MILAN – In 1977, a Ferrari owner unloaded his 1962 250 GTO because his wife complained it was too noisy, says Andrea Modena, head of Ferrari’s classic car division. It was her or the car.
“Today, I’m not sure the woman would have won.”
Times have indeed changed. In 2018, the same Ferrari model became the most expensive car ever sold when it fetched $48 million at auction. Last year, that record was flattened by a 1955 Mercedes-Benz 300 SLR Uhlenhaut Coupé that fetched 135 million euros ($149 million).
These types of megadeals are at the forefront of billions of dollars of annual spending on classic cars globally in a wave of investment in this alternative asset.
Vintage cars have increased in value by 185% over the past decade, outpacing growth in luxury rivals wine, watches and art, and second only to rare whiskeys, the report found of wealth 2023 by Knight Frank.
The market has expanded beyond a relatively small community of collectors to include investors attracted by the prospect of high returns and the lack of correlation with core portfolio assets such as stocks and bonds.
“We have been monitoring the market for a long time,” said Giorgio Medda, managing director and global head of asset management at Italy’s Azimut. “The track record of the last 30 years tells us that classic cars have become a financial asset class that we want our customers to have in their portfolios.”
This year, the asset manager is launching what it describes as the world’s first “perennial” fund to invest in vintage vehicles, and says it will only bet on cars worth more than €1m each.
Advised by Alberto Schon, head of Ferrari and Maserati Rossocorsa dealer, the fund says it will choose vehicles with a unique history.
While Azimut’s fund will not have an end date and can receive new money indefinitely, small Swiss asset manager Hetica Capital launched a €50 million “closed” fund in 2021, which also said that it was the first of its kind.
The Hetica fund, which aims for a return of 9%-15% after seven years, has bought a dozen cars so far and aims to reach 30-35 cars in the fifth year, leaving the last two years to sell the vehicles and pay. investors
The plans are bold.
“We’ve seen more than 100 attempts to create funds in the past. No one managed to build a diversified investor base and a diversified car portfolio,” said Dietrich Hatlapa, founder of classic car research house HAGI, which provides the sector data. used by Knight Frank.
Nor is it a sector for the financially weak.
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 who want to invest between 1,000 and 2,000 euros and we have to turn them down,” said Walter Panzeri, who runs Hetica’s Klassik Fund.
Also, a small scratch or dent, or a spare part, can be a big financial hit. For example, replacing just the bumper on a rare vintage car can cost $15,000, Modena said.
KEEP CARS ALIVE
According to Florian Zimmermann, who started buying vintage cars when he worked at Mercedes-Benz and has since built up a collection, the costs of running car collections, including high storage and insurance fees , could easily reach 5-6% of the portfolio value annually. of 300 vehicles with a partner.
“It’s getting harder and harder to find the right mechanics to keep these cars alive. And you have to spend an amount of money to keep all these cars in working order,” he said.
In fact, mutual funds that manage car portfolios can generate money for the classic car divisions of car manufacturers, which not only provide repairs and parts, but also certify the authenticity of vehicles for participation in shows and contests.
The certification 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, could confirm the originality of a classic model.
However, the classic car market is expanding as the number of wealthy people also increases; the value of vintage cars grew by 25% in 2022, its strongest performance in nine years and behind only the 29% rise in art, according to Knight Frank.
Classic car insurer Hagerty estimates there are about $80 billion in collector vehicle transactions a year worldwide, including all auctions and private sales.
While North America remains the largest auction market, with Hagerty posting $3.4 billion in auction sales by 2022 up from $774 million in 2007, Zimmermann said that in recent years a growing number of buyers in the Middle East, India and China.
“THEY WILL BE CULT OBJECTS”
The global race to ditch combustion-engined cars will only serve to increase interest in these relics of a fading era, some market players say.
“Electrification will favor classic cars,” said Cristiano Bolzoni, head of Maserati Classiche vintage car unit at Maserati. “Over time they will become objects of worship.”
Ferraris are the most valuable vintage cars, according to Adolfo Orsi, founder of the Classic Car Auction Yearbook, which has been tracking auction sales data since 1990, who called them “absolutely the best in this sector”.
Ferraris had an average auction value 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 tremendously over the last five to 10 years,” Zimmermann said. “Once only people knew cars inside out. But over time, others simply thought: I like these cars, I can afford one, and I’m not losing money buying them.”
