Wealth

CLAS­SIC CARS AREN’T JUST SEX­IER THAN STOCKS; THEY’RE THE UL­TI­MATE HIGH-PER­FOR­MANCE IN­VEST­MENT, WRITES Adam Hay-nicholls

Hong Kong Tatler - - Con­tents -

Clas­sic cars aren’t just sex­ier than stocks; they’re the ul­ti­mate in­vest­ment

On au­gust 14, un­der a mar­quee on a Cal­i­for­nia golf course, the crème de la crème of clas­sic car en­thu­si­asts gath­ered from around the world to wit­ness the sale of a scar­let 1962 Fer­rari 250 GTO Ber­linetta—one of only 39 ever built. For a cou­ple of decades, the GTO, with an orig­i­nal sticker price of US$18,000, has been the holy grail of mul­ti­mil­lion­aire car col­lec­tors such as fash­ion mogul Ralph Lau­ren, Pink Floyd drum­mer Nick Ma­son and Walmart heir Rob Wal­ton. As ex­am­ples rarely make an ap­pear­ance on the mar­ket, the ex­cite­ment and an­tic­i­pa­tion in the mar­quee was pos­i­tively buzzing. Robert Brooks of Bon­hams started tak­ing bids in US$1 mil­lion in­cre­ments. At US$34M, bids started to ease off. The auc­tion­eer scanned faces in the crowd and asked point­edly, “When is the next time a GTO will be at auc­tion—and will the next one be any less?” Even­tu­ally, the hammer came down at US$38.1M, a new auc­tion record for a clas­sic car. The iden­tity of the bid­der was not dis­closed.

That’s a whole lot of money for 880kg of hand-beaten metal, a 300bhp V12 en­gine and some lov­ingly re­stored leather. But this—or an­other Fer­rari, Bu­gatti, Porsche or Mercedes-benz—could be a safer in­vest­ment than stocks, gold or prop­erty.

For the big­gest re­turns at present, bet on red and sporty. Ac­cord­ing to the His­toric Au­to­mo­bile Group, which tracks and pub­lishes prices, the cost of top-end clas­sics

from Fer­rari rose 33.6 per cent in the past 12 months (com­pared to last year’s star­tling 55 per cent) and Porsche saw prices for clas­sics up 18.5 per cent in the year ended July 2014.

Tra­di­tion­ally, the sporti­est mod­els have been pur­chased out of a yearn­ing for ro­mance and adrenalin. But the sharp and steady in­crease in prices has in­evitably led to a dif­fer­ent clien­tele at­tend­ing auc­tions—some more ob­sessed with re­turn on in­vest­ment than the open road. For ex­am­ple, the record­break­ing Fer­rari 250 GTO sold by Bon­hams in Au­gust had been owned by one wealthy Ital­ian scion for five decades—fab­rizio Vi­o­lati’s es­tate sold it and 72 other cars to an in­vestor group, which in turn put the GTO up for auc­tion two months later. A num­ber of pri­vate eq­uity firms have also been es­tab­lished in re­cent years to in­vest specif­i­cally in clas­sic cars. PHD Eq­uity Part­ners, for ex­am­ple, has launched a fund along­side auc­tion­eers H&H Clas­sics to ac­quire ve­hi­cles worth more than US$500,000; in­vestors are al­lowed to share the cars at glam­orous au­to­mo­tive events and on spe­cial driv­ing days.

Aside from the in­vest­ment po­ten­tial, you can’t ig­nore the fun fac­tor. When you re­ceived your first pay cheque, did you lust af­ter stocks and bonds? Of course not; you dreamed of the day you would get be­hind the wheel of a Maserati. For many in­vestors, part of the ap­peal of own­ing a clas­sic car is join­ing pres­ti­gious car clubs and at­tend­ing ral­lies around the world, such as Peb­ble Beach in Cal­i­for­nia, Mille Miglia in Italy and Good­wood Re­vival in Eng­land. Own­er­ship al­lows you to live out your dreams—and make a mint while do­ing it.

Alain Li, the Hong Kong-based Asia-pa­cific CEO of Richemont, bought his first clas­sic soon af­ter he started his first job in Lon­don. It was an Alfa Romeo Duetto Spi­der. Now his col­lec­tion in­cludes a 1955 Mercedes-benz 300SL, a brace of iconic Jaguars and five sig­nif­i­cant Fer­raris from the 1970s and ’80s. “I have never bought a car as an in­vest­ment,” he says. “How­ever, I’ve been for­tu­nate that, in the last few years, the value of the cars has risen and more than paid for their up­keep.”

For many col­lec­tors, a per­sonal con­nec­tion is key. “I had wanted a Fer­rari Dino since I was 12, in sil­ver with a black in­te­rior,” re­calls Li. “I stum­bled upon one ex­actly like that in Mi­lan. It had just 8,000 miles on the clock and I bought it from its sec­ond owner. It had all the orig­i­nal books, tools, keys—the owner had even kept ev­ery spark­plug that had been re­placed.” But he ad­vises prospec­tive buy­ers to get cars thor­oughly checked first. “The Duetto was a good les­son in that re­spect. It was fine me­chan­i­cally, but the body pan­els were stuffed with filler. Ba­si­cally it was a rust bucket. I had it put right and en­joyed it for the sum­mer, but since then I make sure ev­ery car I buy has been in­spected by a spe­cial­ist.”

Peter Wall­man, a clas­sic-car ex­pert for RM Auc­tions, ex­plains what makes one ve­hi­cle more de­sir­able than an­other. “It’s the mar­que, rar­ity, us­abil­ity, orig­i­nal­ity, prove­nance and con­di­tion. There’s a cer­tain amount of fash­ion in­volved. Most cus­tomers are now of an age where cars from the 1950s, ’60s and ’70s were what they lusted af­ter when they were young—and now they can af­ford them.” He con­tin­ues, “Fer­raris will never go out of style. As a brand, it still main­tains its author­ity and sex ap­peal like the early days. It has the ro­mance of it be­ing Ital­ian and the pas­sion that in­vokes, and the fact that Fer­rari still com­petes in For­mula One is sig­nif­i­cant. To this day they still build the best su­per­cars, in very low num­bers.”

Should the car have had a fa­mous owner be­hind the wheel, chances are it’s go­ing to bal­loon in value—par­tic­u­larly if it rested in the hands of ac­tor and car col­lec­tor Steve Mcqueen. Three years ago, RM sold the 1970 Porsche 911S that Mcqueen drove in the open­ing scene of the 1971 film Le Mans for US$1.38M, though the book value for a stan­dard model at the time was US$55,000. One of the cars at Bon­hams this Au­gust was the movie star’s 1967 Fer­rari 275 GTB/4, which sold for US$10.2M; sim­i­lar cars unas­so­ci­ated with celebri­ties have gone for about US$3.7M.

The fact Mcqueen took de­liv­ery of the lat­ter car on the set of Bul­litt adds to its ca­chet. Road & Track magazine con­trib­u­tor Colin Comer ex­plains that a car needs a story as well as a big name to pump up the price. “Elvis Pres­ley owned hun­dreds of cars, so it doesn’t re­ally mat­ter if he bought a 1975 Cadil­lac and gave it to his man­ager. But take Elvis’s yel­low 1971 De To­maso Pan­tera; it was a no­to­ri­ously un­re­li­able car and wouldn’t start one day, so he took a pis­tol and shot it full of holes. That in­creased the value quite a bit.”

Own­ing a clas­sic car isn’t an in­vest­ment you sit on—it’s one you sit in. While you’re hold­ing out for the best price, you can hold on through some high-speed turns. Surely you’re get­ting the best of both worlds.

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