Which classics to buy, how to make money and how 2030 new car sales ban will impact classic cars
Can you buy in a classic car in 2021 and make more money than investing in art or gold? Which cars should you buy? How will the 2030 ICE car sales ban impact classic cars?
What a tough year this has been, and how unpredictable. Even as I write this London is reeling under newly imposed tier 3 restrictions as coronavirus infections continue to rise, despite the fact that a vaccine has finally arrived.
That unpredictability 2020 obviously spread to the car industry and proved catastrophic to new car sales, which have taken an absolute battering. Used cars, on the other hand, did rather better. But how did classic cars fair?
With the economy crashing, the market being mostly limited to online selling and the implications of the 2030 ICE (that’s internal combustion engine) car sales ban looming in the UK (with similar restrictions impending in other countries), you could justifiably imagine that trying to figure which classic cars to buy next year, both for your petrolhead fix and also as an investment – if that sort of thing is still possible – is potentially a minefield right now.
But in the video above and this article we’ll do both – and you know what? There’s quite a bit of good news to be had. So sit back, read on, and get your chequebook ready – this is going to get interesting.
So is it a good idea to invest in classics? Could you actually see your investment grow? Well yes you could – more than some traditional investments in many cases.
Now before I get into this research that was put out by Vanarama recently (https://www.vanarama.com/car-leasing/blog/cash-in-the-garage-are-classic-cars-a-solid-investment.html) and as they also pointed out, it’s worth mentioning that there are no guarantees.
There’s always risk involved in investments – and cars are no different. In fact, in addition to the rising asset value of cars, you need to consider storage, maintenance and insurance costs, plus repair and restoration expenses, especially if you intend to run them.
That said, the average value of affordable classics has been seen to increase by 97% over a decade. Even in half that time, values were seen to increase by as much as 33%.
Keep in mind that that’s usually how much new cars depreciate by in their first year – so instead of losing 30-50% on a new car in its first three years – think about this, you could buy a usable daily driver modern classic, and potentially MAKE that much in the same period.
So Vanarama looked at the value of things like stocks and shares, property and art at an investment level of about £15,000 – they chose that value to compare to equivalent classics going for about the same money. What they found was that the five cars they looked at, all gained more value over a decade than some of these investments.
While stocks do well in the shorter term, over a 10-year period, a classic car appreciates by almost as much – 97% compared to 107% for stocks. However classic cars are consistently ahead of property – doubling value over a decade – now that’s a surprise. And they are well ahead of art and even gold.
Looking at the cars they chose to study – with starting prices below £15,000 in 2010 – they identified the 1961 Volvo P1800 as the best place to see your money grow – rising in value by 283%. That’s an extra £22,000 added to its value.
Interestingly according to their research the value of the P1800 seems to rocket upwards in 2017 – incidentally that’s the same year that the great Sir Roger Moore passed away – he made the car famous in his role as TV’s The Saint, before he became James Bond. Keep in mind, things like this do often have an impact on classic car values.
Now it’s great to see Japanese cars been acknowledged, loved and recognised as classics worthy of investment, with the wankel-engined 1981 Mazda RX-7 in second place rising by 239%. And the legendary VW Beetle of course is right up there at third at 157% – increasing by over £10,000!
I’m a little surprised by the 1968 Ford Mustang GT being so low on the list at 67% – but I suspect that’s a little skewed because 60s muscle cars rose steeply in value over the previous decade, particularly in the mid to late 2000s.
I’ve been saying for a couple of years now that the XJ-S – also a later Saint car when he was played by Ian Ogilvy – was a good place to put money, and sure enough they went up by 39% – I suspect they will increase a lot more in the coming decade.
Now what about this crazy year – 2020 itself?
Surely no one bought classics during all these lockdowns right? Well actually a lot of people with a bit of money found themselves sat at home with nothing to do but surf the internet, with itchy trigger fingers and a restless credit card – unsurprisingly quite a few online auction houses reported record results this year.
One – Gooding & Co – reported $9.2 million in sales and a 77% sell-through rate for an online auction. BringATrailer.com had some of the most traffic to their website ever, during the strictest lockdowns! So actually the market has remained consistently strong.
Before we get into actual cars that you should think about investing in – what makes a classic car likely to be collectible and hence appreciate in value?
Obviously demand – people hunting for them, snapping them up, that of course makes them special. Porsche 911s fall into this category for example.
