Skip to main content
Part of complete coverage on

How to get rich quick: Buy a classic car?

By Stephanie Ott, for CNN
December 2, 2013 -- Updated 1346 GMT (2146 HKT)
The 1952 Jaguar "C-Type" was last night's biggest draw at Bonham's historic car auction, fetching $4.8 million when the hammer went down. The 1952 Jaguar "C-Type" was last night's biggest draw at Bonham's historic car auction, fetching $4.8 million when the hammer went down.
HIDE CAPTION
The allure of classic cars
The allure of classic cars
The allure of classic cars
The allure of classic cars
The allure of classic cars
The allure of classic cars
The allure of classic cars
The allure of classic cars
The allure of classic cars
The allure of classic cars
The allure of classic cars
The allure of classic cars
<<
<
1
2
3
4
5
6
7
8
9
10
11
12
>
>>
STORY HIGHLIGHTS
  • Auction house Bonhams sold Ringo Starr's vintage car on December 1
  • Classic cars rose 430% in value over the past decade
  • Investing in classic cars bears risks such as maintenance costs and lack of liquidity

(CNN) -- If investing in credit default swaps or commodity derivatives doesn't exactly fill your heart with a sense of wonder and excitement, then a product with a little more va-va-voom could be a surprisingly viable alternative: vintage cars.

Records have been tumbling recently for classic cars sold at auction. Last week, a 1964 Ferrari went for $14.4 million at the "Art of the Automobile" sale, smashing the previous record of $6.9 million for the same model. Sotheby's sold off 31 classic and concept cars and auto-related items for nearly $63 million in just over two hours at the auction in New York City.

Over the past decade the average value of classic cars has risen by 430%, according to Knight Frank's Luxury Investment Index. This compares to 273% for gold and a comparatively meager 55% for the FTSE 100 over the same time period.

Read: Take a peek at the world's most exquisite libraries

Classic car investing can be lucrative
This 1960s car sold for how much?!

Indeed, in only July a 1954 Mercedes-Benz was snapped up for $29.6 million, the highest price for any car ever sold at a public auction -- dwarfing the previous title-holder by $13.3 million.

And just yesterday, Ringo Starr's 164 Facel Vegal was auctioned off for a cool $553,000 alongside a host of historic cars at Bonham's, during a series of lots that netted the auction house a cool $27.6 million of sales.

"The fact that a car was previously owned by a celebrity will more often than not push the value up, but of course it depends on who the celebrity is" said Bonham's spokesperson Chloe Ashby.

"The demand for vintage cars is rising," she added. "Along with jewelry and Asian art, cars are now in the top three collecting categories."

Dietrich Hatlapa is founder of the Historical Automobile Group, an independent investment research house that specializes in classic cars. He says that vintage motors offer a unique appeal, particularly in the wake of the financial crisis.

"People have been more drawn to tangible assets over the last 10 years. Classic cars are fun, you can drive them and they have become a lifestyle as well. It's also a way to pass on wealth from one generation to the next."

Read: Rare Psalm book sells for $14.2 million

Someone shouldn't go into the vintage car market for pure investment purposes but have a passion for classic cars.
Dietrich Hatlapa, Historic Automobile Group founder

The value of classic cars has jumped 39% this year alone, according to the Historic Automobile Group Index (HAGI), which tracks the financial performance of 50 rare and exotic classic cars.

However, there is a sense among industry experts that these growth trends will slow down. "I would be surprised if the demand and value can continue at the same rate over the next 10 years," said Andrew Shirley, editor of the Wealth Report.

There are also risks to investing in vintage cars, as opposed to the more conventional alternatives, like bonds.

"The big difference to mainstream investment options is the lack of liquidity. You can't sell your car next door," Shirley said.

"It will take a lot of research and a long time to find someone to sell your car to for the right price. There are also slight fluctuations in trends, so it might be that at that time an Aston Martin isn't as much in demand as a Ferrari."

It's also not a one-off investment -- there can be substantive costs involved in maintaining the car. "You have to look after them to keep them in good condition, especially if you want to keep driving," Shirley said.

Accordingly, Hatlapa advises against throwing your money at a classic car if money is all you're hoping for in return.

"Someone shouldn't go into the vintage car market for pure investment purposes, but have a passion for classic cars," he said. "The most valuable return from owning a vintage car is the satisfaction that you have something you're passionate about."

ADVERTISEMENT
Part of complete coverage on
CNN Style
October 28, 2014 -- Updated 1347 GMT (2147 HKT)
The Green Vault in Dresden Castle houses one of the largest collections of jewels and objets d'art in Europe.
October 27, 2014 -- Updated 1610 GMT (0010 HKT)
Forty-three years before the first issue of Playboy hit newsstands, Egon Schiele released some of the most shocking nudes of the century.
October 24, 2014 -- Updated 0345 GMT (1145 HKT)
The Chinese leadership has called for less "weird architecture" to be built in the country. Does it mean the end of structures like these?
October 24, 2014 -- Updated 1403 GMT (2203 HKT)
Luxury enthusiasts, rejoice: Fondation Louis Vuitton is bringing its upscale tastes to the art world with a new museum.
October 22, 2014 -- Updated 1334 GMT (2134 HKT)
Today, mourning a loved one means donning the most formal black outfit in one's closet. But 150 years ago, it meant buying a whole new wardrobe.
October 20, 2014 -- Updated 1427 GMT (2227 HKT)
Some artists are obsessed with making things tiny. Others are into vastness. Here are incredible works from both ends of the size spectrum.
October 31, 2014 -- Updated 1921 GMT (0321 HKT)
Close one eye, and it could almost -- almost -- pass for a regular underground train. Close the other, and it looks like a space shuttle from Star Trek.
October 16, 2014 -- Updated 1431 GMT (2231 HKT)
Soup that is rumored to be radioactive; 10 people sharing a single silk hat. It could only be Frieze London, one of the world's leading art fairs.
October 22, 2014 -- Updated 1422 GMT (2222 HKT)
Contemporary Chinese art can be a thorny jungle for the uninitiated. Here are the movements and artists you need to know.
October 17, 2014 -- Updated 0939 GMT (1739 HKT)
In spite of all the sexier pictures around us, the titillating pin-ups of the early 20th century are still in demand.
October 9, 2014 -- Updated 1150 GMT (1950 HKT)
Iris has autism and cannot speak, but her stunning paintings sell for thousands of dollars.
October 27, 2014 -- Updated 2113 GMT (0513 HKT)
Here's a look at the world's finest feats of facial hair, from sculpted sideburns to manicured mustaches.
ADVERTISEMENT