Kevin Derrick says "Classic cars slot into the niche investment category of appreciating moveable assets. They're like fine art and quality gemstones; but unlike cash under the mattress, their rising values grow your wealth.
Derrick is the Founder and CEO of Creative Rides Classic and Collectables Auctions, the largest specialist classic automotive auction company in Africa.
A growth estimate of US$12.5 billion (R200.4bn) has been forecast for the global classic car market over four years from 2020 to 2024 off an initial value base of US$30.9bn (R495.3bn). Still, the market has gone into overdrive this year with several collector cars jumping in value by more than 30%, so that four-year estimate will have to be revised upwards*.
The Hagerty Market Rating, which measures the strength of America's enormous classic car sector, also reached an all-time high this month, reflecting the overwhelmingly bullish sentiment this industry is experiencing in the largest trading market in the world.
Appreciating Moveable Assets
The number of global collectors has also risen dramatically in recent years.
Passion will always factor into classic car ownership, but investment-buying has escalated sharply in the economic uncertainty of the past two years.
Classic cars slot into the niche investment category of appreciating moveable assets. They're like fine art and quality gemstones; you can keep them close and move them instantly if necessary, but unlike cash under the mattress, their rising values grow your wealth.
Creative Rides is hosting one of the most spectacular multi-million-dollar classic car auction events on the 2022 global calendar in Johannesburg, South Africa, on 2 July, when more than 115 exclusive models will go under the hammer.
The remarkable auction will span nearly 90 years of automotive design and feature many highly sought-after collector cars rarely seen on the global market in recent years.
Hagerty's detailed analysis of the global Ferrari market in October last year noted that "there are collector cars, and then there are Ferraris… The cars that Enzo (Ferrari) built are in many respects a market unto themselves...".
Ferrari has been an automotive investment market leader for 40 years, with the first major collecting wave starting in the 1980s.
A new trend that's emerged in the past few years, though, is an impressive appreciation in the values of more recent models, most dramatically the 1987–1992 F40, but also for much newer cars like manual 1996–2006 Maranello's – one of which we're auctioning at Montecasino next month.
The Maranello will be one of nine Ferraris will be among more than 30 rare, sought-after Italian automobiles on the auction block. Another Italian lot stirring global bidder interest is a 1984 Alfa GTV 6 3L, one of only 212 ever built.
In December last year, Creative Rides had the pleasure of auctioning a GTV 6 3.0-litre for the first time, and we were astonished by the tsunami of inquiries about the car and the subsequent sale that went from R200 000 to a closing bid of R1.1 million in a matter of seconds.
Many unsuccessful bidders from December's auction are already registered for next month's sale because the GTV 6 3.0-litre is a classic investment car.
Pumping Muscle Market
US manufacturers will also be well represented at the auction because South Africa's enthusiasm for collecting muscle cars continues to grow.
But until recently, this was more a pursuit of passion than profit. Barring the stand-out rare collectibles that are perennial record-breakers, the global muscle car investment market has been relatively static for the past decade.
However, local collectors were absolutely right to follow their instincts because, since the beginning of this year, the market has rebounded to levels not seen since 2008.
Hagerty data analysis published at the end of April notes that Dodge Chargers posted some of the most notable gains, with sale prices rising an average of 30% to 40% since late 2021.
This bodes exceptionally well for bidding on the 1973 Charger we'll be auctioning on 2 July because it's a red-hot investment right now.
The same goes for our first-generation Camaro SS (1967-69) lot, which has also exploded in value this year by a staggering 35%.Investor buyers should also consider the wide-ranging definitions of classic and collectible cars when approaching auctions.
Classic cars are broadly defined as those that are 30 years or older, meaning that every year thousands of cars join the stock pool available in the classic category.
Collectables can be classics, but they don't necessarily have to be as old as the strict classic definition.
The most significant factor in defining a newer collectable is scarcity. Car manufacturers design special and often very limited numbers of particular models, which are built for groups of clients that are marquee followers.
As a result, these special editions will often be immediately desired and collectable, even though the cars are new and modern. This scarcity-determined limited-edition type collectable will generally be an investment opportunity.
The classic car investment market unequivocally presents a long-term value proposition in South Africa and worldwide. And that's not just being hopeful; it's a view underpinned by global industry intelligence predictor analysis of current market shifts.
Baby Boomers may still be buying the most supercars right now, but most classic car insurance clients internationally are Gen-Xers, Millennials, and even Gen-Xers.
What's also incredibly interesting is how youthful enthusiasts are broadening traditional collector car horizons with their passion for Asian automotive design and, in doing that, influencing market values.
Over the medium term, it means more enthusiasts will be after a widening subset of automobiles they consider collectable, which bodes well for a healthy investment market for some time to come.
(*Statista.com Global Research published 8 December 2021)The 2 July unreserved and reserved auction at Montecasino in Johannesburg starts at 11:00 sharp (Central African Time). The hybrid live, and online auction will be streamed across Creative Rides' website and social media platforms.
Visit the Creative Rides Auction Website to view the complete auction catalogue and to register for the auction. Contact Creative Rides at firstname.lastname@example.org for information on remote bidding.