Classic cars a poor investment
October 13, 2008 by Matt Brogan
Classic cars are becoming an increasingly poor investment, says the car buyers’ Dog & Lemon Guide Editor Clive Matthew-Wison. He’s advised that during these tough economic times, a classic vehicle is probably one of the worst investments you can make with disposable income becoming tighter by the day.
It’s not good news for those of us who already have a garage full of Classic Cars, but as Matthew-Wilson points out, our labour of love may end up stinging us in the tail.
“With the current economic turmoil, people are looking for safer investments, and some are buying up classic cars in the hope that these vehicles will gain in value. My advice is: don’t”
“There’s a widely held myth that classic cars never lose value and often increase in price. This is basically crap. People who invested in classic cars before the 1987 stockmarket crash generally lost heavily on the deal. In some cases their vehicles dropped in value by as much as three quarters.”
“Already American classic car collectors are taking a bath. In March of this year, the Wall Street Journal reported that the prices of many desirable classics had dropped by a third. By now I’m willing to bet that some of those cars will have lost half or two thirds of their value.”
“Even the upmarket classics like Ferraris are not immune. These cars tend to be bought during good times by people who have grown rich due to speculation on property or shares. When these investments drop in value, rich people suddenly aren’t rich anymore so they end up having to auction off their cars for far less than they paid for them. The situation is already bad and it’s going to get far worse.”
Matthew-Wilson, who has been restoring classic cars for over twenty years, says that people should buy classic cars because they love them, not because they want to make money from them.
“For many classic car enthusiasts, their car is a part of their family. However, most owners will privately admit that they’ve spent far more on their classic than they could ever hope to get back by selling it. If you take a classic wreck and fully restore it, you can expect to recover between one quarter and one third of the money you spent on it, not including a few thousand hours of your own labour.”
Print it: 
“There’s a widely held myth that classic cars never lose value and often increase in price. This is basically crap. People who invested in classic cars before the 1987 stockmarket crash generally lost heavily on the deal. In some cases their vehicles dropped in value by as much as three quarters”
Huh?!? So, what did collectors pay for an XY GTHO back before 1987? What have they been worth over the last 5 years or so? Simple maths, really.
I would generally agree with the sentiments of this article – apart from some very few exceptions. A well maintained classic is beautiful to behold, but it really is a labour of love. If you have one, just enjoy it without the crazy notion that you might make a dollar or two on it someday. If you do make money ono it, good luck to you.
It’s beyond me why some people buy these rust bucket ‘classic cars’ and pay almost the same price as a brand new Porsche or Ferrari which is hell of a lot sexier, more fun to drive, and will actually make hot women turn their heads!?!
Im pretty sure thats the difference between a colletor and investor FH, one buys out of love while the other buys in hoping in the future someone with love will buy it at a premium.
Restorations are usually fruitless as a money maker as its not really ‘original’ anymore so the value it not really there.
Ahaa, joober you’re talking about that touchy subject of ‘authenticity’ over ‘originality’. There is value in true authenticity but I agree, originality is king.
As far as the subject goes though, emotions often speak louder than bank balances when it comes to classic cars or any other materialistically cool things for that matter.
The good thing about th current ecconomic climate (maybe the only good thing) is that classic car lovers (like me) see the people who purely by classics gradualy drop out of the market. That leaves the people who buy these cars left. Prices become more realistic. When I bought my EH 8 years ago I paid $1200. Sure I have put a lot of time and effort into the car, but it is not worth the $14′000 I have been offered for it a few times. The same with the bloke that paid (a reputed) $750′000 for a Phase 3 GTHO last year. Sorry but that is just insane. I feel sorry for him if the value drops but all he did was help to drive the price of Aussie classics out of reach of most ordinary car lovers. Here’s to hoping that the market comes down to more realistc prices so we can all enjoy classic motoring.
Unless it’s a rare Classic (All original, only ever driven off the back of a truck) I’d have to agree with this article.
The “invest and hold” philosophy (for non-income producing assets) is bollocks, folks.
Every investment that does not produce a revenue stream is a pure gamble. You must have an exit strategy for such investments, which in reality makes you a trader.
So, buy a classic car, sell it when it goes up 10%, and you are a successful trader. If it goes down, your exit strategy might be sell if it goes down 8%, so you lose a bit but don’t take a total bath.
If you hold on to the car and it goes up 10%, you have effectively still lost the purchase price, same thing if it quadruples.
The article is spot on.
the article is spot on, you should buy them cause you love them.
Anyone who bought them as an investment is an idiot!
Agree,Cars are a non profit making exercise.
I once owned a 1967 mk 2 Jaguar, an inheritance from my late grandfather. It was in fair condition and needed approximately 6k to pass road worthy compliance. I had the work done, drove the car to uni and back and some shortish road trips. Then one day I decided it wasn’t reliable/practical enough so i decided to sell, advertised it for 10 k for year; no genuine buyers, dropped the price to 6 k; sold at 5.5 k within a week. The point of my post: I regret selling the car and that classic cars are ultimately priceless, and should be bought/sold using their own monetary value system, not the conventional system!
cars are a poor investment. its old news.
sure something that you have had in original condition, is rare, and have had for a few years will spin you a few buck,
but the ones you restore to get back to original are a waste of money and time.
eh179driver,
how much did you spend on your EH including time and effort to find the parts?? (and how long did it take you to complete)
My brother inlaw has an EH (Not quite finished yet) and the amount of time and money he spent/spends on it hardly makes it worth it. even if he gets 14K for it when or if he finishes it, it still wont reflect a good investment
what about the $150000 Commodore isn`t that a good investment, lol
Damm! Damm! Damm! I thought I might get $180000 for my classic 1983 SJ camira.My mother hates it
If u want to “waste” money on classic cars in the next 12 months should be ripe pickings if the economy goes into recession for reasons already mentioned.
