If you are looking into classic cars to purchase, the cost may be your first concern. But those who are routine investors in the classic car market over time know that when you buy and sell classic cars, there’s an opportunity to make some extra money (especially if you invest in a classic that’s projected to increase in value or you plan to restore the vehicle).
Ultimately, the ROI of your investment hinges on your ability to pick the right classic car–not just any classic car. So what should you look for when shopping? What sets a hidden gem apart from a bucket of bolts?
We’ll help steer you in the right direction.
Factors That Make a Car Collectible (and Valuable)
Several factors contribute to a car’s collectibility, making it desirable and potentially valuable. These factors include rarity, historical significance, racing history, and celebrity ownership. Of course, the condition of the vehicle will also play into this.
Factor #1: Rarity and Limited Number
Rarity is a significant factor in determining a car’s collectibility. Cars produced in limited numbers or with unique customizations tend to be more desirable among collectors. For instance, the 1954 Mercedes-Benz 300 SL Gullwing originally had only 1400 units produced. If you find one, it could sell for between $1 and $2.5 million.
Factor #2: Racing History
A car’s racing history can significantly enhance its collectibility and value. Cars with notable racing achievements are often seen as pieces of automotive history. Newer classics like Colin McRae’s 1998 Subaru 22B set a record, selling for over $600,000 in August 2023.
Factor #3: Celebrity Ownership
Cars previously owned by famous individuals, such as Steve McQueen or Paul Newman, often fetch higher prices at auctions. The most famous of these may be Steve McQueen’s 1968 Ford Mustang GT. In January 2020, it sold for 3.74 million dollars. For collectors, these celebrity-owned cars offer a unique connection to their favorite stars, making them highly sought after, even if they aren’t always worth millions.
Risks of Investing in Classic Cars
The stories about Steve McQueen’s car or the 1954 Mercedes may make you think that classic car investing is only for those who have millions to spend. But that’s not the truth. You can invest in classic cars in a much lower price range, lowering the potential risk and market volatility. Your potential for appreciation may not be as high, but your investment is a bit more safeguarded.
Risk #1: Purchasing a High-Maintenance Car With High Restoration Costs
Maintenance and restoration costs are some of the highest expenses you will face when you make these investments. Depending on the vehicle’s age, condition, and usage, annual maintenance and repair costs can total up to between $1,000 to $4,000,
Restoration projects can be particularly expensive, sometimes costing tens of thousands of dollars. Many classic car investors will tell you that they spend more restoring the car than they did on their initial investment.
The reason behind this is that classic cars often require specialized parts and skilled labor. You can’t trust just anyone to work on your 1967 Shelby! One tip of advice if you plan to sell your car later on, make sure to keep detailed records of your expenses so you can value the car properly in the future.
Risk #2: High Storage and Insurance Expenses
Proper storage and insurance will help protect your classic car investment. Climate-controlled storage can prevent rust and paint deterioration but can be costly, ranging from $50 to $400 per month, depending on the location.
Despite the higher costs, storing your classic in a locked garage can reduce the insurance rates that would otherwise range between $200 to $1,000 annually.
Classic car insurance differs from standard car insurance and provides agreed-value coverage in case of loss or damage.
Market Volatility
The classic car market can be highly volatile, and prices can fluctuate based on trends, economic conditions, and collector interest, making it hard to pinpoint the perfect time to buy.
Fair warning: changes in collector trends can quickly impact the value of vintage cars, contributing to market volatility.
Investors must be aware of these fluctuations and prepared to make quick changes.
Some places you can check on classic car values include:
Understanding the Past and Future of the Classic Car Market
The classic car market is constantly changing. Recent years have seen significant shifts. Some notable changes include.
- Classics from the 1980s and 2010s have seen noteworthy price increases, such as the 2000 Subaru Impreza Turbo, which spiked by an astonishing 161% in value.
- In 2023, only two of Hagerty’s five indices rose above the rate of inflation, indicating a market correction (less than a third of cars increased in value).
- Younger collectors, particularly millennials, are also making their mark, increasing their market share by five percentage points over the past year.
Understanding these trends is crucial for anyone looking to invest in classic cars. The market is influenced by various factors, from economic conditions to collector interest, making it essential to stay informed and up to date with the latest trends.
Market Performance
Two key factors influencing market performance are a) economic uncertainties and b) elevated borrowing costs. However, the health of Hagerty’s Classic and FOTU Indices has remained strong in the last few years.
If you are interested in a certain model, tracking market trends is crucial for predicting future value and making informed investment decisions. Overall, long-term trends show promise.
The Historic Automobile Group International (HAGI) Top Index, which tracks the performance of high-end classic cars, has increased by a staggering 264.49% since its inception in December 2008. These figures suggest that, despite short-term fluctuations, the market for classic cars can offer substantial returns over time.
High Prices and Value Appreciation
High prices and value appreciation are key attractions for many classic car investors. Classic cars often gain value due to their historical significance and rarity. However, this is not a guarantee.
Some cars have sold for jaw-dropping prices, with examples like the 1962 Ferrari 250 GTO fetching $48.4 million and the 1954 Mercedes-Benz W196 Silver Arrow selling for $29.7 million. The potential for big gains helps the market remain strong.
Here is the chart formatted for easy copying and pasting into a document with visible lines between cells:
| Year | Car Model | Sale Price (USD) |
| 2018 | 1962 Ferrari 250 GTO | $48.4 million |
| 2013 | 1954 Mercedes-Benz W196 | $29.7 million |
| 2021 | 1967 Ferrari 275 GTB/4*S NART | $27.5 million |
| 2022 | 1935 Duesenberg SSJ | $22 million |
Assessing Affordable Options
If you are considering investing in the classic market but don’t have seven figures to dump into this project, you aren’t alone. Investing in more affordable classic and modern cars that might become future classics (like these) can be smart. These vehicles still come with financial risks but can also provide significant enjoyment and potential value appreciation.
| Car Model | Year Range | Average Market Price (USD) |
| Volkswagen Beetle | 1960s-1970s | $10,000 – $20,000 |
| Ford Mustang | 1960s-1970s | $20,000 – $35,000 |
| Chevrolet Camaro | 1970s-1980s | $15,000 – $30,000 |
| BMW 3 Series | 1980s-1990s | $10,000 – $25,000 |
| Mazda MX-5 Miata | 1990s-2000s | $8,000 – $15,000 |
Tips for Investing in Classic Cars
Investing in classic cars requires careful research, due diligence, focusing on quality over quantity, and buying from reputable sources. If you know nothing about a vintage car, you must conduct research before investing your money in it.
- Research and Due Diligence: Use online valuation tools for classic cars to track value and trends.
- Independent Evaluation: Weigh each private sale on its own merits to understand potential risks and ensure it’s an investment you are willing to make.
- Inspection for Defects: Conduct detailed inspections for hidden defects or maintenance needs.
- Quality Over Quantity: Prioritize high-quality, well-maintained vehicles over many average cars.
- Original Parts: Choose cars with original parts or those that have been properly restored with documentation.
- Buying from Reputable Sources: Purchase from reputable dealers or well-known auctions to ensure authenticity and security check documentation.
Summary
While there is no guarantee you will make money on a classic car you purchase, you can guarantee that you’ll need a great place to store a collectible car.
Older cars are prone to rust, so you will want to find garage storage (or another type of covered car storage), if possible. Use Neighbor, a peer-to-peer car storage marketplace, to find local garages and storage centers at prices 50% lower than traditional options. For your security, all Neighbor hosts are pre-vetted.
