At the top of my short Christmas wish list that year, the name “Hornby” appeared; but it didn’t stopthere.
Every subsequent birthday, Christmas and indeed at every opportunity there was to ‘invest’ I was seen in the Railway Models shop in central Leeds building and expanding my collection. But, as mid teenage years approached, there were other interests which needed financing! So bit by bit a very splendid set up was gradually returned to the Leeds central arcade and turned into the much needed cash. I did make a modest profit, but: “If only,” I often think today,
“what must such a set up be worth now?”
So it is with classic cars. Numerous of the browsers, wannabe and maybe purchasers who wander around our showrooms make the comment: “If only I still had my E Type,”
or “I used to own......and sold it in 1970 for.... are they really worth this much today?”
The reality is that just like childhood railway enthusiasts, more and more people are looking at owning a piece of automotive history. The reasons are perhaps understandable; apart from nostalgic and historic interests, classic cars are enjoyable to own and drive, they can be used and shown to others. But most importantly, they are appreciating in value and have been for some considerable time.
The Saturday Telegraph recently published an article on this theme, entitled: “A Better Investment Than Gold.” This drew heavily on detailed information from former banker Dietrich Hatlapa, who highlighted the sheer impenetrability of the classic car market, which for years has defied attempts to track and analyse its movements. Hitherto a mysterious world where – unlike wine, gold or other tradable commodities – there has been no independent market index to illuminate its machinations, until now.
In 2007, Hatlapa decided to take his love of classic cars a step further. He made it his mission to create the first authoritative, independent index and founded the Historic Automobile Group International (HAGI) research group.
Calling in top-flight expertise from, among others, former colleagues at ING Baring Securities, he began analysing the market in minute detail.
What they found was remarkable. They established there were clear patterns but little transparency within the classic car market; collectors and investors were making buying decisions on little more than a hunch and opinion. Hatlapa remarks: “Investors
in more traditional markets would arm themselves with more information. This is what I am doing for the classic car market with the HAGI index. Collectors want to enjoy their cars but they also want to know what they’re getting into financially.”
First HAGI established the market size for the top 100 historic collector’s car models: between £10.1 and £12.3bn in 2008. Total turnover for sales of the top 100 was at least £1.07bn that year.
HAGI’s latest research quantifies the upper echelons of the world wide classic cars market (i.e. cars with a per unit value of minimum £100,000) at £30bn with annual turnover of £4bn (comprising an estimated minimum of 200,000 qualifying classic cars). By comparison, the tradable portion of the fine wine market in 2010 was £3bn.
The mechanisms of the HAGI index, which tracks the classic car market much as the FTSE 100 tracks the largest UK companies listed on the London Stock Exchange, appear beguilingly simple at first glance. But it took years to select the initial 38 car models from 18 marques, representing the top slice of the collector’s car market, using historical data going back to 1980.
Once HAGI’s experts began monitoring the index it became clear that someone who bought a rare Bugatti, Jaguar or Ferrari in top condition would have done better during the downturn than an investor in almost any other asset, including fine art, wine – or even Gold as a chart in Hatlapa’s new reference book, Better than Gold: Investing in Historic cars – demonstrates.
Another startling fact emerged; the classic car market moved entirely independently of any other investment area.
The HAGI index has risen 40.9% in the three years since it began tracking the market early in 2009, which accords exactly with our front line market supply and demand correlations experienced at J D Classics.
We are regularly asked the question: “I want to invest in a classic car – what do you recommend?” The fact we are now being asked this question evidences investors are wising up to the realities of classic cars as an investment class, which in recent times has outperformed almost all other asset classes.
So the HAGI index is a good starting point, ideally to be studied in conjunction with Hatlapa’s book. Thereafter Blue Chip Classic Car magazines such as ‘Octane’ and ‘Classic & Sports Car’ will give a closer picture of which cars are being advertised and who is selling them. Once you have an idea of which is your favoured marque, approach the best Classic Cars specialists in the business.
HAGI’s senior analyst Dave Selby notes that by specialising in a particular marque the collector/investor not only builds a body of knowledge that will help inform choices and buying decisions; there is also the opportunity to get to know the best specialists in that marque and build relationships with restorers, brokers, dealers and suppliers whose advice, guidance and quality of work you can trust.
Marques such as Ferrari, Porsche, Jaguar, Bentley and Aston Martin are all backed by specialist networks that span the globe, yet the individual marque communities are very close-knit and word travels fast. In this environment, where customers
will often know one another and compare notes, specialists need to maintain a good reputation to endure and prosper. That provides reassurance for customers.
For Aston Martin, R S Williams are arguably the gold standard; the best Ferraris are sold by Talacrest; and for Porsche Maxted Page and Prill. P & A Woods are the favoured name for Bentley and J D Classics are recognised as the first choice for Classic Jaguar as well as historic motor racing.
Owning a classic car need not be expensive; we advise an annual service by the reputable dealer of choice for the marque and sensible storage especially during the winter months. As with all things a proactive approach to service and maintenance is the key to ensuring any problems are diagnosed early enough for corrective action to be proactively taken.
Compared with other investments there can be few more enjoyable ways to store wealth. Would you rather look at a painting or go for a blast over the Alps to Monaco in an appreciating asset? One thing is certain; there’s a finite supply of classic cars and unlike model trains, they aren’t making them anymore!
