"THE MUSCLE CAR MARKET IS FAST BECOMING THE STRONGEST OUT OF ANY OTHER AREAS OF THE
CLASSIC CAR SECTOR."
American Muscle Cars on the Rise
The value of muscle cars between 1969 and 1971 have been going through the roof the past few years.
Cars as an alternative investment can offer tremendous profits and are one of the best alternative investments out there.
Muscle Cars’ index has long been surpassed from the likes of Ferrari, German cars, and general classic car markets. That is no longer the case as according to Hagerty’s market index, muscle cars have increased 8% over two subsequent periods.
The market remains strong and is not showing any signs of slowing down. The past four years have been promising. This isn’t currently a bubble either because that is partly due to a lot of leverage. That has yet to be seen in the market. Muscle cars are joining the ranks of pre-World War II cars and are getting high valuations.
Other Collectable Cars
Investing in collectable cars isn’t only profitable but fulfilling for many car aficionados out there. Some classic cars can be picked up for relatively affordable costs and have the potential for tremendous gains. If you have the knowledge or resources to restore a classic to its former prestige, that will come in handy in adding value to a classic.
There is also a new trend out there on catching somewhat modern cars before they become classics. A whole new generation of collectors and investors is entering this market and driving the demand up. There has been an increased interest from international investors. Foreign investors who usually did not see anything in this market have been grabbing up whatever they can, sometimes not even seeing the car in person. Just as an investment tool they view these markets as highly profitable.
Don’t get ripped off!
Hire a vehicle broker to protect you from fraud. A professional vehicle broker will make sure that the car is not misrepresented and is actually what it says it is, they will check the car’s integrity through inspections of the physical vehicle and solid documentation.
Restoration Versus Preservation
There are a lot of old beat up cars out there that have the potential to be classics. The cars may have been sitting in garages for years and be seriously deteriorated and possibly unable to even run.
The type of work involved with restoration is going to include working on the overall physical look of the car as well as working on the internals. Parts will be replaced or added onto the car without ruining the integrity of a classic.
Preservation is on the other end of the spectrum and involves housing the car in a safe place away from the elements and keeping up the appearance and internals of the car. Think of it almost like a museum piece.
Both of these avenues is going to require maintenance as well. Depending on what needs to be done maintenance can either be a large cost or a small one. All these concerns need to be factored into the investment, as it will not only cost time, but money.
Owning a classic is a rewarding experience and as the American muscle car gains more traction it will also be a solid alternative investment.
Classic cars as an investment
Savvy investors with an affinity for rare, valuable objects have made classic cars a valuable part of their portfolios. While collectors can earn big returns on such vehicles, many of them are car aficionados who find their greatest rewards come from the experience of owning and maintaining the vehicle.
If you’re considering collecting as an investment, it’s important to understand what makes a classic car.
Classic cars date back at least 15 to 25 years, but more importantly, possess some quality that makes them interesting to collect. This may include unusual designs and limited production runs. The rarer the car, the more valuable it is likely to be. Cars more than a century old fall into the separate category of antiques.
As you would for any investment, research what you are interested in buying carefully. Weigh each deal independently and make a sound decision. That means finding a car that meets your budget, is in good shape and is likely to have strong resale value.
More investors than ever are looking at classic cars as an alternative to traditional stock or bond investments. That’s largely because it can lead to major profits. Between 2004 and 2014, the Knight Franklin Luxury Investment index noted a 500% increase in the value of classic cars, according to U.S. News and World Report.
For example, the 1954 Mercedes-Benz race car sold at public auction for a record $30 million in July 2013. Juan Manuel Fangio, a legendary Argentinian-born driver in the 1950s, raced the car. Part of its appeal was that it was largely unrestored and still had scuffs from racing – something that buyers today covet.
While few investors will have the fortune to make a record profit like that, it’s not too late to own and enjoy a classic. The classic car market evolves over time and cars that carry high prices at one point may dip, while others that cost less may see a jump. It’s important to track the market for the best investment opportunities.
Buying into classic car investing
Thanks to the Internet it can be relatively easy to track the cars that interest you. At Hagerty, Nationwide’s partner for classic car insurance, you can find valuation tools and a classic car newsletter. There are also classic car auction sites such as Barrett-Jackson, or Russo and Steele that can help you spot trends.
