Classic cars turn heads and a profit for owners

Collecting classic marques mixes enjoyment, profit and the chance to fulfil some boyhood dreams. Two weeks before the Grand Prix boys rolled out their kit in Monte Carlo late in May, a group of equally committed, competitive racing drivers sped around the Monaco street circuit – but at a somewhat more relaxed pace.

Classic car enthusiasts including some clients of private bank Arbuthnot Latham & Co, raced their beauties around the 3.3km track in the Historic Grand Prix of Monaco – much to the delight and admiration of the onlookers. One was Paul Denman (pictured), director of private banking at Arbuthnot Latham, who himself holds a racing licence. For clients seeking advice on specific brands he can call on his impressive list of contacts, be it for Ferraris, Aston Martins or Bugattis, for example.

Classic cars are a wise investment. Between 1980 and 2008, the value of The Historic Automobile Group’s index, which tracks prices paid for historic vehicles in more than 100,000 actual transactions, has risen almost 30-fold, against just more than five-fold growth in US shares. Classic cars retained value creditably during the recent financial crises. Indices tracking prices for only Ferraris, as well as those excluding Ferraris and Porsches, have also held value at times when many financial assets plunged.

“Classic cars are also a tangible asset in short supply with reasonable or healthy demand,” Denham says. “What has happened in classic cars post-2008 has some similarities with fine wine. Both have shown very strong growth over that period.” But Denman emphasises collectors typically buy them for love, not money, and “they tend to [go for] cars they remember from when they were younger”.

This may well be the Aston Martin DB5, remembered as James Bond’s car of choice. Denman says: “Anyone who was a boy in the mid-1960s could hardly forget James Bond’s Aston. It is ­unsurprising, therefore, that someone with concern over the ­performance of traditional asset classes in the last few years may look at alternatives such as this, with the added benefit of fulfilling that childhood dream, and have a t­angible asset in the garage.”

Denman says the Aston Martin DB5 has rocketed in value from £80,000 or £90,000 five or six years back, to the region of £250,000 or more now. Some individual cars’ values have been fuelled by having been driven by famous figures. Denman notes demand is high for cars that raced immediately after World War II driven by such stars as Juan Manuel Fangio and Sterling Moss.

Ownership by the late Hollywood actor James Coburn or The Rolling Stones’ Keith Richards have all boosted values. Denman says certificates, press cuttings, trophy photographs and papers from the FIA – the ­Formula One ­governing body – that come with cars all help verify provenance. Interestingly, for some of the more prestigious motor racing events, such as the Historic Grand Prix of Monaco and the ­Goodwood Revival, it is the car and not the driver that is invited to participate.

Classic cars pass hands at auctioneers such as ­Bonhams, H&H Classic Car Auctions and RM Auctions. But Denman says a lot happens by word of mouth. Arbuthnot Latham is connected to such networks, not least through its s­ponsorship of the Historic Grand Prix Cars Association. Denman adds there is a classic car fund, IGA ­Automobile LP, which was backed at inception early last year by Pink Floyd drummer Nick Mason. It aimed to make 15% a year by investing in 20 to 40 “trophy marque vehicles”, according to Bloomberg.

Collectors should note some cars fetching surprisingly high prices are not in the fund – one was Lot 307 at a recent Bonham’s auction in the UK, “believed to be the oldest surviving un-restored Mini”, with just 30,041 miles – about 48,000km – on the clock. Bonham’s described the 1959 Austin Mini Seven De Luxe Saloon as having “evidence of corrosion”. It sold for £40,250 (€50,300), ­nevertheless.