Classic Car Values Increasing as Collector Car Hobby Takes Off

Classic car values are going through the roof this year as a result of surging demand for vintage vehicles. Along with Asian art and precious jewelry, classic cars have become the favorite item among collectors in 2013, according to CNN Money. The upward trend in vintage car values is reflected in the jaw-dropping prices that collectors have been willing to pay for classic vehicles this year, CNN noted.

Soaring Values

One example is a 1964 Ferrari that sold for $14.4 million at an “Art of the Automobile” classic car auction earlier this year. The price was more than double the $6.9 million that the same model had fetched in a previous auction. In July, a 1954 Mercedes-Benz vintage vehicle did even better selling for a staggering $29.6 million, the highest price ever for any automobile at a car auction. The figure easily smashed the previous record high of $13.3 million paid for a vintage car at a car auction. Demand for classic cars has been so high this year that auction giant Sotheby’s was able to sell off 31 vintage and concept cars worth a total of $63 million in under two hours at an auction in New York, according to CNN. On average, classic car prices have risen by about 40 percent this year, according to CNN. Over the past 10 years, the value of classic cars has soared by 430 percent, CNN noted, citing the Knight Frank Luxury Investment Index. In comparison, the value of gold rose by 273 percent over the same period, while the share index of the top 100 companies listed on the London Stock Exchange rose by a scant 55 percent.

Surging Demand

Investment research analysts that specialize in collector car values theorize that the surge in interest this year may be the outcome of the recent financial crisis. People with lots of disposable income are usually attracted to tangible assets during a financial meltdown. Classic cars offer a fun way for many such individuals to invest in a tangible asset, according to the analysts. Classic cars also offer a way for investors to pass their wealth from one generation to the next, they contend.

Not for Everyone

Despite the soaring value of classic cars, investing in vintage vehicles is not for everyone, financial analysts caution. There is a growing sense within the vintage car industry that the present growth trend is unsustainable over the long-term. Many analysts, in fact, doubt that the growth will last more than four or five years at best. Investing in classic vehicles also presents more risks than other more conventional investment instruments. Classic cars, for instance, do not offer the same liquidity that a mainstream investment option would offer. Classic cars are much harder to sell off, and usually require months of research to find someone willing to buy the vehicle at the right price. Classic cars also require a relatively high degree of costly ongoing maintenance. In addition, slight fluctuations in trends and consumer tastes could greatly diminish the value of a car over time. As a result, investment analysts often caution against buying a vintage vehicle purely for investment return purposes. Someone interested in purchasing a classic car should do so only if they are passionate about the vehicle, and not because they expect a return from their investment.