Investment cars have become an increasingly popular alternative investment in recent years, especially among high net worth individuals and car enthusiasts. An investment car is a collectible vehicle purchased primarily as an investment with the expectation that it will appreciate in value over time. Unlike stocks or real estate, investment cars offer investors an asset that they can physically see, touch and enjoy. However, investing in cars also carries risks and requires deep knowledge of the exotic car market. This article provides an overview of investment cars – from understanding their investment potential to evaluating specific models and managing a car collection.
Factors driving growth in investment cars market
Several factors are fueling the rise in investment cars as an asset class. First, global wealth, especially among high net worth individuals, has swelled over the past decade. This has increased demand for alternative investments like art, wine and cars that offer prestige and pleasure beyond financial returns. Second, interest rates have remained low worldwide following the 2008 global financial crisis. This has pushed investors to seek higher returns in unconventional assets. Third, exotic and luxury cars have shown the ability to generate high returns. Over the past 10 years, rare cars have appreciated much faster than generic stock indexes. For example, the Ferrari 250 GTO has gained over 300% in value during this period. Strong historical returns combined with scarcity have attracted investor interest.
How to evaluate investment cars
When evaluating investment cars, historical price performance and rarity are key factors. The most valuable models are those produced in limited numbers decades ago by iconic brands like Ferrari and Porsche. Within a given brand, special edition and rare configurations are especially prized. Beyond rarity, important considerations include whether the car has an impressive racing pedigree, desirable specifications, or a unique backstory. Original condition and maintenance history also greatly impact collectability and value. Cars with perfect paint, original interiors and components, and complete service records command substantial premiums. Provenance and ownership history are also paramount – one-owner cars with minimal miles from reputable collectors are ideal. Auction records, expert opinions and market reports provide critical data to assess investment potential.
Top investment cars to consider
The most coveted investment cars share traits like exclusivity and acclaimed racing histories. The Ferrari 250 GTO is considered the holy grail of investment cars, with only 39 ever built in the 1960s and current values approaching $70 million. Other icons include the Mercedes 300SL Gullwing Coupe and Porsche 917 race car. Modern supercars with instant collectability include the Ferrari Enzo and McLaren F1. While less expensive, the Acura NSX, Toyota Supra Turbo and Mazda RX-7 have shown strong gains due to nostalgia and tight supply. Obscure models can also be shrewd buys if they have a compelling story or specifications. Whether buying a multi-million-dollar Ferrari or a classic Mustang, focus on quality, provenance and market trends when selecting investment cars.
Effective investment car portfolio management
Managing an investment car portfolio requires ongoing attention and resources. Storage is a major consideration – climate-controlled facilities with security features are ideal. Proper registration, titling and insurance must be maintained on all vehicles. Condition and mileage should be carefully monitored with regular servicing, inspections and maintenance. Documentation like window stickers, invoices and correspondence must be preserved. Professional appraisals every few years inform buying, selling and insurance decisions. Diversification across different brands, eras and market segments reduces risk. Periodic rebalancing helps lock in gains from individual cars that have appreciated substantially. Professional wealth advisors and car collectors can provide expertise to manage portfolios optimized for total return.
Investment cars offer compelling returns for enthusiasts seeking an alternative to financial assets. By focusing on truly rare models with impeccable pedigree, evaluating comparable sales and managing collections actively, investors can potentially realize significant gains. However, investing in cars also requires deep passion and resources to properly buy, store and care for vehicles over long holding periods.