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Classic cars – on the Luxury Index

Invest in classics now with low interest and a low pound

Now is the time to get in on the classic car market. With a low pound external investment in appreciating assets will grow as investors look for alternatives to shares and property in our low interest environment.

Classic cars and wine have jointly taken the chequered flag in the latest Knight Frank Luxury Index released Thursday.

The index tracks the performance of the ten “investments of passion”. Wine and Classic Cars gained the same amount of votes to the end of the first half of 2016, but current trends suggest they are headed in different directions.

“With the pound being where it is and if you have good quality wine stock, buyers will come, flocking from around the world,” he affirmed on Thursday’s show.

The pursuit of the highest quality offerings is a theme that is also recognizable in the classic car market where participants are seeing buyers gravitate towards the most exclusive, niche and impeccably maintained vehicles while eschewing products perceived as common or imperfect.

While the market has seen a sharp deceleration from the cumulative 458 percent growth rate achieved in the past decade, four of the most expensive cars to ever be put on the auction block were sold in the past year.

This includes the 1957 Ferrari 335 Sport sold last year for over €32 million ($35.3 million), narrowly pipped by the 1962 Ferrari 250 GTO Berlinetta sold at Bonham’s Quail Lodge sale in 2014 for around $38 million.

In addition to the most prestigious models faring well, the influx of younger aficionados as investors in recent years has also supported the much lower end of the classic car market of late, in a trend seen persisting.

According to Dietrich Hatlapa, founder of the Historical Automobile Group International, “We expect that the trend towards younger models in the lower price brackets below $1 million and even below $100,000 will continue.”

“The market has among other aspects reacted to a decline in global liquidity. It is therefore key to observe what central banks are doing and if interest rates will rise going forward,” he noted.

And for those who have not yet managed to translate dreams from childhood into a real set of wheels today, now might be the moment to consider taking the plunge.

“Transaction volumes are low and buyers have the choice to negotiate and select the best examples,” Hatlapa added.

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