12 April 2012

Seven cars with investment potential

Classic Car as Investment has been an oft-written topic over the past few years. A host of financial products, including IGA Automobile LP Fund (of Gordon Murray and Nick Mason fame) and the Count of Custoza Family’s Classic Car Fund, among others, have been announced or are in the works. As A-list classic cars appreciate faster than traditional investments, it was perhaps inevitable that they be viewed in terms of an investment. Of course, speculation isn’t a novel practice in the hobby, as those who tried to sell a Ferrari in 1990 can attest.

The biggest and most obvious differentiator between cars and traditional investments is that cars can actually be driven and enjoyed, while a stock portfolio, for example, cannot. (Of course, you don’t need to insure, store, or maintain a stock portfolio, but that’s another topic.) It is with that simple fact — that cars can be a blast and still be worth more than you paid for them when it comes time to sell — that we at Hagerty Price Guide assembled this short list. Here are seven of the top investment-grade cars, from the perspective of the driver.

  1. Ferrari 250 GT California Spyder

    Ferrari’s 250 GT California Spyder is universally recognized as one of the most beautiful cars ever manufactured, and it also happens to utilize the euphoric, Colombo-designed 3.0-liter V-12 engine. Lesser known is that the Cal Spyder is actually easy to live with — by Ferrari V-12 standards, anyway. The SWB variant is especially desirable, with its stiffer ride, increased power and four-wheel disc brakes.

    During the past few years, several 250 GT California Spyders have traded for huge numbers — most famously the ex-James Coburn car in 2008 ($10.9m) and Gooding & Company’s alloy competition car at its 2010 Pebble Beach auction ($7.3m). With a few years distance, these prices don’t seem quite as astronomical as they did in situ.

    The bottom line is that the Ferrari market in general is showing continued strength, and Cal Spyders seem to be near the front of that charge. Very low production numbers and icon status are the driving factors, and a few very desirable value-adds (i.e., hard top, covered headlights, side vents) can induce intense competition when the “right” one hits the market.

    Average price: $6,018,750
    12-month gain: 18%
    36-month gain: 30%
    60-month gain: 245%
  2. Bentley R-Type Continental

    The Bentley R-Type Continental is a rare car that evokes equal parts elegance, power, sophistication and luxury. Aside from its opulent packaging and its exclusive build numbers (only 43 of the 203 built were configured for left-hand drive), the car is in fact a tremendous touring machine. Road tests most often quibble about the car’s heft, but the Conti is such a well-paced grand tourer that it hardly seems to matter. Once up to speed, the Bentley, especially the later 4.9-liter car, rolls with assured effortlessness. It manages to do all of this with a pair of usable rear seats, which means you can tote friends or family as well.

    These cars have long been on the radar, but that hasn’t held prices back. In fact, while much of the rest of the collector car market contracted during 2008 and 2009, the R-Type Continental kept moving forward as though it were in fourth gear. Of the 17 periods for which Hagerty Price Guide has reported values for the Bentley R-Type Continental, only once did its price dip (and that at only .04%).

    Average Price: $730,750
    12-month gain: 3%
    36-month gain: 35%
    60-month gain: 196%
  3. BMW 507

    The BMW 507 has officially joined the million-dollar club. When properly equipped (Rudge wheels, hard top, disc brakes) and in top condition, this elegant roadster is essentially a sure shot to hit six-figures these days.

    Not always the case, the 507 had to overcome an unwelcoming public in period, which too often opted for the more powerful Mercedes-Benz 300SL to fill their open sports touring needs. While the SL could cruise at 150 mph, the 507’s 124 mph didn’t really compare. The SL also had a link to the racetrack, which the BMW couldn’t claim. In the end, only 253 507’s were sold, guaranteeing its demise. And, it turns out, its legacy. The car’s rarity has driven prices higher than the SL roadster today.

    It turns out that the car is imminently drivable and quite understated. While its 3.2-liter V-8 isn’t a screamer, it is refined. And those looks! The car has finally shook its ill-borne reputation as something of a fakir and is now viewed as a legitimate blue-chip automobile. Rightly so.

    Word from traders is that 507s are not a tough sell even at their new price plateau, indicating that growth will not taper off in the short term.