The process is more than just a numbers game. Find a car you like. A fondness for a model and the pleasure in owning it can soften the blow if the market suddenly devalues your car. A classic car, in which you take pride and build an attachment, is far different than owning stocks and bonds.
Also, it’s important to consider just how rare a car is. Before investing in a classic car, find out just how many cars of that make were built. That will tell you something about the car’s worth. If there were only 1,000 ever built, this bodes well for the ultimate price you may be able to get if you resell it.
Starting out is easier than you might think
Classic car investing is not limited to the super high net worth investor. For example, you can, purchase a car in the $20,000 to $40,000 range. For example, that 1965 Mustang you were hankering for in high school can be had these days in the $30,000 range. But, don’t just snap up any random ‘65 Mustang.
As a smart shopper, you’ll want to ensure that a car wasn’t in an accident. You’ll also want to determine that, if it was restored, it was done so properly. An original car with its original parts is a particularly good find.
Mistakes to avoid
With any classic car purchase, it can be helpful to hire a vehicle broker to provide feedback on a potential purchase. While this may add to your buying costs, these professionals can diagnose issues and save you money in the long run. Hiring an expert will ensure that you’re vetting an investment wisely.
It’s important to avoid buying anything on impulse or because you know somebody who’s offering a classic for sale. You could end up with a car you can't sell that’s taking up space in your garage, or you may have to pay far more in restoration costs than you could hope to recoup.
The cost of owning a classic car goes beyond a simple paper investment. Before handing over your check, you must also think about maintenance, restoration and storage costs, as well as the need for classic car insurance – which differs from ordinary car insurance.
Ultimately, if you vet your car wisely, you may find yourself with an investment that not only looks good on paper but also carries you back to the good old days on Route 66 and beyond.
Hagerty Vehicle Rating Top 25: Familiar trends and a few surprises
by Andrew Newton // February 13, 2018
You can now call your old Chevy C10 the hottest vehicle on the collector car market, at least according to the latest Hagerty Vehicle Rating. The 1973–87 Chevy C/K moved up from third to take the highest spot in the Top 25, knocking off the Dodge Power Wagon.
As was the case in the last update, vintage trucks and affordable performance cars are dominating the top spots. About half are trucks, and only two vehicles on the list are valued at $30,000 or more. Most are under $20,000. Prices reflect average values for #3 (or good) condition vehicles.
The Hagerty Vehicle Rating tracks a vehicle’s performance relative to the rest of the market, based on a 0–100 scale. A 50-point rating indicates that a vehicle is keeping pace with the market overall. Ratings above 50 indicate above-average appreciation, while ratings below 50 indicate vehicles that are lagging.
Some of the vehicles in the last update—like Willy's-Jeep Pickups, 1950–57 VW Transporters, Jeep CJ-2A's, and Land Rover Defenders—have slipped slightly and out of the Top 25, but they have simply been replaced by other trucks, namely Chevy's/GMC's and Internationals. For this update, two GMC's and two Internationals made the list. Last time around, there weren’t any from either make.
Specifically, GMC and Chevrolet trucks of the 1950's have seen an uptick in buyer interest through insurance quote activity, while GMC's have shown strength at auction, and the Chevy's have been performing well on the private market. The International pickups are new to the Top 25 list thanks to huge surges in quote activity, particularly for the 1969–75 pickups that have also seen a sizeable jump in their Hagerty Price Guide values. The more well-known International Scouts, meanwhile, are also outpacing the market with high ratings, but they surprisingly haven’t seen the same kind of growth as the pickups and didn’t make the cut.
Other newcomers to the Top 25 include two Porsche's, not of the classic air-cooled variety but instead two underappreciated models that finally seem to be getting their due. The 996, including Turbos, have seen a big growth in quotes, while good low-mileage examples of both the 996 and first-gen Boxster have started showing up at auction and are bringing healthy prices.
Vintage trucks and SUV's are still hot.
According to the latest Hagerty Vehicle Rating, more than half of the Top 25 vehicles in the ranking fall under that designation. And, for now, many of these up-and-comers are still affordable. The most expensive vehicle on the list is just $35,000 USD, and many are below $15,000 USD, which means that the entry-level market remains robust and booming. (All prices reflect average values for #3, or “good”, condition vehicles.)
