What do you remember about March 2022? Russia had invaded Ukraine only a week earlier, there was a coup d’état in Burkina Faso (yes, I had to look that one up…), and then the Fed started the current rate raising cycle, thereby ending a decade of zero interest rates or if you will, free money. As we know now a year later, the subsequent increases to the current level were the quickest in history, and it’s not clear if we’re done yet. They’ve happened against a background of rising inflation after as said, a decade of zero rates and money printing, by the same central banks who are now trying to contain the inflationary pressures that resulted from it.
When you don’t get any return on your savings, you try to do so by putting your money elsewhere. And so over the last decade, pretty much every type of investment has had a good run that at least partly came to an end a bit more than a year ago. One of the best areas to put your money in this period has been various types of collectible cars – oldtimers, race cars, and then with time, pretty much every car beyond a certain age, never mind really how collectible it really is. That’s what we’ll talk about today, as everything that is priced as a collectible certainly isn’t one, which is something the new market environment will no doubt show us. I have however recently seen some excesses in the market that are frankly just ridiculous and that show that a new balance hasn’t been found yet. Being sensible in your planned car purchase is therefore more important than ever!
Back in 2020 I wrote a post you can find here, where I went into some aspects to consider when buying your dream car. I also emphasized precisely that, i.e. that you should really buy the car because of your love and desire for it – not because you think it will increase in value. Although many cars have continued to do so, that’s worth remembering. Firstly, whether a car will rise in value or not is never a given (except perhaps for a small number of hyper-exclusive and very limited series). Secondly maintenance, storing, insurance and running any car, but especially collectibles, eats up much of the potential value increase, so at the end of the day there often isn’t much left. then again, that’s perfectly alright as long as your priority has been to enjoy the time spent behind the wheel!
You may well think this is too negative, and that value appreciation on, say a manual Porsche 911 of certain series is all but guaranteed since they haven’t yet reached the stratosphere (well, most have, but not all), and they’re becoming fewer and further between. That’s true, but then again so is a Porsche 944 which still hasn’t gone anywhere and probably never will – although its sibling (and less good looking) successor, the 968 has. I’m certainly not claiming there aren’t cars that will rise in value going forward, I’m just saying that you shouldn’t bet on it, and it’s not what should guide your purchase.
That said, there are a few clues to help you select a car that is both a joy to drive and can be expected to hold its value relatively well. A manual gearbox is certainly one such thing, if you look for example at a 911, a Ferrari F355, and a bunch of other cars that are 10-20 years old. Production numbers is another, as special series or limited production runs tend to hold values better. The right engine will help, as will provenance, given a famous previous owner tends to do wonders for the price. I find this last one a bit strange since it’s not like it says “this used to belong to (select your favorite famous person)” on the car, but I guess there are things that can’t fully be explained by logic…
A case in point is a classic dealer in the Zurich area who has a Porsche 928 GTS standing in the showroom. With 90.000 km on the clock the mileage is ok but not exceptional, as is the general condition of the car – very good, but not mint. The GTS was the last iteration of the 928 produced in the early 90’s. At 350 hp it had the highest power output of all 928 series and is for many the most attractive in the range, provided however that it’s a manual, which this wasn’t. The dealer had tried to compensate this with a big sign saying “Prominent Swiss previous owner”.
This country is great in many things, but it’s not like we’re lining up famous people. The only two can think of who would motivate paying more for a car according to this logic would be Roger Federer, who’s however tied to Mercedes-Benz through sponsor contracts and, well, Tina Turner, who spent the last 20 years of her life in a magnificent villa on the shores of the Zurich lake. She obviously just passed away, may she rest in peace, but before that was mostly seen in a green Bentley. The “famous previous owner” is thus most probably no one known outside of the local Zurich circle. And it doesn’t warrant you paying – hold on to your chair – around USD 110.000 for this particular 928, especially when a far more desirable manual GTS can be had in similar condition for USD 20-30.000 less. Which is still double what they cost 2-3 years ago.
Another even stranger category is that of cars that someone bought a number of years ago and never drove, so that they’re now sold with very low mileage, most often in a condition close to new – at least on the outside. Obviously, if you’ve stored a car away for 30-40 years, it’s really important to know how it’s been stored, and also if it’s been maintained throughout. Because a car that is left standing for a number of years without no one attending to it, is not a car you want. Then the question is of course also whether there’s anything attractive with the car apart from the fact that no one’s driven it, or if it’s just an old car?
An example of this is a VW Golf GL Diesel from 1983, advertised by one of the most well-known classic car dealers in the region. Someone bought this 50 hp monster 40 years ago, sealed it, and put it away, so that it only has 2.000 km on the clock. I guess the 50 hp were not that exciting even back then… It’s most probably been stored correctly and maintained throughout, but who on earth would pay the asking price of around USD 28.000 for a car that wasn’t even desirable when it was new? I can think of a large number of far better, more modern and certainly more fun small cars for that money, and I’d be really surprised if this example doesn’t sit with the dealer for a long time. As if this wasn’t enough, the 70’s shade of brown really isn’t a particular desirable color,
It’s not all bad though, because the gems are still out there, you just need to be patient and look out for them. Coming back to 911’s, and more specifically one of my favorites, the 997 Turbo, I’ve spotted a manual 2009 car in silver with a red leather interior and all the carbon packs you could have at the time, and around 85.000 km on the clock. It’s in mint condition and has had one previous owner, the F1 driver Jarno Trulli (who raced between 1997-2011 and had the good taste of scoring his only win in Monaco in 2004).
Whether he’s famous or not is not the point, it’s more that I would assume that an F1 driver for one drives the car correctly (albeit fast…) and also knows, and has the money, to maintain it properly. Then again if that isn’t the case, I wouldn’t hesitate going for a car where it is, no matter who the previous owner is. At an ask price of around USD 85.000, the car is only slightly more expensive than comparable cars, but that is probably warranted by its history.
Desirable? To me, absolutely, I’ve had my eye on the 997 Turbo for a while and actually find the red interior pretty cool, although it’s not for everyone. Will it increase in value? Maybe, then again it certainly won’t be free to run. Does it make my “car buying pulse” increase? Definitely – at the thought of driving it that is, not speculating about its potential future value increase. If you ask me, that’s exactly as it should be. Now I just need to find a half-rational argument for it…