Classic Car as an Investment?

In my profession I get asked all the time, Are collector cars a solid investment?

My answer is always the same, they are as strong as any investment out there, if not stronger. We all remember the burst of the dot com bubble and the more recent real estate disaster. A car is a concrete investment standing the test of time. A collector car invokes the senses, the look of that shiny red paint, the feel of the steering wheel in your hands, the texture of a worn shift knob, the smell of old leather and stale gas, or how about the joy of showing your child or grandchild how to drive a three on tree transmission. The thought of what it was like when the car first rolled off the showroom floor.

Then I ask them a question in return, 'Can you do that with a stock, bond, or mutual fund?

Collector cars have proven their strength as an investment time and time again? For example, from 1988 to 2008 muscle cars rose 32% while the S&P was negative 1.7 %, and collector cars as a whole rose 67% while gold rose a measly 15%. Even during theses challenging economic times the top selling collector car in 2009 brought a hefty 12.4 million dollars. That is nearly double the price of the world record holder in 1986, which commanded a winning bid of 6.6 million. Collecting automobiles is more than an investment that will yield a great return; it will keep a piece of history alive for the next generation.

The question is how do I get started, How do I know what to buy?

To answer these questions I have a universal rule when it comes to collecting cars. People all want the car they couldn't afford in high school or the vehicle they dreamed about getting for their sixteenth birthday. Even though many of my peers in the collector car world would say there is nothing worth investing in after the year 1973, it is my opinion that this is just plain wrong. I also hate it when people say 'just because it is a rare vehicle doesn't make it a collectible'. This is just plain ignorance. Every car, whether it is an AMC Gremlin or a Chrysler LeBaron, has a loyal following of collectors that would love to have that one of a kind car.

Who invests in classic automobiles?

Just as with other investments, collecting cars has a number of types of investors.
All investors start collecting with what I call the three P's ' Personal, Passion, and Pennies. The type of collector that you are will relate to these three P's.

Personal is the first and most simple P. What is your personal preference in cars? What type of car do you like, Coupes, sedans, or convertibles?

Passion is the second P, and it is your connection to the car. Is it the complex engineering of a Ferrari or the simple rumble of an American muscle car? What car gets your juices flowing?

Lastly Pennies is how much you can afford to invest in the collector car. Putting these three P's together is the key to getting started in the world of investing in collector cars.

Once you have determined your personal, passion, and pennies for collector cars you will need to determine what type of collector you are. There are a few types of collectors in the world. The number one type of collector and the most popular is the hobbyist. The hobby investor is all about cars liked by you. Most cars this type of investor buys have an emotional connection. Whether you grandpa had that certain car, or your first date was in that special car, there is an emotional tie. These collectors are more concerned with the car versus the rate of return the car will provide them. The hobby collector is the most important step in collecting cars for investment because it is the gateway drug that leads to a life of addiction in collecting.

The Streamliner-
The next type of collector/investor is an evolution of the hobbyist. I like to call this type of person a "Streamliner". The 'Streamliner' takes his collection to the next level by focusing on one type of car or make/model and becoming an expert on that particular automobile - whether it is the popular Hemi Coda or the more obscure Studebaker Avanti. Whatever car is chosen this type of collector learns everything there is to know regarding production numbers, condition, and value of that particular car. By streamlining you have reduced the overwhelming universe of collectible cars down to a more manageable size and something you can stay on top of.

The Timeliner-
The third type of investor the hobbyist leads to is the "Timeliner". This type of collector is another step in the evolution of the humble hobbyist. The "Timeliner" is often mixed with the 'Streamliner'. The "'Timeliner' also collects and invests in automobiles from a certain era in time like the 50's, 60's, or 70's. Again as with a 'Streamliner' you become an expert in cars of this time period. Combining the "Timeliner" and "Streamliner" focuses on collecting a certain car in a particular decade. For example someone might focus on collecting muscle cars from the sixties or convertibles from the 50's. Again this takes the world of collector cars to a more manageable size.

Once you know what direction you want to take your collection the next step is to determine what condition of cars you will be buying. There are three general groups of vehicle condition ' restorer, driver, and museum. The restorer is a car that is going to need to be fixed up to become either a driver or museum piece. The driver is a car that can be enjoyed everyday taking the family to the local ice cream parlor on Sunday or maybe going to the drive-in to bring back that certain romantic spark. A museum car is just that, a car that never sees the road and is cared for daily. Now that you've focused your collection and what type of car to buy, you are well on your way to a bright future in collecting cars as an investment.

This article is just a tiny speck of your start in the world of collector cars. Investing in collector cars is just as complex and involving as any other type of investment, but you don't have to go about this journey alone, with the help of Classic Car Consultants you can be assured that you will be ahead of the curve. Our number one rule here at Classic is research, research, and more research. Research is the key and number one step in showing our clients positive results over and over again. With over thirty years of experience in the marketplace and a true passion for collector automobiles, Classic Car Consultants will help lead you in the right direction.