Gen-Xer's and Millennial continue to drive this trend toward SUV's and trucks. And as popular models like the Ford Bronco and Land Rover Defender soar out of reach for these young buyers, they flock instead to Ford F-Series, Chevy Blazers, C/K Series pickups, and Suburbans.
The Hagerty Vehicle Rating tracks a vehicle’s performance relative to the entire classic car/truck market. Based on a scale of 0–100, a vehicle with a 50-point rating is keeping pace with the overall market. Those above 50 are appreciating ahead of the average, while those below 50 are lagging. This month’s Top 25 includes 28 vehicles, due to a five-way tie for 24th place.
Both sitting pretty atop the November 2017 HVR list are the 1960–66 Chevrolet C/K Series and 1945–68 Dodge Power Wagon, at 98 points. It’s the third time the Power Wagon has been #1 on the list, and its eighth appearance in the Top 25. The C/K Series has caught up, however, jumping five positions and five points since the September 2017 Rankings. The biggest jump belongs to the 1973–91 Chevrolet C/K Blazer, which surged eight points and 15 positions to capture the eighth-place slot. A different Blazer, the 1969–72 model, dropped 14 spots and five points to a total of 87 points and 24th place.
There is still some hotness with cars on the list as well. The 1968–76 BMW 2002 saw a rise in private-market transactions in the last year, pushing its score 23 points upward, which is good enough for a score of 91 and a ranking of 15th. The 1978–88 Porsche 924 has made a sizeable leap into 17th place with a score of 89—up 51 points since this time last year. “The 924’s appearance is the result of big growth in quoting activity,” says Hagerty auctions editor Andrew Newton. “It’s one of the last things with a Porsche badge that’s still very affordable, coming in at $7700 USD.”
Anchoring the bottom of the Top 25, with 87 points apiece, are the 1973–91 Chevrolet Suburban, 1946–49 Willy's-Jeep CJ-2A, 1947–65 Willy's-Jeep Pickup, 1950–67 Volkswagen Type 2 Transporter, and the 1969–72 Chevrolet C/K Blazer.
The 1950–67 VW is the most expensive on the HVR list, at $35,200 USD.
More articles about Muscle and Classic car investments.
Classic Cars are Making News…
“Class-Car Values Rise 54%…”
(Durisin, 2013, Bloomberg)
“Classic Cars are Riding High”
“If you’re fortunate enough to own a classic car or able to afford one, consider yourself blessed because their prices have surged 28% over the past 12 months and more than doubled over the past five years. “
(Berr, 2013, MSN Money)
“Classic cars increased 27-fold over the past 20 years…”
(Historic Automobile Group Int.)
“Classic cars top the list of most lucrative alternative investments with 400% returns over ten years”
(Glass, 2013, Mail Online)
3 Killer Car Investments
“When discussing killings made in the market, the classic story seems to be that hypothetical person who invested $10,000 and bought 5,000 shares of Apple stock in 1985 for $2.00 a share, and held it for nearly 30 years, and watched that initial investment balloon to $6 million today. Some people have done nearly as well in the classic car world. February 1981 issue of Hemmings Motor News, a small ad appeared for a 1964 Ferrari 250 GTO. The asking price was $285,000. Today your investment would be worth around $50 million.”
(Sass, 2013, Hagerty)
A New Global Asset Class
Have you wondered why is it that a $120,000,000,000 market that has existed for over 50 years has never been made available to investors through a Fund? Although it is long overdue, The Ultimate Classic Car Fund is the first of its kind offered in the United States.
Why should every portfolio contain units in the Ultimate Classic Car Fund? The Blue Chip group of Classic Cars have been the best performing asset class over the last thirty years, with a 30% per annum appreciation. This asset class has outperformed the DOW, S&P 500, S&P 1200, Gold, Wine and other commodities by a significant margin, with consistent yearly growth over the last ten years. Classic Cars have a low to negative correlation to alternative asset classes; a tangible asset not prone to volatility of mainstream asset classes. It is a global market that is expanding every year. Investing in Classic Cars provides portfolio diversification and a defense to cyclical risks.
Since 1965, the Dow has experienced a 6.3% per annum return, Gold an 8% per annum and Blue Chip Classic Cars at over 12%.