Investing in Classics
Ask any serious car collector what his biggest regret is and he will tell you that he should have bought more collectible cars in the past or that he should never have sold some of his collection.
Collectible classics have steadily been rising in US Dollar or Euro prices over many years. The international HAGI index tracks Classic car prices in world currencies and has increased from a base of 100 in December 2008 to over 167 in September 2012. Last year’s growth for this index stands at a staggering 18,31% and with the recent weakening of the South African Rand, Classic car prices in South Africa are bound to increase substantially to prevent some of our collectibles from being exported. Classic cars are an internationally traded commodity and can easily be imported or exported around the world. This provides a hedge against currency fluctuations in developing countries.
While world stock markets and property prices have stagnated or declined over the past few years, right now the whole world – auction houses,dealers, collectors and people who know, are fanning the collectible car flames.That’s all part of the texture and tone that shows that the intentional market has the legs for a long haul with no sign of overheating in the foreseeable future.
An emerging feature of the world market is an increasing variation and widening amplitude in prices, particularly among the higher volume constituents. This is ascribed to new players into the market and the need for liquidity among some existing collectors, who are tempted by the 63% increase since December 2008.
The value of a classic is very dependent on condition and originality. A good original non-restored car generally tends to be more valuable than a restored car where originality could have been compromised. On average a really nice car that is well presented and that has no obvious faults, will be worth about 70% of a car in Concours condition. A Classic car capable of regular use with a Road Worthy Certificate but that will need work and/or original parts, will be worth only 50%, while a drive-able car that usually needs a complete rebuild, will be worth only about 15 to 25%. These values will vary widely dependent on the collect-ability of the model. The discount will be substantially lower on very collectible cars, but higher on lower cost and more available classic cars.