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Classic cars gaining currency as high-end investments
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The Toronto Star-By John Terauds
Classic cars have joined Old Master paintings, Fabergé eggs and gold as hedges against the ravages of uncertain financial markets.
The most recent of the world’s top classic-car sales, held earlier this month during Monterey Car Week in California, set a record price of $16.4 million (U.S.), for a 1957 Ferrari Testa Rossa offered by auctioneer Gooding & Co.
The previous high had been set in 2009, for a Testa Rossa of the same vintage that sold for $12.2 million (U.S.).
Also auctioning automotive creampuffs in Monterey was Chatham, Ont.-based RM Auctions, which sold a silver 1937 Mercedes-Benz 540 K Spezial Roadster for $9.7 million (U.S.).
Historic Automobile Group International, a British-based research firm, says that the Top 50 benchmark index of exceptional classic cars has gained 10.05 percent this year. This is only slightly under the 12 per cent annual average for price appreciation before the financial meltdown of 2008
Since then, the market has split into two, say the experts.
The most rare and perfectly-preserved classics, “are going to the moon in price,” according to RM Auctions founding partner Dan Warrener. He says values are being propelled skyward, “by people who look at current tangibles in the marketplace.”
But more prosaic collector-car values are not faring as well.
Warrener tells how five-dozen 1967 “big-block” Chevrolet Corvette roadsters sold at auction for about $125,000 between 2006 and 2007. “Today, they are selling for 25 to 30 per cent less, with few exceptions,” he adds.
It’s not simply a question of supply.
Peter Klutt, president of Halton Hills-based collector-car dealership, Legendary Motorcar Company, says it’s “great cars, not high-end cars” that make the best investment.
To fetch top dollar, “it’s got to be the right colour, have the right options and have had the right restoration,” says Klutt.
Torontonian John Ogden, a British car enthusiast whose personal stock includes a concours award-winning 1964 Austin Healey and an aluminum-bodied 1950s Jaguar XK convertible among his six collector cars, says an entry-level investor should think of $2 million as starting figure.
Maintenance and repair can be expensive, too. Warrener explains that it’s common for owners to spend $500,000 to restore a top-rung car. Cheaper classics cost money, too.
“I spent $14,000 on paint alone two years ago,” says Odgen of his Austin Healey, currently valued at $65,000.
On the other hand, Ogden says it’s no trouble to source parts and service for the more popular classics, and insurance rates tend to be reasonable.
But you have to know what you’re doing.
“There is no point looking at any car until you’ve done your homework on that particular model. There are just too many different types of cars out there with different issues and things to check for,” writes Singhampton, Ont.-based vintage car appraiser Allan Lewis.
The bottom line is that most collectors do it because they love their cars more than dollar signs.
Most of the people shelling out millions for shiny classics are, “genuine collector-owners,” says Warrener.
Last year, he attended a classic car excursion in Colorado’s Rocky Mountains, where Wal-Mart heir Robert Walton and his wife arrived with a $15 million Ferrari.
“Out of 125 cars, at least 30 were worth well over $1 million,” says Warrener.
One of Peter Klutt’s star cars is a 1958 Dual Ghia convertible – “one of only 117 made, and one of only two built without tailfins,” he explains with obvious enthusiasm.
The car sold for $7,646 when new, which is about $75,000 in today’s dollars. Klutt has his mint convertible priced at $275,000.
“Anytime we have a personal interest in a car, it’s easier to buy and sell,” he adds.
Or, as Ogden says of his Austin Healey, “I just like looking at it.”
That’s what an art collector would say about an Old Master painting.
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