But be aware – demand is not always consistent, as mentioned with the Volvo P1800 they could be triggered by topical events, deaths of famous people – (Ferrari values shot up in the late 80s after founder Enzo Ferrari died) or it could be to do with anniversaries of some kind, and occasionally if a classic car suddenly starts trending on social media.
Of course, demand can lead to rarity, and of course scarcity will see values increase. However, that doesn’t mean you’ve already missed out and can’t afford one. Because even when that happens, hunt around carefully, because often classics (especially modern classics) are with owners who don’t realise their potential values, or don’t’ want to be bothered with restoring or reviving the cars, and that’s when you could bag yourself a bargain.
For example, third gen Honda Prelude values are going up because of its unique sleek design and clever engineering, including being the first production car on sale to have mechanical four-wheel steering. Those are hard to find. Yet I’ve seen one being driven around as a beat-up daily driver right here in my local area in Northwest London. I’m still trying to identify who actually owns it – I don’t think they realise its value.
It’s a clever car and that segues to the next important aspect – Design and technology, which of course obviously plays a big part in a car’s desirability and classic status, especially if something was unique, significant or epochal in its day. Values of the original McLaren F1 supercar are stratospheric, because it was so advanced and highly engineered in its day.
Then there’s just plain nostalgia, and this is often a generational thing – and is why as I mentioned earlier, you can have situations where suddenly there was a boom in 60s muscle cars. It was due to the generation that grew up with them, cashing in retirement cheques and wanting to live out their teenage fantasies.
Don’t forget pop culture – like movies etc. It’s why the DeLorean – a car that arguably was a failure in its day for a number of reasons I won’t get into –but was then made famous by the Back to the future series, remains a solid investment and a much-loved cult classic.
And finally, there is that indefinable X Factor – something that just makes a car special – like the World Rally Championship dominating Audi Ur-Quattro, James Dean’s fateful Porsche and of course Steve McQueen’s Bullitt Mustang – stuff like that.
Insurance specialists Hagerty, do something they call a Bull Market List every year, in which they pick their top ten cars to invest in – they do these lists both for the UK and the USA. I won’t repeat all of them, but I’ll pick out some of the cars they mention, but I’ll leave out the obvious ones. Although you can check them out at these links:
And when I say obvious I mean cars from marques like Ferrari, Lamborghini and Porsche etc. Having said that the original Testarossa and the 328 – that’s the one after the car Magnum drove which was the 308 – are all solid investments right now.
And having hit its 30th anniversary, I think we’ll see Lamborghini Diablo values rise more steeply. Especially as it was the last car designed and developed before Audi-VW group’s involvement, and hence arguably the last pure Lambo?
As for Porsches, aside from the 911, the 928, 944 and 924 have seen values go up recently, I’d say it might be a good idea to snap up 968 models next year.
Before we get into the cars that Hagerty recommend, it’s interesting to note what they say regarding the 2030 ban on petrol and diesel car sales. While it won’t prohibit the sale of classic cars, it is ultimately trying to discourage people from using fossil fuels, so Hagerty reckon there’s a possibility it might dampen classic car values.
Personally, even if that does happen, I think it will be a temporary blip, for two reasons – firstly, I think petrol and diesel will be around until at least 2040 if not beyond as I discussed previously, because many of us will still be driving conventional ICE cars probably right up to 2050.
And secondly – the move to electric cars could actually make classics more desirable, people will want to keep hold of them, so I am actually pretty certain values will increase, and there will be a surge on so-called ‘modern classics’. And cars that we don’t yet think of as classics.
For example a 2020 Honda Civic Type-R – which is an awesome machine – will be a 30 year old classic by 2050. And you just know it’ll still be a reliable runner, right? Think about that!
Focussing on the less obvious classics, here’s what caught my eye in the Hagerty lists.
The first-generation Land Rover Discovery Series 1 from 1989 to 1998. That’s a somewhat unusual suggestion, particularly as most of these are either well worn and battered or highly modified for hard-core off-road use now. But I reviewed this car back in 1990, it was a standard setter – a family SUV based on Range Rover.
I recently reviewed the brand new Defender, and I did say that it feels more like a successor to this original Discovery than the previous Defender. Hagerty saw Disco prices up by over 15% compared to 2019.
