x Abu Dhabi, UAEFriday 28 July 2017

Classic cars can be anything but a money sink

Investment has become something of a dirty word in recent times, but put that cash into the right classic car, and you could be looking at some rewarding ownership opportunities.

The auction house Gooding & Company set two world records in March with the $2.75 million (Dh10.1m) sale of a 1931 Voisin Mylord Demi-Berline (above) and the $1.705m sale of a 1961 Porsche RS61. Pawel Litwinski / Gooding & Company
The auction house Gooding & Company set two world records in March with the $2.75 million (Dh10.1m) sale of a 1931 Voisin Mylord Demi-Berline (above) and the $1.705m sale of a 1961 Porsche RS61. Pawel Litwinski / Gooding & Company

Investment has become something of a dirty word in recent times, but take that cash from under the mattress and put it into the right classic car, and you could be looking at some rewarding ownership opportunities.

I am, by nature, a hoarder. Every now and then I have to discipline myself to clear out all the detritus I've managed to collect; old magazines, brochures, receipts and memorabilia. But some things are sacrosanct, much to the chagrin of Mrs H. There's no way I'll ever get rid of the car magazines I collected when I was growing up, often a decade before I was legally entitled to drive.

Last weekend I purged my cupboards of all unnecessary junk - always a therapeutic exercise. But I took longer than is normally the case because I was distracted from the task in hand by opening up some of my old magazines and scanning some of the classified advertisements within. And what I found was startling.

Let's take an issue of the wonderful Supercar Classics magazine from 1984. Beneath the closing words of a feature on Lord Brocket's collection of classic Ferraris (in 1996 he was sentenced to five years in prison for insurance fraud with the very same cars), is a half-page advertisement for a dealer in Yorkshire, England. What caught my eye was a 12-year-old Ferrari Dino. "A rare opportunity to acquire probably the finest 246 on offer," it said. The asking price was £18,250 (approximately Dh260,000 in today's money), so hardly loose change. However, a feature on the Dino published in the same title in March 1989 - just five years later - mentioned that the going price for a really good one was, wait for it, £100,000. That equates to about Dh1.2 million today.

In other words, the market for interesting classic cars had rocketed skywards. That diminutive Ferrari had appreciated in value by more than 400 per cent in five years and, by the late 1980s, even ropey examples were changing hands for huge prices. It was nuts, and enthusiasts felt robbed by investors who viewed classic cars as nothing more than four-wheeled profit machines. Anyone who had saved for years to buy the car of their dreams suddenly found themselves unable to afford them. Of course, like the property boom in more recent times, this situation could not last and, when recession hit in 1990, those greedy opportunists found themselves severely short-changed.

Why am I telling you this in 2012? Well, certain cars appear to be nothing short of blue chip investments these days and it may be time for me to act before it's too late. I may finally be in a position to drop a hefty sum of cash on the right classic, one I'd cherish, use occasionally and eventually sell when the time is right. What should I be looking at?

Certain brands will forever be collectible but you need to be careful about the model you go for. Rarity is always good, so the lower the build number the better. Sticking with Ferrari, one model I've always lusted after is the exquisite 308, as well as its 328 successor. As close to automotive sculpture as is possible, almost 20,000 were sold between 1975 and 1989, so they're fairly common. As a result, values have been stagnant over the years and Dh230,000 will still bag you a pristine example. Tempting, but as an investment not the soundest choice. Far better to go for the almost-as-gorgeous V12 Boxer. With lower production numbers (to the tune of one twentieth), undoubtedly the Boxer's time is nigh. Right now you can procure a mint example for Dh460,000 but the market is waking up and soon they'll be out of reach for all but the wealthiest car collectors.

It's a similar tale for the legendary Porsche 930. More commonly known as the early 911 Turbo, five years ago you could have bought a stunner for Dh150,000. Now you'd have to dig much deeper as prices have doubled, while that Dh150,000 could buy a modern, used 996 Turbo. Technically light-years ahead of the 930, faster and safer, it's just too common for its own good and frankly represents the supercar bargain of the decade. But the 930's star is in the ascendant and I fear I will have missed the boat with that one by the time I'm sufficiently flush.

With the financial world in its current state, you'd be better off keeping your hard-earned under your mattress than in a bank account, and the same could be said for property and shares in most markets. So the right classic car could be the soundest investment you'll make this side of an economic upturn, and the beauty of this line of reasoning resides in the fact that the car market knows no international boundaries. If you have the right model for sale, its next owner may well be based on the other side of the world.

