For some time, classic cars have been in demand among investors, in large part due to their price performance. With three classic models celebrating their 30th anniversary this year, prices could rev even higher.
Many classic car owners see historic vehicles not only as fun to drive, but also as an exciting investment, and the market has been booming for years.
«After the financial crisis of 2008, classic cars have established themselves as exciting investment objects. Many customers were and are looking for alternative, but stable value investment opportunities, including classic cars» says Jens Berner, a classic car investment expert at Suedwestbank, tells «Private Banking Magain» (in German).
BMW 507 Drives Index Down
Suedwestbank has been calculating a classic car index (OTX) since 2010 which compares the performance of 20 selected models. Compared to the previous year, the 2022 index has declined slightly, but the decline is exclusively due to the drop in the price of a BMW 507, down nearly three percent. It's been the most expensive classic car for several years (title photo).
All other cars in the index either increased in price, which 13 vehicles gaining, or stabilized, as was the case for six models. At the beginning of 2023, the OTX stood at 581 points.
Classic Cars at the Top
Porsche 944 (Image: Shutterstock)
In 2022, the performance of vehicles in the low-priced segment was stronger than in the high-priced segment. Overall, five of the twenty vehicles in the index increased in value by more than 10 percent. The top performer in terms of value development among the classic cars is the Opel Manta B GT/E, with a price increase of 31.21 percent compared to the previous year.
The Porsche 944 recorded a nearly 20 percent gain in value, the Mercedes 250 CE (114 E25) «dash eight model» gained about 14 percent, with the Opel Kadett C GT/E fetching about 13 percent more, and the BMW 2002 (02) with a nearly 11 percent gain made the most significant gains in value.
Portfolio building blocks
A long-term comparison with other asset classes shows that classic cars represent an investment opportunity with stable value. Since 2005, the DAX has grown by 227 percent, the Euro Stoxx 50 Performance Index rose by 113 percent over the same period, and the REX-P for German government bonds posted a gain of 42 percent. In comparison, the OTX gained 481 percent.
«Oldtimers can be a useful addition as portfolio components in the asset allocation of very wealthy clients. However, in terms of risk-reward ratios and for reasons of appropriate diversification, classic cars are only suitable for investment by customers with liquid assets of more than one million euros,» explained Berner.
Only Invest 100,000 or More
From a yield perspective, Berner recommends buying a classic car only from a price of the equivalent of around 100,000 Swiss francs. Additional costs between 3 and 5 percent for insurance, taxes, appraisals, maintenance, and repairs should also be considered.
The fourth generation Porsche 911 (993) celebrates its 30th birthday in 2023. It's the last air-cooled 911 and has long been a very popular classic whose price has already risen considerably in the past decade. The BMW 3 Series Convertible E36, Golf III Convertible, and the first generation Mercedes C-Class also celebrate their 30th birthdays this year.
