The vintage car market has grown steadily and is a great place to park excess liquidity. It is also an environment in which one vintage vehicle can appreciate to stratospheric heights while another languishes in a garage. The move to purchase a classic car requires serious homework, deep insight and local knowledge. The same model and year of car can have widely differing values, and finding the right car and buyer for the idiosyncrasies of the individual vehicles can make the difference.
It’s no secret that many people have taken to investing in classic cars as a fun way to grow their personal wealth. And while we’ve seen values of particular models rise dramatically in recent years, the market in general has surged substantially. As recently declared in a Financial Review article, prices for rare classic cars are skyrocketing “faster than gold.” This has led some to believe that certain classic vehicles are a more stable investment than gold, stocks, cryptocurrency, real estate, etc.
This is an issue we’ve covered many times before. While some wondered if the COVID-19 pandemic would kill car collecting as a hobby, we saw the exact opposite happen. It turns out when you take away swanky vacations and a lot of other activities, forcing people to stay home, they turn to collecting classic cars in a big way.
That intensified interest in collectible vehicles has only fueled value increases. As the market goes, there’s a very limited supply of these old cars, so when demand for them rises, prices go in the same direction.
Of course, the supply of gold, vintage wines, high-end real estate, and other popular investments are also limited. However, there’s another perk to collecting classic cars: they’re far more entertaining to own.
For many, collecting classic cars isn’t just about the money. Anyone who’s a gearhead and even a fair amount of people who aren’t understand that having some cool rides in your garage is more entertaining than stocking up on gold bullion or bottles of wine. After all, you can take your investments out on a fun weekend cruise and participate in car shows, where you can meet like-minded people.
If you're looking to buy a classic car, you can expect to pay much less than $53 million, but you'll still need to research the market thoroughly. Things that affect the price, in addition to how rare the vehicle is, include:
- Original equipment/condition: In classic cars, the more original, the better. This means seats, carpeting, gearshifts, pedals and other features should all be from the car's original manufacturer. Of course, the better the condition is of all these original components, the more valuable the car can be.
- Vehicle Mileage: Just as with any used car, lower mileage is better - but that's not necessarily the biggest factor in classic car pricing. A low-mileage car that hasn't been well cared for, or that doesn't have original equipment, may not be worth as much as one with higher mileage that meets the other two criteria.
- Car Color: Color affects the value of a classic car, particularly on muscle cars. The difference between a red muscle car and a brown one can be significant.
- Manufacturer: Certain brands demand more dollars, regardless of their era. Jaguar, Ferrari, Rolls Royce and Porsche are among the brands on which you can expect to spend more money. American-made classics that are among the most popular purchases are Pontiac Firebirds, Ford Mustangs and Chevrolet Corvettes.
- Age: In addition to all the factors above age plays a part in the value of any car. Typically, the older the car is, the higher the price is.
Finding the right classic car price
Want a classic car? Consider that a classic 1965 Mustang can be found for around $20,000, and many other collector cars are available in the $20,000 to $30,000 range.
Research current buyer’s guides - many of which you can find online - to ensure you know the going rates. Be sure you're working with current information and, when you've found one that appears to meet your criteria, always have the car professionally appraised. Just as you'd have a mechanic check out a used car before you buy from a private seller, having a certified appraiser evaluate your classic car will ensure that you're getting your investment money’s worth.
Counting the total classic car cost
Finally, before you make the transaction, factor in the other costs of owning a classic car. How much maintenance will it require, and do you have someone who can work on and has knowledge of your specific make and model? What will be the cost for registration, and does your state have any limitations on the use of cars registered as historic or antique? Does it need restoration work, and if so, how much will that cost?
A wonderful example of a micromarket at its height is that of the vintage Porsches. More enthusiast-oriented from the day they were driven off the showroom floor, and aimed at more particular drivers than the American cars, the vintage market for the classics from Stuttgart were the dream cars of a higher level. These cars represented a shift, having smaller engines located in the back and were built largely in accordance with the vision of one man. They were small, tight, and required muscles to drive and fortitude to drive fast.
The growth market used to be confined to the early 356s and the right years and models of the iconic 911. The present market is so overheated that demand is across the board.What they call the “impact-bumper cars” were so named because they came at a time when American law demanded that cars handle five miles an hour (or so) hits to the front and rear with no damage, mainly for repair-cost issues, it was argued.
They had long ugly extensions front and back that would cushion any low speed impact, and they destroyed the pure lines of the 911s. The boys and girls who grew up in that period now look at these cars with fond memories, so much so that they are taking the more sculpted 911s and adding these lumps to them.
The market for vintage Porsches has very clear models that command the highest values, but because they are in such short supply, they are almost unattainable. As such, the market for “lesser” models has increased more than it should have because those models are all that can be had.
Vintage cars are gorgeous examples of art, craftsmanship and engineering and, while they have every right to be in museums, they are best enjoyed on the road or track, putting you in a time warp of sorts as you drive in a cocoon of old-world soul through a modern landscape.
If you look at these vehicles and see that they are well-appreciated, you ask; “What is next?”. For this, you need to look not just at the significance of the cars and the industry, but also of the world. There are a lot more Japanese carsout there than American ones.
They have always had a following, and the people that grew up on them are reaching their levels of buying power timed with their need for nostalgia. The first important cars, such as the Datsun Z and the Mazda RX7 and the early sporting attempts by Honda and Toyota, are already collectors items in Japan, and the Japanese nostalgic car culture is growing.
They are attainable like the American cars, they are reliable like the Porsches, and the earlier models have unique design cues. They are timestamps of the era of Japanese dominance, and are undervalued and less expensive to restore and maintain. Just as the businesses popped up to take advantage of the other bubbles, they are beginning to appear now for these cars.
