Advertisement

Classic-car sales stall

Chris Carter looks at what has gone wrong as the classic-car market hits the skids.

864-car-634
The Aston Martin DBR1: yours for $22.5m

Tim Scott ©2017 Courtesy of RM Sotheby's

Classic cars have left other "passion plays", such as wine, art and stamps, in the dust over the past decade. Since 2005, their value has risen by 332%, according to the Coutts Passion index. The Knight Frank Luxury index puts the growth even higher, at 362% since 2007. Coins came a distant second for Coutts, having risen in value by 225%, while wine took Knight Frank's silver medal with 231% growth.

Advertisement - Article continues below

However, both luxury indices agree on one crucial aspect: classic cars have now hit a bump in the road. In retrospect, the market began to sputter in 2015. Last year, the value of the average classic car fell by 10.4%, according to Coutts. Knight Frank's assessment was more generous, recording 2% growth, but even this was much lower than in 2015. So what's going on?

First of all, it's important to note that, like all collectable assets, the classic-car market is highly illiquid. The cars in the index sell relatively rarely and, unlike a Tesco share for example, every one is different and you can never really be sure of their value until a sale is in the bag.

For example, the market appeared in fine fettle as recently as August, when a 1956 Aston Martin DBR1 became the most expensive British car ever sold at auction, fetching $22.5m. And the record for the most expensive car overall was only set three years ago, when a 1962 Ferrari 250 GTO Berlinetta sold for an equally headline-grabbing $38.1m. Yet, in a wider test of the market's health this month, half of the 71 lots at a Sotheby's classic-car auction in Battersea, London, failed to find buyers.

Advertisement - Article continues below
Advertisement
Advertisement - Article continues below

"It's a change from the grease-monkey generation to the high-tech generation The courtship and love affair with old cars is dying," Philip Warner of the Car and Classic website tells Graeme Paton in The Times. The other culprit, notes Paton, is what drove the market higher in the first place: "the increase in demand for collectables is believed to have been driven by the economic slump, as the super-rich pumped their millions into investments that would offer the greatest chance of huge returns".

With the wider economy now healthier, investors are looking elsewhere, as Dietrich Hatlapa of investment researcher Historic Automobile Group International tells car magazine Evo: "Those who were in it just for the money have moved on. The market is now more in the hands of the collectors and specialists, which I think is good news for the real enthusiast."

But not everyone thinks the market has entirely run out of fuel. After "a long period of sustained growth", as Mohammad Kamal Syed, Coutts' managing director, tells Paton, the market is probably "taking a bit of a breather". Just don't expect it to hit the fast lane anytime soon.

Tomorrow's classics

If you don't have a couple of million lying around to spend on a classic car, don't despair. Instead, you could set your eye on a potential future classic. Buy the right car today (it doesn't have to be a Ferrari), look after it properly, and in time, you could make yourself a tidy sum, says Telegraph.co.uk. The website looked at the 20 "cheap" cars most likely to appreciate in the coming years. Here are three models to keep an eye on:

Advertisement - Article continues below

"One of the most profoundly French cars of recent years, the Citroen C6, is one of our favourites," says Telegraph.co.uk. "It's pretty rare we think there are just over 600 on British roads but therein lies its potential as a future classic."

Price: £3,000 to £15,000

Just 500 Trophy Renault Sport Clio 182s were built for the UK market. The special edition model is also regarded as one of the "greatest hot hatches of all time", which means there are "two good reasonswhy values should soar in years to come".

Price: £4,000 to £6,000

The Japanese Lexus LS400 was "a wake-up call" to European manufacturers when it was released, matching the "big German flagships for comfort and refinement". The first two generations of the LS span the 1990s, "so you should be able to find one that suits your budget".

Price: £1,000 to £8,000

Check out MoneyWeek's stablemate, Buyacar.co.uk, for the latest prices of used cars.

Auctions

Going

Advertisement - Article continues below

An epic auction of Audrey Hepburn's personal effects was held on Wednesday at Christie's in London, alongside an online sale, which runs until 3 October. Among the 500 lots put up for sale by the late actress's family were Hepburn's copy of the script to the 1961 classic Breakfast at Tiffany's (in which she starred), valued at between £60,000 and £90,000, and a Givenchy black cocktail dress from the 1963 film Charade, with an estimate of between £50,000 and £80,000.

Gone

Actress Vivien Leigh's belongings went under the hammer on Tuesday. As part of the Sotheby's sale in London, a painting of roses by Winston Churchill, gifted by the former prime minister in 1951, fetched £638,750. Other lots on offer included the Gone with the Wind star's presentation copy of the 1939 screenplay, which sold for £58,750, and a diamond bow brooch, which raised £46,250. In total, the sale made £2,243,617.

Advertisement
Advertisement

Recommended

Visit/514982/alternative-investments-three-hidden-gems-beyond-stocks-and-bonds
Share tips

Alternative investments: three hidden gems beyond stocks and bonds

Alternative investments such as private equity or commodities are one of the oldest forms of investment, says professional investor Alex Barr. Here. h…
16 Sep 2019
Visit/investments/alternative-investments/601393/new-ways-to-profit-from-a-love-of-whisky
Alternative investments

New ways to profit from a love of whisky

Chris Carter looks at the latest online developments for whisky lovers.
29 May 2020
Visit/investments/alternative-investments/601392/wine-lovers-sniff-opportunity-online
Alternative investments

Wine-lovers sniff opportunity online

The lockdown has seen wine lovers rush online, says Chris Carter.
29 May 2020
Visit/investments/alternative-investments/601381/vintage-champagne-an-effervescent-asset
Advertisement Feature

Vintage champagne: an effervescent asset

SPONSORED CONTENT – Amidst the financial stresses and strains of various global financial crises, canny investors have identified vintage champagne as…
22 May 2020

Most Popular

Visit/investments/stockmarkets/601460/disease-rioting-and-mass-unemployment-so-why-are-markets-soaring
Stockmarkets

Disease, rioting and mass unemployment – so why are markets soaring?

Despite some pretty strong headwinds in the last year, America’s S&P 500 stock index is close to all-time highs. John Stepek explains why markets seem…
4 Jun 2020
Visit/investments/commodities/gold/601444/these-seven-charts-show-exactly-why-you-must-own-gold-today
Gold

These seven charts show exactly why you must own gold today

Covid-19 is accelerating many trends that were already in existence. The rising gold price is one such trend. These seven charts, says Dominic Frisby,…
3 Jun 2020
Visit/economy/uk-economy/601426/stealth-debt-jubilees-are-here-and-thats-a-good-thing
UK Economy

“Stealth” debt jubilees are here – and that’s a very good thing

We may not have had a full-scale debt jubilee, but many Covid relief measures quietly amount to “micro-jubilees”. That’s something to celebrate, says …
1 Jun 2020