MILAN — In 1977, a Ferrari owner offloaded his 1962 250 GTO because his wife complained it was too noisy, explains Andrea Modena, head of Ferrari’s classic car division. It was either her or the car.
“These days, I’m not sure the wife wins.”
Times have indeed changed. In 2018, the same Ferrari model fetched $48 million at auction, becoming the most expensive car ever sold. Last year, that record was eclipsed by a 1955 Mercedes-Benz 300 SLR Uhlenhaut Coupé that fetched 135 million euros ($149 million).
Megadeals like these are at the forefront of a wave of investment in this alternative asset with billions of dollars spent annually on classic cars worldwide.
According to Knight Frank’s 2023 Property Report, the value of vintage cars has risen 185% over the past decade, outpacing the growth of luxury rivals wine, watches and art, and second only to rare whiskies.
The market has expanded beyond the relatively small community of collectors to include investors attracted by the potential for high returns and the lack of correlation with mainstream portfolio assets such as stocks and bonds.
“We have been monitoring the market for a long time,” said Giorgio Medda, CEO and global head of asset management at Italy’s Azimut. “The track record of the past 30 years tells us that classic cars are a financial asset class that we want our clients to keep in their portfolios.”
This year, the asset manager is launching what it describes as the world’s first “evergreen” fund to invest in vintage vehicles, and it will only bet on cars worth more than 1 million euros each.
Advised by Alberto Schone, head of Ferrari and Maserati dealer Rossocorsa, the fund said it would select vehicles with unique histories.
While the Azimut fund has no end date and can receive new money indefinitely, small Swiss asset manager Hetica Capital launched a 50 million euro ‘closed-end’ fund in 2021, which it also said was the first of its kind.
The Hetika fund, which aims to give 9%-15% return after seven years, has bought a dozen cars so far, and aims to deliver 30-35 cars by the fifth year, and has yet to pay by selling the cars in the last two years. Investors.
The plans are bold.
“We’ve seen more than 100 attempts to set up funds in the past. No one has managed to build both a diverse investor base and a diverse car portfolio,” said Dietrich Hatlapa, founder of classic car research house HAGI, which provides sector data. Used by Knight Frank.
It is also not an area for the financially faint of heart.
Registered in Luxembourg, both the Azimut and Hetica funds have a minimum entry investment bar of 125,000 euros.
“We get a lot of calls from people trying to invest 1,000-2,000 euros and we have to turn them down,” said Walter Panzeri, who runs Hetica’s Classic Fund.
Furthermore, a small scratch or dent, or a replacement part, can cause a huge financial blow. For example, replacing just the bumper on a rare vintage car can cost $15,000, Modena said.
Keeping cars alive
Running costs for a car collection, including fat storage and insurance fees, can easily add up to 5-6% of a portfolio’s value annually, according to Florian Zimmermann, who started buying vintage cars while working at Mercedes-Benz and then built the collection. 300 vehicles with partners.
“It’s getting harder and harder to find the right mechanics to keep these cars alive. And you have to spend a lot of money to keep all these cars running,” he said.
In fact, investment funds that manage car portfolios can be money-spinners for automakers’ classic car divisions, which not only provide repairs and parts, but also certify the authenticity of vehicles for participation in shows and competitions.
The authentication process alone can cost around 20,000 euros, according to Mercedes-Benz Classic’s Peter Becker, who said only the carmaker’s experts, with access to its archives, can confirm a classic model’s authenticity.
However, the market for classic cars is expanding as the number of wealthy individuals also increases; Vintage car prices rose 25% in 2022, their strongest performance in nine years and second only to the 29% rise in art, according to Knight Frank.
Classic vehicle insurer Hagerty estimates that there are approximately $80 billion in collector vehicle transactions worldwide a year, including all auctions and private sales.
North America remains the largest market for auctions, with Hagerty recording $3.4 billion in auction sales in 2022, up from $774 million in 2007, Zimmermann said, adding that the Middle East, India and China have seen a growing number of buyers in recent years.
‘They will be cultural objects’
The global race to ditch combustion engine cars will only serve to fuel interest in these relics of a fading era, some market players say.
“Electrification benefits classic cars,” said Cristiano Bolzoni, head of Maserati Classiche, Maserati’s vintage car unit. “Over time they will become cult objects.”
Ferraris are among the most valuable vintage autos, according to Adolfo Orsi, founder of the Classic Car Auction Yearbook, which has tracked auction sales data since the 1990s, describing them as “the blue-chips of the region.”
Ferraris commanded an average price at auction of $589,000 in 2021-22, followed by Mercedes-Benz cars at $378,000 and Porsches at $348,000.
“The classic car community has changed a lot in the last five to 10 years,” Zimmermann said. “Once it was just people who knew cars inside out. But over time others just thought: I like these cars, I can buy one and I’m not losing money buying it.”