The Mercedes SLS AMG – Gullwing doors! I mean c’mon. And a proper German muscle car, loud and theatrical, you gotta love it. Currently at around the £170,000 mark, prices have recently increased by 2.5%.
The original Mini Cooper – can you believe that prices for this 1960s city car are around £24,000! And while they didn’t move in terms of value by much this year, these are becoming rare and highly collectible.
The 1986-1991 Renault 5 GT Turbo is something of a legend – and prices have rocketed by 39%. It’s still possible to get one for under £15,000 – but act fast.
Toyota’s third generation MR2 – the little mid-engined roadster that looked a bit like a Porsche Boxster – and actually was my favourite in the range in the lineage, is an absolute bargain at the moment. You can pick one up for two or three grand easily, but values have seen a rise of over 12%. Get one now.
Interestingly Hagerty also has the 1964 Honda S600 on its list, though I’d also add in its successor the S800 from 1967. They are very rare, but utterly brilliant fun by all accounts.
Another surprise might be the 2006 Jeep Grand Cherokee SRT8 – actually I can see a trend emerging, not just for these, but all the early SRT models with the big HEMIs like the Chrysler 300C for example – well worth it right now.
Perhaps equally astonishing to some, the J80 series Toyota Land Cruiser of the 1990s is listed. This generation is often regarded as the best of the modern versions: indestructible, reliable, highly capable, and sure to be rewarded for its iconic status with rising values.
Now here’s a few suggestions of my own.
I mentioned 60s muscle cars earlier, now I reckon it’s time for the 80s versions. Things like the Chevrolet Camaro and the Pontiac Firebird Trans Am.
The Camaro Z28 and iconic IROC Z from the mid 80s are highly sought after and collectible now, but I always preferred the Trans Am with the pop-up lights, particularly because that was the Knight Rider car!
You can pick these up for under 10k and even customise them to look like KITT. The proof that they are experiencing a renaissance? One featured prominently in the first series of the Karate Kid continuation series on Netflix – Cobra Kai.
Earlier I mentioned the Jaguar XJS – I’d still have one. But right now I’d also be looking at early XK models from 1997 onwards. For a while they looked dated, but now they’re starting to look sexy again. Plenty around, so be picky. Get the best you can.
Everyone went Supra crazy last year with the arrival of the all-new muscle car from Toyota. But they were all looking at the 1990s A80 version as featured in the first Fast and Furious movie.
Prices have already shot up – so look now instead to the previous A70 and A60 versions from the 1980s – I actually owned an 84 car once and miss it so much. Today it’s worth nearly 10 times what I paid for it in the mid-90s.
Similarly check out the 1990s Nissan 300ZX Z32 edition – I feel it’s been overlooked and is about to have its day.
The BMW 8 Series E31 has been on the up for the last couple of years, it’s still possible to get these for around 15,000 and they’re well worth it.
But I’d also highly recommend the 1980s Mercedes S-Class coupe – especially the 560 SEC – that was a truly lust-worthy beast. Prices are already in ascendance. Spend between 20-40k and keep it safe, or cruise in it, either way, it’s just a really cool thing to have.
There’s tons more cars that I could add to this list but I’ll end, for now at least, with probably another surprise. The original Lexus LS400. Yep, these were dirt cheap a while back, but good ones have crept back up to over £10,000 or more in some cases.
Remember in the criteria we mentioned earlier – cars that were epochal or technological advancements – well this was Japan putting all the German luxury cars in the shade at a single stroke – they had crisis meetings in Stuttgart when this thing came out.
I remember being totally blown away by just how supreme it was when I reviewed it back in 1990. It’s definitely worthy of a footnote, if not a chapter, in the annals automotive history – and will become sought-after. Find a good one and keep it safe.
And that applies to everything really.
As stated earlier, I do think all surviving traditional internal combustion engine cars will become future classics as we roll on towards an electric-only future.
So if there are cars you’ve always loved, liked and wanted, now is the time. Get them, drive them, enjoy them while you still can.
And rest assured, even when the driving stops (read my sci-fi story on our motoring future), because governments eventually legislate us off the roads (probably around 2050) the values will still go up. After all, all cars with internal combustion engines will become historical artefacts of mankind’s progress because, let’s be honest, without them, so many of us wouldn’t have had the mobility we’ve become so used to.
Let me know in the comments below – what classic or modern classic you reckon is a good bet for fun and investment in 2021.
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