Cars as an investment: Myth or Fact?

"carwitter" (carwitter) 08/30/2014 at 16:11 • Filed to: investment, cars as an investment

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Following on from our little natter !!!error: Indecipherable SUB-paragraph formatting!!! some conversations about other avenues of financial intrigue regarding the more interesting areas of the marketplace.

Talk to anyone about buying a car and one of the forefront issues contested will be that of depreciation. Almost anything brand new will incur a severe loss of value from the moment it leaves the dealership. The motorcar new or old is by and large considered to be something that money is lost on.

There are however, always whispers of those rare cases where a car has been an investment.

The Ferrari 250 GTO being the most unobtainable, but nevertheless most obvious case in point. The current most valuable car in existence, over 50 years on from its homologation debut.

It proves the point, but for this discussion holds little pertinence for the following reasons. Most obviously, that £32 million sale price. It was an investment for whoever may have bought one in the 80's or 90's and sat it in an air conditioned silk lined garage for 30 years. Its had its day potential wise. Secondly of course is that it is a Ferrari and as such is unobtainium for 95% of us- projected profit margins or not.

It does however leave the debate open. That which I intend to tackle today.

What else, if anything else, can reap a profit as an investment for buyers- at any end of the automotive exotica scale? It is a fine art developed from an eagle eye for markets both brand new and second hand. Noticing trends and making predictions based on fashions, rarity, desirability, chronology (anniversaries, celebrations of a release and so forth) as well as the influence that the cars of today and tomorrow have on the values of those of yesterday.

On that last point, its worth highlighting some exceptional cases of value increase of cars that were only released in the past 5 to 10 years, presumably, as a direct result of the nature of their successors- a departure in nature more specifically.

The Porsche 911. Widely regarded as the ultimate expression of performance perfection. Balance, control, satisfaction and value for money (although nowadays a 100k 911 Carrera S doesn't fight that last corner so well).

It has, as celebrated last year, held said authoritative position in its area of the marketplace for 0ver 50 years. It has also, over the past three years, undergone some of the most dramatic (in the eyes of enthusiasts) departures in terms of technology, mechanicals and the relationship between the two in all the models tenure.

Changes which have alarmed the 911 faithful- a mighty force to be reckoned with. Insert current sale prices for some of the most iconic 911 iterations here: 964 RS- the GT3 of the late 80s- £215,000 as auctioned earlier this year.

997.2 GT3 RS 4.0- arguably the finest driving 911 of all time. Original purchase price of £128,000. Current value just recently clearing the 200k mark.

Fairly simple stuff. Porsche equip their current GT3 with a paddle shift gearbox and as a result double the values of their hardest of hardcore runout models and significantly leapfrog the values of others.

The computer processor era of Ferrari- that which has been at full steam for the past 10 years- and the imminent selection wide turbocharging spree that Ferrari is about to embark on.

Factors which may have had something to do with the value of the 11 year old track orientated 360 Challenge Stradale doubling in value over the past two to three years. The 355 is fetching double that of what you'd be paying four years ago as well.

BMW. Begin an awkward strategy of renaming and shuffling the product line up whilst simultaneously sending a car out with a bang using their M division?

Surface the naughtiest little M car to have exited those factory gates since the legendary M3 CSL. Pay £45,000 in 2011 and sell on in 2014 for £55,000. What you could sell it on for in 2015 and 2016 remains to be seen. It looks to be higher still.

Aforementioned CSL is also fetching up to three times that of the standard model on which its based.

Further down the exotic spectrum the humble holy grail of modern hot hatch motoring- the X65 Clio 172 and 182.

In certain iterations (172 Cup, full fat 182 with both cup packs and Trophy) you're looking at serious appreciation over the next couple of years... if your car is in good original condition and well looked after.

For the others look for a value plateau and a steady value increase a little further down the line as desirability increases. The trophy- the creme de la creme of the X65 era is rising from £5000 now. Again, look to the newest paddle shift 200 Turbo for reasons why the older models are becoming more desirable.

Predictions?

Its very hard to say. All you can really do is stay absolutely transfixed on the classifieds in tandem with brand new releases month on month, announcements, and comparisons with predecessors.

