For many, classic cars are a purchase made for nostalgic and sentimental reasons. However, there are people who accumulate these vehicles expecting them to appreciate in value. It can be difficult to determine which models are a worthy investment. Here are some factors that can help you make the decision.
Watching the Market
The market for classic vehicles, like other markets, tends to go up and down. However, this one in particular can be especially tricky. An article written for thenewswheel.com states, “The classic car market is notoriously volatile. Prices surged in the late 1980s with a Ferrari F40 fetching nearly one million at auction, but by the early 90s, the bottom had fallen out of the market and prices had dropped by up to 40%. Today, a Ferrari F40 is lucky to fetch £800k (over $1 million U.S. dollars) on the open market, and that is only if it is in mint condition.” Your goal should be to buy low and sell high. If you’re planning on investing, keeping a close eye on the market is vital.
Consider the Car
In the world of classic cars, some are far better than others. There are a handful of vehicles that are worth an exorbitant amount of money. Thenewswheel.com mentions, “The problem with classic car investment is that not all models are equal. Some cars appreciate far more than others, so you need to know your cars before you snap up an old classic at auction. Vehicles associated with movies or celebrities are worth more. For example, the James Bond 007 connection has boosted the value of Aston Martin DB7s. Lotus Elans are also a smart buy, thanks to the Avengers connection. Any classic car associated with Steve McQueen is worth a mint, with his Ferrari 275 GTB fetching £6 million (over $7.8 million in U.S. dollars) at auction in 2014.” Paying attention to trends based on popular films is a sure way to determine which vehicles will hold their value for years to come. Additionally, rare and scarce cars are almost always worth more than the average ‘classic’. Consider how many units of a particular model were created and how many are estimated to exist today.
Risky Business
The definition of a classic vehicle tends to be pretty general. Because there are so many factors that go into determining value, the market for classic cars can be incredibly risky. It involves a bit of gambling. Consumers and experts have no way of knowing which vehicles will hold the most value in the next thirty years. Therefore, there is a lot of guessing that goes on. If you’re looking to invest your money in a more stable market, this may not be the place for your extra dough.
Ultimately, it can be hard to decide whether a classic vehicle is a worthy investment. Consider your investing goals, passion for cars and your disposable income (for repairs, maintenance, storage, etc) before you make a commitment.
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