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Why invest in a classic car?

During the turbulent economic times of the past few years, investors have been seeking alternative ways to seek the best return on their cash such as watches, wine, stamps or art.

However by far one of the best performing investments has been in the classic car market. The Historic Automobile Group International has stated that between 2004 and 2014 the average return on classic cars has been a staggering 456%. (The HAGI top index is a tool to monitor the value of rare classic cars) 

hagi index

According to the government classic cars are seen as a “wasting asset” – defined as an item that irreversibly declines in value, as a function of time. Wasting assets include vehicles, machinery and other fixed assets. As shown by the figures, an investment in the right classic car has been anything but a declining asset over the past few years. Due to their status as a wasting asset this means that any returns on classic cars are capital gains tax-free. To put this into perspective a Ferrari 250 GT California as made famous in Ferris Buellers Day Off was sold for £1.7 million in 2006. The same car was then sold in 2013 for over £9 million. A phenomenal return of £7,300,000 – all CGT free.

ferrari california

The stunning Ferrari 250 GT California – sold for a £7.5 million profit.

The Ferrari California may be a shining example of the money to be made at the top end of the booming classic car market. However, the more modest end of the market is still an excellent place to invest. In 2010 I viewed a Ford Escort XR3I, in excellent condition and for sale at £750. I recently attended an auction and saw the very same car, which then sold for £4,500.

As with other fine collectables such as art, owning a classic car is a purchase of the heart. With the added benefit of knowing that your purchase may turn out to be a sound investment for the future.

 

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