The classic car market in South Africa is booming.
Well, that is the opinion of the newly launched “Classic Car Passion South Africa”, a source of information for classic car enthusiasts. “Affordable classics have grown for the last seven years – even last year,” says John Tallodi of Classic Car Passion South Africa.
The Money Show’s Bruce Whitfield interviewed John Tallodi, Managing Director at Classic Car Passion. ‘We just launched the South African branch of Classic Car Passion. It’s been going for 12 years in Europe. It brings together classic car fans… We offer events, cars for sale, news items specifically for South African classic car fans…Classic cars are a highly investable alternative asset class, and South African investors – especially at the lower end of the market – are piling in.’
If you buy right, it can be financially beneficial… The Hagerty Index tracks various classic cars over years. ‘Affordable classics’ have grown for the last seven years – even last year. These are vehicles between R300 000 and R600 000. On Line classic car purchasing at auctions have grown hugely in the last year. People stuck at home, looking to invest in something slightly different. The VW Beetle is proving very popular. There are lots of parts for it… and it won’t break the bank if something goes wrong.
The Beetle is definitely riding a wave right now, and affordable classics might become the answer to the question of how to attract younger people to the Classic car movement. Ford Escorts are another Marque that is seeing lots of interest right now, along with Cortinas of all types. Sheridan Renfield of Sedgefield Classic cars can’t get enough of the Escort and is exporting many to the UK. From the almost frenetic activity on Facebook advertising, Gumtree and the like, Mercedes Benz saloons of all decades have also become sought after as have the BMW saloons of the 80’s and 90’s. If you have some spare cash to invest, you might want to invest or speculate?
By Dennis Cook
Brian Gibson has not allowed the lockdown to slow him down. As was previously reported, he purchased a 1947 Triumph Roadster from HOCASC last year that was in the (late?) Bert Scheepers collection. It is a magnificent car, a model now seldom seen, and we can’t wait to see it displayed at the next Knysna Motor Show. Brian also completed the chassis up restoration of a beautiful TR3A.
Brian has recently purchased an industrial unit in Knysna to store his ever-growing collection of Triumphs (and BMW’s). Over the past months of lockdown Brian has refurbished the building and now has a fully equipped workshop, office and meeting room. Brian has now completed 2 beautifully rebuilt sidescreens- a TR2 known as “Mathilda” and a TR3A known as “Minty”. Brian’s workshop is very conveniently situated near his major service providers While I visited Brian last week his local body shop delivered his next TR, a matching numbers TR2, by simply pushing it up the road. Here is a pic of Brian taking delivery. In a dark Green colour that is almost Black, with Tan leather trim planned, it is going to be magnificent car. (all his cars have names but, I did not ask if this one will be called “darky”) 😊
13 JUNE 2019 – BY LEON STRUMPHER; SANLAM Private Wealth
Ferrari leads the pack of the most highly priced wheels, as 59% of the classic cars sold at auctions for more than $5m have been Ferraris
Looking back over the past decade it is hard to ignore the tailwind that near-zero interest rates gave consumers in the US and in Europe in purchasing power terms. This in my view was the single biggest impetus in the search for alternative asset classes, especially luxury goods or so-called “assets of passion”. There wasn’t much incentive for investors to hold their cash in the bank or in developed market government bonds, and what better place to put excess money than in assets that can actually be enjoyed? Within the luxury goods asset class, classic cars have done exceptionally well. For the decade ending December 2018, the Knight Frank luxury investment index has measured collectable cars as gaining 258% in US dollar terms, trumping the 10-year returns on watches, wine, jewellery, stamps and art. The only other investment in this sector that would have provided a better return is rare and collectable whisky, which gained 582% over the period. By comparison, if you’d invested in the Nasdaq composite index you’d have enjoyed a total return in US dollars (including dividends) of 330%, while the S&P 500 delivered 250%.
The luxury investment index compiled by Knight Frank, the world’s largest private property advisory company, focuses on the spending habits of individuals with wealth in excess of $30m, excluding the primary residence. This comprehensive report on the world of the really wealthy is well researched and based mainly on the results of well-known global auction houses, as well as private transactions. The data on classic cars is obtained from HAGI, the global authority in this field, which has been tracking classic and rare cars through various auctions over the past few decades.
The best-known international auction is the RM Sotheby’s auction held annually in Pebble Beach in Monterey, California. In 2008 this auction netted $35m, and the average price of a vehicle was $172,439. In 2018 the same auction recorded $158m, with an average price of $1.27m. The average auction price thus increased by 22.1% per year over the decade.
Looking at individual sales, the most expensive car sold at the 2008 auction was a 1963 Ferrari 250 GTO, at a price of $28.5m. At the 2018 auction, a 1962 Ferrari 250 GTO sold for $48.4m, giving that particular marque and series a return of 5.5% per year, which isn’t great but is nonetheless stable and defensive. At last year’s Gooding & Co Pebble Beach auction, a 1935 Duesenberg Model J once owned by actor Gary Cooper was sold for $22m, a record for a pre-war car and the most expensive American car ever sold.
What’s the best way of approaching the classic car market, especially if you’re a newbie investor in this asset class? It emerged during the conference that the first thing you’ll need is a deep knowledge of the industry. You’ll have to do a lot of homework to learn which collectable cars will appreciate in value. Investment cars vary dramatically in price tag and returns, depending on their rarity and condition and the size of the buyer’s pocket. Scarcity remains one of the most important factors in appreciating prices in classic cars. Every classic car that’s left to rust or is scrapped or shipped abroad leaves a gap that can’t be replaced. A winning combination is scarcity, good looks, original engine and components, original paint and upholstery, and low mileage.
