For those with even a passing knowledge of automobiles, classic cars conjure up images of sexy, curvy Ferraris, or perhaps an Aston Martin DB5 from a James Bond film. But a 1987 Ford Sierra, really? Yes, a rare Cosworth RS500 model sold at auction early last year in Coventry for £590,000.
One has to wonder whether the new owner will see that price again. Most Sierra RS 500 Cosworth models have gone under the hammer at less than a fifth of that value.
And there you have it: the erratic, emotional nature of the classic car market — one that, it must be said, can be tricky for the average buyer to steer through.
To be fair, any auction can lead to silly transaction prices. In fact, the values of classic cars — the truly collectable models — tend not to vary so radically in a given year. But, as with any collectable asset, a car’s unique qualities and its scarcity can make a huge difference not only to the price but also whether one can sell it, if desired. Plus not every collector wants to trade in his or her car, happily driving it now and again.
This author likes a fast, pretty car as much as the next person. But digging into savings to pay perhaps £1.5mn for a Ferrari 275 GT Spyder requires a bit of thought first. Here are some guidelines of engagement.
1. Take the scenic route
Treating any collectible as an investment requires patience; returns may come slowly. Ask yourself whether you will drive this car in the future. You will have to trust some experts or veterans to provide guidance, so some research is required. Also, these are often emotional purchases, which people tend to prefer to do themselves, rather than outsourcing to others.
In July, Tertre Rouge Assets PLC, a London-listed special purpose acquisition company, decided to exit the track after failing to raise sufficient funds. Launched two years ago, it aimed to buy up classic cars and motorcycles to later sell them on profitably as an alternative asset investment option for others. Tertre Rouge had retired Formula One drivers Mika Häkkinen and David Coulthard on board as directors but clearly that did not suffice.
Car collector tastes can be fickle and definitely change over time. Middle-aged male buyers dominate the market for collectible classic cars. But demographic changes have affected prices to an extent. Demand for older models such as the Austin Healey 3000 Mk 3 and even classic Aston Martins has declined as the typical buyer ages and then disappears.
2. Do some price-trend research
Instead more buyers have a taste for popular cars of the 1970s through to the 1990s. It is not just the Ford Sierra Cosworth but other famous rally racing models such as the Subaru Impreza which, according to John Mayhead, editor of the Hagerty Price Guide, have attracted buyers in their 40s and 50s “who remember them from their teenage years.”
Hagerty began as a specialist insurance business in the US in 1984 and is now a $3.8bn company listed on the New York Stock Exchange. Mayhead’s team tracks collectible car prices based on data from classic car auction activity, dealers, and details of private sales values as reported by their willing insured clients. Its share price is up 43 per cent this year, far ahead of the broader US market.
“Looking at classic car pricing back to 1984, some have gone up a lot, the Lamborghini Miura and some Ferrari GTOs, maybe a Mercedes-Benz “Gullwing”. But only a small handful have increased [in value] faster than inflation over time,” says Mayhead.
In the four decades since 1984, the car with the greatest appreciation by far is the Lamborghini Miura produced from 1966 through 1973, considered one of the first rear engine supercars. Prices for Miuras have multiplied by over 195 times in that time, according to data from Hegarty. But a Rolls-Royce Silver Wraith, two decades older, has just tripled in value, barely keeping up with UK inflation trends.
So which cars look like good value today? Although he does not provide investment advice, he points to the small production run Porsche 911 and 997 variants. Also fast Fords such as the Focus RS and in Italy recent versions of the Alfa Romeo Giulia GTA and GTAm. He advises to “look for high performance, low production numbers, unusual specifications and wow factor.”
3. Take some counsel
Mayhead advises collectors to “buy something you really love. Also, it’s hard to make money without very good advice.”
Some collectors focus on one carmaker, even one model. Since the early 2000s, Porsche collector Simon Webb has focused on 911s. He prefers low production run models counting on low supply and sometimes a unique racing pedigree to bolster the value of his acquisitions over time. “These cars have to earn a living in terms of investment value.”
“If a race car has a history of winning races, that will increase the value considerably,” he says. “A car with race history, particularly Le Mans or Sebring, will be worth millions.” Notably among collectable manufacturers Porsche has performed relatively well. Over the past six years or so, Porsche has outrun Ferrari, Aston Martin and Jaguar, according to data from Hagerty. The latter two fell during this time.
He admits that he’s a Porsche nerd and prefers the older ones in short supply. But he would advise someone else to have a more “balanced portfolio”.
“It’s better to have different manufacturers if you really want to make money,” he says. “Then again, you will need to find multitalented experts, or a bunch of them, to check provenance.”
This last point is an important one for classic car buyers. Forgery can be a problem, requiring sometimes forensic investigations by mechanics hired for the purpose. It’s not just about checking chassis and engine numbers. Thickness of the paint can hide problems. In some cases, collectors seek out the original paintwork.
