The Daily Telegraph - Saturday - Money
Car boom shows no signs of braking
Returns of 40pc have driven vintage motors ahead of rival investments but will new government emissions rules cause a crash? By Will Kirkman
Classic cars are a passion project for many enthusiasts, but investors have found they can offer better returns than traditional assets. Bought at the right time and kept in good condition, classic cars can outperform property, gold or art. Research from Vanarama, a leasing firm, found the value of “affordable” classic cars, worth about £ 20,000, nearly doubled in the decade to 2020.
Phil Mires, 26, from Surrey, a classic car enthusiast and dealer, said: “If you pick a car that’s in good condition to begin with, you’re unlikely to lose money. Prices are generally only heading in one direction, providing the vehicles are well maintained.”
Investors do not need to wait a decade to see strong returns if they pick the right vehicle. For example, a 1986-91 Renault 5 GT Turbo increased in value by about 39pc in the past year, rising from £9,300 to £12,900 today, according to Lease Car, a leasing firm.
Meanwhile, the value of a 195967 Jaguar Mark II increased by about 28pc over the same period, with prices jumping from £21,700 to £27,700.
With the reopening of auctions,
‘For well-maintained classic cars, prices are only heading in one direction’
the classic car market in Britain has boomed, according to Hagerty, an insurer. In the first six months of the year, more than three quarters (77pc) of classic cars offered at auction were sold, a 6.1 percentage point rise from 2020. The average sale price also climbed, from £ 38,984 to £45,648. More than a third of the cars that sold did so above their top estimate, compared with 18pc in 2020.
However it’s not always a smooth drive. Unlike other investments, classic cars require a level of ongoing expenditure to ensure they are properly maintained.
This cost can quickly add up if vehicles are regularly driven. Parts are no longer produced for older vehicles, so can be difficult and expensive to acquire, especially for non-European vehicles.
The Federation of British Historic Vehicle Clubs found that owners spent £1,489 per vehicle each year, though this figure is likely to be significantly lower for newer models.
Mr Mires said that for a vehicle to maintain or increase its value, it was imperative to store it correctly.
“It needs to be stored in a heated garage where it is not open to the elements and in no danger of rusting,” he said. “I know some people who put classic cars in shipping containers, which is a cheap alternative, but they let all the condensation in and destroy the car. You must invest in the correct place to store it.”
Companies such as Historit and Storacar offer insured storage from £120 a month. Mr Mires said these costs should always be budgeted for before a purchase is made.
There are bumps in the road for investors. Last year, the Government announced a ban on the sale of new petrol and diesel cars from 2030. This will only affect new vehicles, so second-hand cars, including classic cars, will still be sellable.
However, the value of petrol and diesel cars is likely to fall, although Mr Mires said this market would be insulated as they are rarely driven. riven.
“I can’t see the ban affecting ecting the market. Classic cars are, in essence, ssence, collector’s items in their own right. ight. They’re not going to be used as s a daily runaround,” he said.
There are other ways ys to earn money from classic sic cars besides selling them, m, such as renting them out ut for weddings and events. ts. This does not require a specific licence unless the he vehicle seats more than han eight people, but will ll require additional insurrance. This usually falls ls under “hire and reward” d” rules, which can usually be added to an existing policy. cy.
Hiring the car out for or films or photo shoots is also an option, though this his may not be covered by hire and reward policies but can fall on the film or photography company’s public liability insurance.
For those looking to invest in a classic car, Mr Mires said it was essential to always check there was documentation to prove the vehicle’s history, and ideally to purchase cars that have passed their MoT. He added: “If you are not mechanically minded, get a pre-purchase inspection via the AA or RAC.”