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Classic Cars – Which Is The Most Valuable?

Author: Jason Snyman
Date: 2017-09-08
How do we determine value? What makes a classic car a smart investment, and what do you need to look for before purchasing?
You’d be forgiven for thinking of classic cars as the toys of millionaires. Some of the biggest and best collections we have available in South Africa today belong to these people. However, these icons of motor engineering are also finding their way into the hands of shrewd investors. The desire to amass these vehicles is no longer driven by passion and nostalgia alone, but has proven to be a lucrative business opportunity. The rarity and the future value of classic cars is what they look for, with some of them selling at auction for hundreds of millions of Rands. The value of the classic car market in the UK alone is said to be about R95 billion. Internationally, the value of the classic car market has appreciated more than that of jewellery or art in the last decade. There is a consistent rise in value, and if Hollywood keeps driving these things over cliffs in films, there’s no end to the spike in sight. But what does value mean? What makes a classic car valuable? More importantly – who is driving them? We take a closer look…
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Popular Classic Cars

The latest price index compiled by the Historic Automobile Group International shows that Mercedes-Benz has been the best performing marquee. They have increased in value by just over 85% in the last couple of years. Mercedes models from the 1970s are becoming sought after, with prices rising steadily. In 2010, a 1937 Mercedes 540K Cabriolet sold at Stephan Welz & Co. for R7,37 million. Ferrari, as one would expect, has also done well. So has Porsche, who have continued with their 911 range for some years. The 1970 and 80s versions are coveted by collectors. Other popular vehicles include the Mazda MX5, the sports version of the BMW 6 series and a firm favourite – the devastatingly beautiful E-Type Jaguar. Among South Africa’s high net worth individuals – the richest people in the country – the highest growth in spending has been on classic cars and exotic, wild animals. Could they just be splurging? Possibly… But they didn’t become millionaires by being terrible business people, either.  The price of these classic cars has shot up by 163% between 2007 and 2015, making it the best performing investment class for HNWIs over that period. New World Wealth released a wealth report last year. According to them, the most popular classic cars among South Africa’s high net-worth individuals include the following: [caption id="attachment_27632" align="aligncenter" width="500"] 1980s Lamborghini Countach[/caption] [caption id="attachment_27633" align="aligncenter" width="500"] 1970s Lamborghini Miura[/caption] [caption id="attachment_27636" align="aligncenter" width="500"] 1960s Aston Martin DB5[/caption] [caption id="attachment_27637" align="aligncenter" width="500"] 1950s Aston Martin DB4[/caption] [caption id="attachment_27638" align="aligncenter" width="500"] 1980s Porsche 959[/caption] [caption id="attachment_27639" align="aligncenter" width="500"] 1960s Mercedes Gullwing 300sl[/caption] [caption id="attachment_27641" align="aligncenter" width="500"] 1950s Porsche 550 Spyder[/caption] [caption id="attachment_27642" align="aligncenter" width="500"] 1990s McLaren F1[/caption] [caption id="attachment_27643" align="aligncenter" width="500"] 1960s Ferrari 250 GT California Spider[/caption] [caption id="attachment_27644" align="aligncenter" width="500"] 1960s Ferrari 250 GTO[/caption]  


In 2014, a 1962 Ferrari 250 GTO sold at Bonham's Quail Auction for $38,115,000.00. That’s equal to four hundred and ninety-one million, three hundred and sixty-one thousand, four hundred and twenty-eight Rand, and twenty-five cents, thank you very much. Eat your heart out, Zuma. In terms of return on investment, Ferraris from the 50s and 60s seem to perform the best. A 1960s Ferrari Dino, for example, might have sold for a couple of thousand in the 1980s, but will be selling for a good couple of million today. Of the top 10 most expensive cars ever sold at auction, 6 of these bear the ‘prancing horse’ symbol. If you have the money to invest in a car – any post-war Ferrari is a pretty safe bet.
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What Makes A Good Investment?

Not all classic cars make a good investment. That rusty passion project you’ve been labouring over could sooner bankrupt you than make you a fortune. It’s true that classic cars are a habit of the heart. Enthusiasts and investors aren’t always two separate things, but it’s important not to confuse collecting with investing. You may love your car, but you still need to know what’s going on with its value. In fact, according to Coutts bank, the value of classic cars has seen a decline, with photographs and rare musical instruments on the rise. So, what’s a smart move? According to classic car experts, the younger classics deliver the best return on investment, such as the 1970s, 80s and early 90s models with V8 engines and manual transmissions. There’s an old expression among collectible car dealers which goes; if the roof comes down, the price goes up! Soft-tops and convertibles are always big attractions. Vehicles manufactured in the 1920s and 1930s also have high values, but limited buyers. In auction, some of the contributing factors affecting the value of cars include rarity, desirability, low production volumes, condition and the generation effect. It takes a bit of homework or a deep knowledge of the industry to know which of these vehicles will appreciate in value and which won’t. Some people, of course, find the real value and real return on investment in the joy of ownership alone.
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Things To Check Before Purchasing

  1. Check the car's origin and conduction.
  2. Did the car have a limited production run?
  3. Was the same model ever owned by any famous person or company?
  4. Check the condition of the car’s exterior for rust or paint chips.
  5. Have a mechanic evaluate the vehicle's mechanical condition.
  6. Is the car in demand? These include Ferrari, Porsche, Mercedes and Jaguar.
  7. Collectible cars don’t have to be old. They could also be limited or special editions.
  8. The correct market value is the car’s current auction market.
  9. Research the South African market in the brand and model you’re looking for; through dealer’s and auction houses or classic car clubs.
  10. Seek the advice of a good consultant to validate whether the price of a classic car is fair.
  Lastly, if it turns out that your grandpa has had one of these stashed in the garage beneath a sheet all these years, remember to breathe.