Look for stuff thats surprisingly cheap. If there is a general trend in how cheap that model is, keep an eye on it. It's likely a value plateau.

Case in point the now 20-40 thousand pound Ferrari 348. It will follow the previously avoided but now desired Testa Rossa and later 512 TR as well as its highly regarded 355 sibling. 550 and 575 should follow that.

For the red Italian cars its a good rule of thumb to keep an eye on whats two to three generations behind current- with exceptions (348).

Avoid high volume production too.

Limited runs are a good shout from any company really in terms of potential for appreciation. Jaguars XKR-S convertible- a total of 25 in the UK.

Sweet spots in the life of a model are worth keeping an eye on too. Porsche with the Cayman R and Boxster Spyder meet both criteria in variable measures. They are prime candidates for appreciation.

Lower down the scale. Limited run belters like the original Focus RS - though that ship may have sailed in terms of attainability. The more recent hardcore Renault Megane R26R looks promising.

The second gen' Focus RS could see similar value increases too- once a few more have been put in ditches.

Talking of old generations of wistful eras gone by, the fabled Honda Civic Type R: soon to be turbocharged. The earlier EP3s with their cleverer suspension and lower weight don't appear to be attracting a lot of obvious attention but have patience. Its likely wise to wait on the verdict of the new car before moves are made on them.

For scrumptious limited edition factor look to the 'Premier Edition' EP3 run out model of 2006 and the nutty Mugen 2.2 FN2 of 2011.

Integras and FD2 Type R saloons are a good shout too- if you can find a good'un. All could see little leaps following the Turbos release as the spot light will be shone on the Type R badge as a whole.

Now that i've rambled on a bit too much I hope you readers can extract valuable insight into a game that's not so dangerous as appearances would imply.

The money pit myth of the motorcar is one that I feel should be debunked.

You have to know the rules and you have to be patient with your play, but when the time comes the rewards are very real. As far as what could be of value or what is worth buying now goes? In spite of my waffling I feel I haven't even scratched the surface.

It's up to the individual and what they feel they want to search for. The criteria though isn't a bad basis from which to launch inquiry. Any well read, passionate and switched on enthusiast can make money in this area. Or at least enjoy a purchase without too much worry of money evaporating with every mile that disappears out the back.

Happy hunting all!

!!! UNKNOWN HEADER TYPE (MULTI-LINE BREAK?) !!!

Original article can be found on Carwitter.com

Smultron > carwitter 08/30/2014 at 16:33

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In my opinion, the currently most promising investments are japanese high-end classics.

As the Toyota 2000GT. All of them for sale on the big auctions sold for over $ 1 million and here's one for roughly 790 grand on mobile.de located in Japan, put there bevore the last sales (sorry, ridiculously long link): http://suchen.mobile.de/auto-inserat/t…

Aya, Almost Has A Cosmo With Toyota Engine Owned by a BMW. > carwitter 08/30/2014 at 16:33

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You pick the wrong Civic

Seriously, where all the EK gone?

And oh, another car missing is C63 Coupe. You can buy a brand new C63 Coupe today, put in a garage, watch it raising, since it's the last mercedes with Naturally-Aspirated V8. Altough you can always do this instead:

And for the last..

I don't know if this happens in US, but here in Indonesia the SL600 R129 is now rocketing in value like crazy.

carwitter > Smultron 08/30/2014 at 16:39

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Very true, well worth keeping an eye on!

carwitter > Aya, Almost Has A Cosmo With Toyota Engine Owned by a BMW. 08/30/2014 at 16:40

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EK's are very very rare in the UK. Especially Type R models, they have gone up crazy in recent years!

Good shout RE the AMG!

Smultron > Aya, Almost Has A Cosmo With Toyota Engine Owned by a BMW. 08/30/2014 at 16:41

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In Germany, mint examples are around 20-30k euros, immaculate ones above that and acceptable ones with just minor issues seem to start at around 15k, just checked mobile.de for that.

Doesn't seem sky-high for 394 HP V12 in a range-topping open GT to me

Aya, Almost Has A Cosmo With Toyota Engine Owned by a BMW. > carwitter 08/30/2014 at 16:44

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Yeah, i wonder which one will rockets in value: Coupe, Saloon or Wagon. I bet it's either the Saloon or Wagon since those two are quite rare and very desirable.

carwitter > Aya, Almost Has A Cosmo With Toyota Engine Owned by a BMW. 08/30/2014 at 16:47

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Wagon will definitely!