4. Beauty versus beasts
Another collector who spoke to the FT but wanted to remain private is enthralled by early 1960s Ferraris including a 250 GT Lusso. He describes himself as a “moderate petrol head, but one highly appreciative of beauty.” He seeks out “museum-grade quality, scarcity and provenance”, and stresses the importance of the last one — while “a restorer can make the difference, where’s the car from?” he says.
He counts on the enduring Italian aesthetic to protect his portfolio, as well as scarcity, but admits not all his cars may make him money. Using the lens of a snob investor, he seeks enduring quality as opposed to what is fashionable, and he does drive his favourite cars around.
These classic cars differ from the powerful roadworthy race cars which have dominated the collector’s market in recent years. “A lot of these hypercars are very low mileage, bought as investments and kept as museum pieces,” believes Peter Haynes at car auctioneers RM Sotheby’s in London. “Some go into dark storage . . . many are not driven.”
Haynes, too, feels investment-oriented buyers need to stick to the popular cars in scarce supply to play it safe. He has also noted the shift away from old favourites and he likens them to the works of Rembrandt his colleagues at Sotheby’s deal with. “The truth is, the demand isn’t what it was.” Consider that the 1960-62 Jaguar E-type fixed head coupé and the Aston Martin DB5 from 1963-65 have lost 20-30 per cent of their value in the past few years alone.
In the US, the collectible car market has a different feel, according to Rod Laws of Glenmarch, which aggregates auction price data internationally. “Some models and specifications do perform better over there, such as late model, limited production cars.” One example was the White Collection auction in Houston in December, the bulk of which were white Porsches. A special edition 2015 Porsche 918 “Weissach” Spyder with only 15 miles on the clock sold for over $3.9mn.
Away from the auction market, business remains good for classic car dealers. “The unrepeatable cars will always do well. It’s like buying a house in Cadogan Square [in Knightsbridge] — it’s not about the price but when it will come up for sale,” quips Joe Macari.
When he started in the auto business the first car he ever sold was a yellow Toyota Crown estate. He’s moved up in the world. His London showroom near Wimbledon teems with classic Ferraris, Porsches and even Formula One cars for sale. He says he has had his best year ever so far.
So too has Tom Hartley Jr. He has sold $250mn worth of cars so far this year, more than he sold in his last fiscal year to April 2023. That includes some eight-figure price transactions, including a rare 1962 Ferrari GTO.
“The market is healthy for ‘great’ cars,” says Hartley. “But at the lower price range, up to a million dollars, it’s not so good”. Though some older and particularly prewar classics have not done so well in recent years, there are exceptional ones which have enduring appeal even by car lovers under the age 45. He is currently closing a sale on another Italian, a curvy 1938 Alfa Romeo 8C 2900b Touring Spider worth around $20mn.
Regardless of all the talk about emotional attachments and aesthetic thrills, Hartley firmly believes his clients always have one eye on investment value. The biggest mistake for new collectors, he says, is “buying too many cars without discernment, then later trying to consolidate a collection. That can lead to losses. Best to have fewer cars, but better ones.”
While owning a diversified portfolio of cars can offset some of the risks of a fickle car market, there are the ancillary costs to consider. First, for those who do not have sufficient secure garages at home, paying for storage should cost around £300 monthly, reckons Haynes. But collectors can pay a multiple of that for concierge-style storage sites. Some are near airports for those who fly in to visit their collections.
Second, insurance costs will vary but one collector pays around £5,000 to cover his £3mn of secured cars. Last — but certainly not least expensive — maintenance will depend on the make and availability of parts. While a Porsche might not need more than £1,500 annually, new brakes for your Ferrari might cost £20,000. You could pay double that if you need new tyres with the service for your multimillion dollar Bugatti.
5. It’s OK just to want some fun
At the other end of the buyers’ spectrum comfortably sit classic car lovers who simply want the style of another era, not necessarily the best of the best. Different criteria may come into play, such as driveability and perhaps a modernised engine. Though in the market for an Austin Healy 3000 at an auction, Michael — a first-time classic car buyer — instead fell for a red MGA soft-top nearby. He did take his time over the purchase and spent a year discussing an approach with other classic car owners he knew.
Though he paid less than the reserve price, he recognises that this is not one for purists. Originally built in 1960, the car had a full restoration in 1990 including a more modern two-litre Rover engine. Will it hold its value? Perhaps. But what counts is fun not investment value. “It’s a talking point for passers-by,” Michael enthuses. “Fun and function is what I’ve gone for, not museum beauty.”
As the penetration of electric vehicles into the car fleet edges higher, there may come a time when all internal combustion engine cars are coveted relics. For now, that space belongs to those Ferrari GT Mussos and Sierra RS 500 Cosworths.