Classic And Vintage Cars, The Best-performing Alternative Asset Class

Classic And Vintage Cars, The Best-performing Alternative Asset Class

Way back when (1968) I had the opportunity to by a Ferrari 250 LM for $11,000, today, that Ferrari is worth $15-M. And while Ferrari prices have risen exponentially, the entire classic and vintage car and racing car market has been rising.

This year, classic and vintage cars were the best-performing alternative asset class tracked by Bloomberg, returning 13% through 30 June  and an average of more than 25% Y-Y for the past 3 years, according to London-based Historic Automobile Group International (HAGI).

It has been that way since the Y 2008 financial crisis, as investors have entered the market looking for hard assets with reliable returns.

The indexes that track classic and vintage car values have recorded double-digit returns every year for 7 years.

Now, Simon Kidston, 45 anni, a broker of these cars, has launched K500.

K500 is an index compiled from public auction sales data for 500 valuable classic and vintage cars. His K500 points to conductibility rating and price guidelines. Other indexes use different methodologies, but Mr.  Kidston hopes that his K500 index will become a tool for collectors in much the same way wine critic ratings have become essential for Oenophiles.

Geneva-based, Mr. Kidston headed the motoring department at auction house Brooks and then at Bonhams for almost a decade before striking out on his own in Y 2006.

And over the past decade, according to his publicity, has brokered sales of some of the most expensive classic and vintage cars, including Ferrari, Mercedes-Benz,  Aston Martin and Alfa Romeos.

Among the car collections Mr. Kidston has helped build are those of Jean-Pierre Slavic, a Swiss watch industry tycoon with a Tier 1 Ferrari collection.

Mr. Kidston’s personal collection includes a McLaren F1 supercar, a Mercedes-Benz 300SL Gullwing, a Porsche 911 Carrera 2.7 RS, a 1992 Bentley Continental, and a 1938 Bugatti Type 57C Cabriolet once owned by his father.

Mr. Kidston disdains the new breed of collector, he says that they see cars as simply another alternative asset class rather than something to be driven and enjoyed.

Dietrich Hatlapa, a co-founder of the HAGI Top Index, which tracks 28 especially valuable marques is the only index compiler to use a market cap weighting calculation to adjust for the rarity of a model, meaning the escalation in prices for a Ferrari 250 GTO cannot influence the index more than a more prevalent Porsche 911.

HAGI captures a fairly accurate picture of the market because it takes in self-reported private sales data as well as public auction figures.

Mr. Kidston complains that private sales data are notoriously unreliable. In my 50 years + experience major private treaty transactions are covered by strict NDA’s and the prices are indeed private to the seller, buyer and all parties related to a transaction.

The producers of a 3rd index, Hagerty’s Blue Chip Index, claim it it more accurate because it is based partly on insurance underwriting data.

I know of a 4th index being developed by 2 European PhD statistical analysts, that could very well be the most reliable of all.

Two important notes, when buying a classic or vintage car or race car, do your homework and always buy the best.

Stay tuned…

Paul Ebeling

HeffX-LTN

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