In 1977, a Ferrari owner gave up his 1962 250 GTO because his wife complained it was too noisy, says Andrea Modena, head of Ferrari’s classic car division. It was either her or the car. Nowadays, everything is not like that.

“Today, I’m not sure that the wife would have won,” Modena said, as quoted by Reuters.

Times have indeed changed. In 2018, the same Ferrari model became the most expensive car ever sold when it sold at auction for $48 million.

Last year, the record was broken by a 1955 Mercedes-Benz 300 SLR Uhlenhaut Coupé, which sold for €135 million ($149 million).

These mega deals top billions of dollars in annual spending on classic cars worldwide amid a wave of investment in this alternative asset.

Over the past 10 years, the value of vintage cars has increased

According to Knight Frank’s 2023 report, the value of vintage cars has increased by 185% over the past decade, outpacing growth in luxury rivals such as wines, watches and art, and second only to rare whiskies.

The market has grown beyond the relatively small collector community to include investors attracted by the prospect of high returns and the lack of correlation with core portfolio assets such as stocks and bonds.

“We have been watching the market for a long time,” said Giorgio Medda, CEO and head of global asset management at Italian fund Azimut.

“The history of the last 30 years tells us that classic cars have become a financial asset class that we want our clients to have in their portfolios,” Medda said.

Evergreen fund of retro cars

This year, the asset manager is launching what it describes as the world’s first “evergreen” fund to invest in vintage cars and says it will only bet on cars worth more than €1m each.

On the advice of Alberto Schon, chairman of Ferrari and Maserati dealer Rossocorsa, the foundation says it will choose cars with a unique history.

While the Azimut fund will not have an end date and can raise new money indefinitely, small Swiss asset manager Hetica Capital launched a €50 million “closed-end” fund in 2021, also believed to be the first of its kind.

The Hetica fund, which targets returns of 9%-15% after seven years, has bought a dozen cars so far and aims to reach 30-35 cars by the fifth year, leaving the last two years to sell the cars and pay out investors.

Bold plans

“Over the past time, we have seen more than 100 attempts to establish funds. No one has managed to create a diversified investor base and a diversified portfolio of cars,” said Dietrich Hatlapa, founder of classic car research center HAGI, which provides industry data used by Knight Frank.

This is also not a sector for the financially weak.

Azimut and Hetica funds, registered in Luxembourg, have a minimum initial investment level of 125,000 euros.

“We get a lot of calls from people who want to invest 1,000-2,000 euros and we have to turn them down,” said Walter Panzeri, who manages Hetica’s Klassik Fund.

A scratch means serious damage

In addition, a small scratch or dent or a spare part can cause a serious financial blow.

For example, replacing just the bumper of a rare vintage car can cost $15,000, Modena said.

According to Florian Zimmermann, who started buying vintage cars while working at Mercedes-Benz, the ongoing costs of collecting cars, including high storage and insurance fees, can easily add up to 5-6% of the value of a portfolio annually. a collection of 300 vehicles with a partner.

“It’s getting harder and harder to find the right mechanics to keep these cars alive. And you have to spend quite a lot to keep all those machines running,” he said.

The classic car market is expanding

Indeed, investment funds that manage portfolios of cars can be a source of money for the classic car divisions of automakers, which not only provide repairs and parts, but also certify vehicles for use in shows and competitions.

The certification process alone can cost around €20,000, according to Mercedes-Benz Classic’s Peter Becker, who said only the carmaker’s experts, with access to its archives, could confirm the authenticity of a classic model.

However, the market for classic cars is expanding as the number of wealthy people increases.

According to Knight Frank, the value of vintage cars will increase by 25% in 2022, the strongest performance in nine years and second only to the 29% increase in art.

Classic vehicle insurer Hagerty estimates approximately $80 billion in collector car deals worldwide this year, including all auctions and private sales.

Buyers from all over the world

While North America remains the largest auction market, Hagerty expects $3.4 billion in auction sales in 2022, up from $774 million in 2007.

Zimmermann said the number of buyers in the Middle East, India and China has increased in recent years.

The global race to abandon cars with internal combustion engines will only increase interest in these monuments of a bygone era, some market players believe.

“Electrification will favor classic cars,” said Cristiano Bolzoni, head of Maserati’s classic car division Classiche (news.ro).