Geared for life
On the face of it, the idea of a car as an investment or appreciating asset just seems plain foolhardy. The average c a r depreciates at a round 25%/year. New supercars depreciate at around 10%/year. A few, depending on type and numbers produced, start appreciating almost at the outset. These however, are not cars the average man in the street can afford. True investment cars that appreciate in value are classic, vintage and veteran cars* and those that are scarce due to their age or production numbers. For the lucky few, it is often not about price; it’s more about passion and nostalgia. It also has quite a lot to do with image. For most of us, with little cash to spare, it’s about return on investment.
Ironically, during an era of global recession, the values of classic cars have risen and in some categories, outperformed the reliable gold market. The HAGI index, which measures the performance of collectable classic cars, outperformed gold last year by 4%. The asset class even outperformed the broader S& P500 with an annual growth rate of around 12% compared to gold’s 2% growth rate over a 30-year period. Something to think about, especially if you have some spare change lying around. The catch here though is that the HAGI tracks historically exceptional cars and supercars (See Finweek’s cover story on supercars dated 13 December). So, unless you are Warren Buffett (who famously turned down a classic car collection to his later regret) or his ilk who are more concerned with passion than with price, you are unlikely to be able to afford the majority of the cars currently measured on the HAGI.
But here’s the thing: Forty years on, some of the cars manufactured in the Seventies are now becoming prized collectibles. And because they are not yet as rare as those manufactured earlier, the costs of purchasing them are still relatively affordable. A modern classic* is an excellent starting point for would-be collectors or investors, and a 40-year old car could end up being an appreciating rather than a depreciating asset.
In 1972 less than R2 000 could buy you a “People’s car”, the
VW Beetle. The Beetle was the most produced (21.5m) and longestrunning single-design vehicle worldwide. Today that same ’72 vehicle – depending on condition and engine – could cost between R15 000 and R29 000. Given that many of t hese Beetles have been, or st i l l are,
daily- use cars, that’s a solid return on investment. The Ford Escort 1600 Sport falls in a similar category as a daily-use car. The 1600 Sport was part of a family of Fords made famous by “Supervan” Sarel van der Merwe who drove to five of his record 11 wins as SA Rally Driver Champion in the BDA Escort. The 1600 Sport in the late Seventies cost a mere R4 700. Now that same car could net up to R80 000.
The Sixties and Seventies produced some truly iconic and even cultish cars, some of which are still seen on the roads today.. The ultimate hippie van, the VW Kombi, affectionately named the “Volksie Bus” in South Africa, was a worldwide symbol of this era. In 1956, being the first year of production in SA, a Kombi cost R1 348. Some of these early production vehicles can command prices of up to R250 000 with a mid-Seventies Kombi fetching prices of around R75 000. The twodoor
Karmann Ghia, based largely on Beetle mechanics, was Volkswagen’s answer to the two-seater sports car, and today an older Sixties model has a value of around R100 000.
Among the young guns, the car of choice was the Alfa. Top of the list was the GTV or GT Junior, a small two-door coupe with a rare – for that era – five-speed gearbox. Alfa
Alfa GT Junior