John Hawkins is the garrulous boss of Specialist Cars of Malton in the United Kingdom; the company consistently has a mouth-watering selection of classic Porsches on offer and its customer base is hugely varied. "The early air-cooled Porsches are always a safe bet," he says, "especially anything that was produced in limited numbers, like RS models."

He says there's huge interest and demand for rare Porsches in Southeast Asia. "Thailand, Hong Kong, everywhere. They're snapping up what they deem to be 'real' Porsches. For instance, we recently sold five 964 RSs to Asian customers, one of which went for £120,000 [Dh691,805]." Five years ago, half that amount would have netted one of the very best and Hawkins agrees that the famed 930 represents a sound investment, even now that prices have doubled. "When Porsche started building water-cooled cars, the fate of the earlier models was sealed and they'll only ever go up in value."

But what does he think will happen to the ubiquitous modern Porsches? "There's no way we'll ever see Cayennes or the like increase in price," he sighs. "In fact, I paid £6,000 [Dh34,600] for one a couple of weeks ago. There's just too many of them but, when it comes to modern Porsches, I can see values of limited production models heading north, like the 996 GT3 RS. We recently sold a 4.0L GT3 RS for £200,000 [Dh1.153m] to a customer in Hong Kong, which is almost twice its new price."

It isn't just European prestige brands that are seeing a resurgence, either. Just try finding a 1960s Mustang Fastback - you'll be looking at huge prices, even for sub-par specimens. American muscle cars, in general, are becoming more and more expensive. There's a good reason for this, too. There are plenty of people who were kids when these cars were movie stars and, now that they're old enough and solvent enough, buying and running them is a way of keeping the past present. Never underestimate the power of nostalgia when it comes to the value of automobiles.

It isn't just association with fond memories that affects a classic car's value, mind. Certain marques and models were much maligned when new, suffering poor press, reputations tarnished because of new and unproved technologies or dubious specifications. Yet time is a great healer and, given enough of it, people's perceptions and preconceived ideas can change, sometimes reverse entirely.

Take the Jaguar XJ220 supercar as an example. When it was launched in 1992, it was viewed by almost everyone as a letdown. With a specification that bore scant resemblance to that promised by the manufacturer when deposits were initially being taken, along with a scandalous price increase, some customers went as far as cancelling their orders and the car, named after its alleged top speed of 220mph (354kph), became a legend for all the wrong reasons. Yet a good friend of mine has just bought one in the UK with the sole intention of enjoying it for a while before selling it for more than he bought it for.

The person in question recently came into some money he wasn't going to miss and has hankered after the XJ220 since he was a boy. That he now owns one in perfect condition is, without a word of exaggeration, a dream come true. But why now? He explained that, like me, he's been watching certain cars go up in value and was fed up of missing out. With the XJ220's 20th anniversary being given increasing coverage in the motoring press, interest in the model was gathering pace and, due to the low build numbers (just 281), its value could only go one way: up.

I admire this course of action. He's fulfilled a lifelong ambition by purchasing a car that makes him smile. He's using it and enjoying it and, when the time is right, he'll find a new home for it. Yet, unlike speculators in other forms of investment, I know he's weak enough to throw his eventual profits at another mad car. It is, as we both admit, a disease without a known cure.

Now and again I see the news headlines include stories about rare and fabled classic cars. Rare models and those with distinguished racing histories often go under the hammer for prices that read like telephone numbers. They're collected by the world's wealthiest as though they were pieces of art or sculpture. Which, of course, they are. I know full well that, unlike the fortunate few, I'll never be able to drop Dh90 million on a Ferrari 250 GTO or Bugatti Royale. But there's a chance that I'll be able to get in on the act in a much smaller way with a classic that means something to me personally, so long as I'm careful about the model and which example I end up choosing.

So, as car auctions the world over are continuing to set sales price records, I need to act fast. Maybe, just maybe, there'll be a Ferrari Boxer, a Jaguar XJ220 or a Porsche 930 sat in my parking space within a couple of years. The list of potential purchases is practically endless as people of my generation find themselves drawn towards the cars that used to adorn their bedroom walls.

While it goes against the grain to view these precious cars purely as investment material, at least when it's time to sell, I'll have had the pleasure of actually owning, and occasionally driving, one of my alltime favourites. With the tidy profit I hope to make, I think an early Ferrari 328 could be bought without costing me a penny.

I just need to think of a way to broach the whole "forget buying that house, I'm getting a Ferrari" scenario with Mrs H.