Gee might be able to pick up a good XA GT for less than 30k.
I remember how a mate bought an immaculate stock 911 before the recession we had to have and was forced to sell for less than half the price he originally paid.
Andrew M. It took me about 2 years of work and I spent about $3′000 cash but hundred of hours. The car had been used as a a bit of a farm hack. I must have removed 30kg of dirt from the floor/wheel arches. I did all of the body, mechanical and paintwork myself. That was about 3 or 4 years ago. Since then I have spent another $3′000 on trim and a new engine. The car is stock with the exception of the engine as it now runs a 186 bored out, head work, cam, holley, extractors etc. The front seat are Prem seat trimed in the original 2 tone metallic. I run on a set of rare Magnum light alloys. I have kept all of the original mechanicals and trim parts and there are no additional holes or mods to the car that a weekends work wont fix. It is a great car and the family love it. Goes like stink as well.
My point is that even though I would make a monetary profit, the hours of labour are incalcuable and I would never ever go into a classic to make a profit. But it also proves yoy can get into a classic for a modest investment but have a great deal of fun along the way. If it is done right it is also a hobby that the entire family can enjoy. I just wish I spent more time in Australia enjoying it.
Reminds me of a story in the uk where a dude brought a Jag XJ220 and had it bricked up under the stairs of his factory. He died and the car was forgotten about. Eventually the car was discovered and taken to the big auctions in London where it was sold for a tenth of its original purchase price…even though the car had never been driven.
The only vehicle that I have seen honestly retaining value over recent times is by no means a classic (unless You’re a Red Neck). That vehicle being the F250 Dual Cab 4×4. I mean really, I was selling them for $78k or under nad now 2nd hand ones are selling for $90k with 100,000km on them. There’s an investment for ya.
Ah, Frontman, it’s true they are retailing for more than when they were new.
But by the time you have paid for 100,000k of running costs, and pocketed the wholesale selling price of $50,000 you have still not made money.
I know of one that is for sale for $149,000 which the dealer bought for $95,000. It has a lot of mods….
Actually reckless the customers I put into them found their fuel economy better than 70 series cruisers and they only got scary if you used genuine injectors when replacement was due.
But even so it’s still crazy given their build quality
eh179driver,
you just proved my point and summed it up beautifully.
your EH wouldnt be a great Investment, but rather a great Hobby.
you have spent 6K on it plus the other few dollars you have forgotten to add in, coupled with the obvious that most people would have to pay to initially purchase one for restoration (not all inherit classics).
and then the obvious of your hundreds of hours of work you have done multiplied by a decent hourly rate would equal pretty much 14K (or more).
i see so many ads for restored vehicles selling for half of what they say they have receipts for
buying a classic in original condition isnt as risky as restoring one and hoping to make some dosh
Andrew M, you are 100% right. I went with the EH for the same reasons many people do. Firstly nostalgia. My dad had a new one when I was very young. Then I had one as a first car. Went quick but like most 17/18 year olds, never ad the money to make it a good car.
I initialy looked for an LC/LJ XU1 before buying the EH, but the prices people wanted for them was just ridiculous for a hobby car. Settled on the “H” and have never regreted it. If you have some common sence, are preparred to have a go, join a good car club and can read simple instructions, you can do anything to the car. If you go wrong there are plenty of people in car clubs to help. The Holdens are cheap to play with and I have as much fun in my car as my mate with his $60′000 69 Camaro. I even take mine on dirt roads. His comes out to play when the weather is just right…
Pure BS and anyone who agrees with these sentiments knows little about cars and the classic car market. How do you explain the millions of people who have made millions by buying and selling classics?? Sure, there will always be rich goofs who overpay and over-value cars as “investments”, but those are the only ones that really get bilked. Many people own classics – or restore them – and if they know what they are doing, almost always turn a profit. It’s not rocket science, but guys with money just throw too much at things. Those getting burned currently are the guys who overpaid at Barrett-Jackson for the past few years. No car is going to apreciate a million dollars in a year or two (read: hemi-cuda!). If they where worth 50 grands three years ago and are worth maybe 60 grand today.
A few points on this economic crisis which is not going to go away. Nor throwing trillions at the banks and finance gurus (big money) which is a continuince of the same process that caused the crisis along with the worthless toxic paper. The banks are now using the bailout money for increasing their leverage and position (read domination over the market) by buying up all the smaller banks. The same big money interests with their golden parachutes have created another successful touchdown by cashing in, on the very crisis of their making, for another big payday. The Great Depression of the 1930’s increased the tensions sharply between countries so that trade war became shooting war. The Depression went right through till 1954.
I think the odds are weighted in favor of decreasing prices for classic cars rather than rising.
Classic cars will still be classic cars, and markets will still be markets. Markets dictate the price of an asset. Nothing is a truly bad investment if there is a market behind it.