Other basic principles to keep in mind include the provenance — or story — of the vehicle. You need to understand its journey. Most of the investment cars being bought or sold around the world today have a story, some more intriguing than one might imagine. Other important factors are production numbers, whether the car has matching engine and chassis numbers, its originality, and in some cases mileage. Besides the initial cost of classic cars, buyers also need to plan for taking care of and protecting them, which includes some kind of real estate to house their vehicles, and reliable insurance. And you also need to drive your car from time to time.
While it’s impossible to pinpoint which vehicles currently have the best investment potential, it’s safe to say the ultra-rare and pristine cars being auctioned at renowned shows worldwide should remain sought-after and will appreciate in value over time. Just like high-end artworks, these vehicles are seen as the Picassos of the classic car world. Investors entering this market for the first time would do well to look at the younger classics: 1970s, 1980s and early 1990s models, V8 and preferably manual transmission. Mercedes models from the 1970s are becoming sought-after, with prices rising steadily. As is the case in the retail sector, brand is crucial. The key is to get a vehicle from a good marque before there’s a great demand for that model. One that stands out far above any other when it comes to collectable status is Ferrari. To date, 59% of the classic cars sold at auctions for more than $5m have been Ferraris.
Generally speaking, when it comes to the ultra-rare collectable cars sold on auction, prices very much depend on what buyers are willing to pay. If you’re looking to start investing in collectable cars, especially if you’re thinking of importing a vehicle, you’d currently be ‘paying up’ in my view. Why? The rand is now slightly weaker, which is not in your favour. Also, the asset class has experienced strong returns for the past decade, the US bull market is in extended territory, and developed market interest rates are poised to start rising, which may result in consumers starting to save more than spend.However, for long-term investors whose level of investment is at the top end of the market, it would be advisable to jump right in, without delay. I would be patient with certain marques and series, such as the Mercedes Pagoda and the Porsche 911 from the 1960s — they’ve enjoyed phenomenal growth that is in my view unsustainable over the long term. Apart from these few exceptions, however, there are many classic cars on the market that are fast gaining huge collectable appeal. Start doing your homework today!
- Strumpher is portfolio manager at Sanlam Private Wealth.
By David Schultz from the November 2010 issue of Hemmings Classic Car
There is one term within the collector car hobby that, above all others, has truly driven me nuts over the years, which is “original.” There may be some close challengers but to my mind, no word has been more abused. It’s abused by car collectors, car dealers, auction catalogues and even automotive journalists.
I don’t have enough fingers and toes on which to count the number of times a car collector has told me his or her car was “completely original” and, after seeing it, I immediately realized it was a restored car. Some car dealers probably don’t know the difference between “restored” and “original.” The best ones do, and say so in their advertising. The auction companies typically print what the car owners tell them about their cars; they assume the owners know what they have.
For most serious vintage car enthusiasts, it shouldn’t be too difficult to determine a car’s correct status. A Vintage or Classic car is restored, an unrestored original, or somewhere in between. This is where a category I call “maintained” comes in–a Classic car that has been restored only as necessary, to keep it on the road. That would include maintenance and necessary mechanical repairs, as well as minimal repair work to the body and interior.
My 1931 Lincoln Town Sedan is a maintained car. More than 60 percent of the car remains original, but I would never describe it as an “all-original” car. Some car owners refer to their car as original because they honestly–and mistakenly–believe that once a thorough restoration has been completed, the car is original. It’s not. For me, the correct term is “restored to as-original condition.” As the saying goes, a car is only original once. Think of it as virginity–once it’s gone, it’s gone.
I’ve seen advertisements that read “1925 Belchfire touring, completely original except for repaint, new top and interior. Call Hugo at 000-0000.” “Completely original except for….?” Are these guys serious? Or how about, “1957 Whatzit convertible, 100 percent original, frame-off restoration, every nut and bolt restored. Call Benny at 000-0000.” This is not an original car. Get in line for your restoration award, but don’t call this car an original.
Going back to my 1931 Lincoln, that car is far from being a show car, but everything on it is authentic–as originally delivered–with the exception of 80 years of wear and those areas of the car that were restored out of necessity. The Classic Car Club of America has a judging class called Touring. This is for cars like my Lincoln that are regularly driven to events. These cars are judged for what they are–cars that rarely, if ever, ride in trailers.
In my lifetime, I’ve been lucky enough to see some truly outstanding original automobiles and I’ve even owned one. I learned there’s special difficulties inherent in owning an original automobile, particularly a rare one. These cars become fragile–not breakable, but the interior, paint and top on an open car do begin to deteriorate.
My low-mileage, all-original 1923 Locomobile was mechanically bulletproof, but its top and interior had truly become fragile. The paint was slowly disappearing. As much as I enjoyed driving that car with my family, we had to cut back and finally, reluctantly, sold it rather than face the restoration issue.
I’d watched a friend in a similar situation begin what he called “minor repairs.” Once he’d started, he couldn’t stop. Before it was over, the car was far from original. However, it was now usable, and that meant he could drive it and enjoy it. In the end, we must decide how badly we want to preserve history. Do we do it to the extent that we no longer drive the car? Or do we obtain a greater enjoyment preserving the car? Then there are the spectacular show cars; they’re great to look at, but unless you drive your car, you’re missing most of the fun. A fellow enthusiast recently told me that the best award a vintage or Classic car can receive is a stone chip. A lot of truth to that.