Aya, Almost Has A Cosmo With Toyota Engine Owned by a BMW. > Smultron 08/30/2014 at 16:48

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In Indonesia those cars if ever goes into market, it'll definitely put somewhere around 100k USD. Even the SL500 could fetch 50-60k USD for god sake. I rather get a W140, it's much cheaper.

Manuél Ferrari > carwitter 08/30/2014 at 16:48

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I vote FACT

I stopped my 401K contributions

Cars all the way!

GhostZ > carwitter 08/30/2014 at 16:49

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All you have to do is define what an investment is, discuss asymmetric information, apply it with real world examples in the automotive market. Your entire article is then rendered useless. No more bullshit of "OH WELL I THINK THIS IS A GOOD INVESTMENT!" and speculation over what other people are doing without understanding why they do it.

EDIT: To clarify, the fact that cars depreciate at all should tell you enough about the economy to realize what they can and cannot be in terms of investments. It's not that mystifying and is based purely on the information disparity between buyers and sellers. The same rules that apply to flipping $100 cars into $1000 cars apply to flipping $100,000 cars into $1,000,000 cars.

Aya, Almost Has A Cosmo With Toyota Engine Owned by a BMW. > carwitter 08/30/2014 at 16:50

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Yeah, the wagon. Especially since it's an official F1 Medical car.

And oh, i forgot another car:

Seriously, Evos hold their value very well.

Smultron > Aya, Almost Has A Cosmo With Toyota Engine Owned by a BMW. 08/30/2014 at 16:59

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That's...amazing! In Germany, there's a huge value decrease affecting older luxury cars, especially those that were built more than 2 generations ago. Maybe, because there are just so much availiable, in all conditions. I guess, if Benz-loving guys from Indonesia or Japan or Singapur, or wherever they're a really, really rare sight saw in person, how unloved those CLs or SECs going for <10k sometimes are... Proof: http://suchen.mobile.de/auto-inserat/m…

Aya, Almost Has A Cosmo With Toyota Engine Owned by a BMW. > Smultron 08/30/2014 at 17:08

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Yeah, part of the reason was they're rare. I once owns a W140 S600, and joined the local W140 owners club, and they told me that there's less than 300 W140 S600 in here, and maybe 50-60 SL600.

For SEC i think it's pretty much unloved too in here, i rarely saw one. Which is sad.

BZiel > carwitter 08/30/2014 at 17:28

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I saw a 348 downtown yesterday that had 12,400km on the speedo. Immaculate car. A truly gorgeous vehicle. A long term investment for sure.

BZiel > BZiel 08/30/2014 at 18:09

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They really are an under-appreciated car. The lines and scale and sizing are just so "right." Almost like you'd be "wearing the car." not just sitting in it.

BZiel > carwitter 08/30/2014 at 18:20

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I'm going to throw another investment car out there now that prices are dropping: 2007-10 BMW M6 v10 Cabrio.

Haters, pile on.

Axial > carwitter 08/30/2014 at 23:03

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And that is why I am getting a ZR-1 now. Two years ago, finding one in great shape for $15,000 was easy. I had a hell of a time doing the same today, and I suspect it's only going to get worse. There were only ever 6,939 built over 5 years. Their numbers have been dwindling as they are wrecked, flooded, and/or otherwise parted out for spare items. This is the car that restarted the horsepower war for the mass market, the car that took three companies an ocean and a half a continent apart 6 years to make a reality in an age where the internet was not a thing yet, and the car that really put Corvette on the map as a world-class performer.

You want an investment? Grab a ZR-1 (or a '96 Grand Sport), keep it nice, and then go look up the value again in 10 to 15 years. 1990 was an entire world ago. Triple-digit mileage cars are already at or near price-parity with their original tags.

E92M3 > carwitter 08/14/2016 at 19:45

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Cayman GT4

Any 997.2 GT3 (even a non-rs)

BMW Z8

All safe bets. Likely to beat the average stock market return over the next 40 years.