    Average Price: $865,375
    12-month gain: 6%
    36-month gain: 15%
    60-month gain: 89%
  4. Mercedes-Benz 300SL roadster

    The 300SL remains Mercedes’ hallmark, more than 50 years after the Gullwing first put rubber to road. The car’s radical styling was central to its character, but it was simply a fabulous machine as well. A smooth-revving inline-six, solid construction, and unparalleled refinement have made it a benchmark for generations.

    Both Gullwing and roadster alike frequented watch lists for years as cars that were perpetually undervalued. Critics cited their high build numbers as proof that they would never break free from this phenomenon, but boosters noted that the high build numbers never seemed to dissuade serious collectors from buying them. Prices finally started to escalate at a pace that matched expectations during the past 12 to 18 months, and we anticipate this trend will continue.

    The roadster ends up being a better car to drive by most accounts. The final year of production offers disc brakes and an aluminum engine block, which are both desirable modifications. And even though the Gullwing’s famed doors open up while the 300SL roadster’s plainly open out, consider it a bargain given that you’ll get to enjoy the ride with the top down for less than the occupants of the closed car.

    Average Price: $680,375
    12-month gain: 15%
    36-month gain: 18%
    60-month gain: 77%
  5. BMW M1

    The M1 is the second BMW on our list, and strikingly different from the first. Born from homologation requirements, the M1 is an incomprehensible blend of elegance and performance. It is a true supercar, but one that delivers its promise with a refined ride, smooth engine, and an absolutely quiet cabin. As much as any world-beating sports car, the M1 is civilized.

    M1’s were largely forgotten for a long while, as tends to happen to yesterday’s supercars, but they have aged so impeccably that connoisseurs have once again remembered their merits. Whether this can be attributed to BMW’s mantle as modern performance kings, their highly visible M1 concept car from 2008, or some other factor, is quite unimportant. Looking forward, dealers are reporting that there is still plenty of room at the top of this market, so we don’t expect the ride to stop soon.

    Average Price: $198,600
    12-month gain: 8%
    36-month gain: 45%
    60-month gain: 66%
  6. Porsche 356C

    Over the years the Porsche 356 has been both derided and lauded. Naysayers relentlessly pointed out that the engine was located in the wrong place, and that the car was underpowered. Of course, those folks have never been fortunate enough to unwind a 356 on a twisty road. Aside from that exhilaration, tick off bank-vault construction, tidy design, and superb quality on the checklist.

    As we have written elsewhere, early Porsche prices have been on an absolute tear over the past two years, with 356s leading the charge. Later push-rod coupes have not enjoyed the same run-up as early open or 4-cam cars, but it looks like the market is starting to notice. Gooding & Company sold an SC coupe at their 2012 Scottsdale sale for $72,600.

    Most enthusiasts regard the 1959 A as the holy grail of coupes, especially when fitted with a sunroof, but the 1965 356C is a more practical way to enjoy the car. Improved performance and visibility, and disc brakes all around make it very easy to live with. Versus Cabriolets, the coupe body style means you don’t have to watch the forecast in order to enjoy the car.

    Given the direction this market is headed, we feel there is a good upside here.

    Average Price: $57,900
    12-month gain: 1%
    36-month gain: -3%
    60-month gain: 26%
  7. Shelby Cobra 289

    The Shelby Cobra represents one of the greatest stories in American automotive history. In a nutshell, the Cobra is the distillation of everything a sports car should be: energetic, invigorating, exciting.

    The 427s are at the top of the Cobra value food chain, but from a driving standpoint the 289 is the insider’s pick. The later cars have more precise rack-and-pinion steering instead of the early model’s worm-and-sector setup. The cars also offer all of the attention of the 427 with none of the headache.

    While the 8% 60-month advance won’t catch the attention of Wall Street, it is our opinion that these cars remain undervalued. In fact, they’re off of their 2008 high by more than a quarter, while other Blue Chippers have rebounded (and then some) from the 2009 hit. Cobras have near-universal appeal, are instantly recognizable, and also useable. Expect prices to advance.

    Average Price: $494,250
    12-month gain: -7%
    36-month gain: -28%
    60-month gain: 8%

0 Reader Comments

Join the Discussion