
Supply of Aston Martins is fairly limited, while demand remains high. Aston Martin produced cars primarily for the home market, with production numbers heavily skewed in favour of right-hand drive, says White, ‘which is kind of unheard of with a British sports car since America was such a huge export market. When you take Healeys, Jaguars and MGs, the number of left-hand-drive cars that were built outnumbers right-hand-drives. All that lets Aston Martin sit at the top of the tree.’
Total classic car auction sales worldwide in 2000
Total classic car auction sales worldwide in 2014
Bonhams held its first Aston Martins-only sale at the factory in 2000, making £2 million overall. White recently went through the catalogue with a colleague and they worked out that the same cars would now be worth around £9 million in total. In general, White advises would-be buyers to buy the best example of any particular car they can find for their money, but to make sure it ‘touches their heart’.
Women buyers’ tastes are very different to men’s,’ says Macari. Their favourite is old Fiat 500s. ‘I sell one of those every month, without fail. It’s a small car that makes them smile.’ Another popular female choice is the Mercedes 190SL from the late 1950s or early 1960s. ‘Pretty cars will always sell — end of. Women gravitate towards those cars when they come in the showroom. They seem to encourage their husbands — when it’s a joint decision — to buy the Ferrari 275 GTS and the 250 Lusso. Again, pretty cars.’
The market is certainly vulnerable to changing taste based on demographics. ‘The Audi Quattro or Ferrari Testarossa that kids had on their bedroom walls, they can now afford to buy,’ says White. Macari agrees that young men are buying poster cars that inspired their generation, such as the Ferrari 355 or 599. ‘That makes these cars future classics even though the quantities were higher in manufacture. If you show them something from the ’60s, they’ll turn their nose up at it, because it only does 90 mph, but they might have had a picture of a 599 GTO on their wall ten years ago.’
The same principle can work adversely at the mature end of the market. White points out that a Rolls-Royce Phantom II, with the fairly pedestrian bodywork of a D-back limousine, now has a dwindling band of fans. ‘It’s 7.2 litres of huge car and if I’m driving it people are going to think I’m employed by the owner,’ he says. ‘Phantom IIs with a lovely, three-position drophead coupe body, they’re going up in price, but an Audi Quattro short wheelbase is worth more. No one ever said the market had to be fair, but sometimes you do wonder.’
Of course, provenance will trump pure car in a like-for-like contest. A Bentley S3 Continental ‘Flying Spur’ is typically worth somewhere between £150,000 and £200,000, but one that was previously owned by Keith Richards (with a hidden compartment for storing illegal drugs) was priced at £400,000 by Bonhams and made £600,000 at auction in July.
There are plenty of investment opportunities in classic cars — but the experts agree that you should always choose the car that makes you smile the most.