Classic cars also make the rich richer and the poor poorer ....
09/06/2015
More and more classic cars are becoming so-called "assets" in a portfolio and, in an age of stumbling stock markets and volatile exchange rates, some people are wondering whether they would be better off investing their money in an old car instead of in shares or gold.
It is easy to forget that an old car also generates expenses and costs that you don't immediately think about. For example, it needs to be kept safe and dry, protected against damage with insurance, constantly maintained and moved from time to time. The authorities would like to inspect the car from time to time and, depending on its age, it may also have to pass emissions tests. The tires have to be replaced from time to time and and and ...
This quickly adds up to annual costs in the order of Euro/CHF 2000 to 5000 (or more) per year and it takes a car of quite a caliber whose value increases more than this amount on an annual basis.
Of course there are exceptions, but the inexpensive classic cars are very rare. If you buy an Alfa Romeo Fastback Spider from 1980, for example, you can hardly expect an annual increase in value of over 2000 Eur/CHF. The same applies to an Opel Rekord, a Peugeot 404, Ponton-Mercedes or a VW Karmann Ghia. Even cars in the hundred-thousand-euro class are rarely really good investments in purely objective terms when the full costs of value retention are taken into account. And as I said, there are exceptions, but as always in both directions.
It is certainly easier in the upper price categories, i.e. when it comes to several hundred thousand. This is because the maintenance costs (apart from restoration projects) are less of an issue and, with rising valuations, you can actually become a little richer if you were already rich enough to be able to buy such an expensive classic.
However, some people are granted the privilege of acquiring a newly valuable classic at a reasonable price. But these are the exceptions that prove the rule ...
Further thoughts on investing in classic cars can be found in our dedicated topic channel.
