Investing in Cars
Most people tend to think that if they buy a car, the value will drop over time. The value of the car will of course drop because it is a ‘product’ which will age and will be used, perhaps getting damaged. Most cars (classic cars not included) have a lifetime of about 15 to 30 years, after this period there is a huge chance that a car will not be worth anything at all. Now, this is true for most cars, but not for all.
New car market
In the last few decades, investing in cars has become more and more popular. For new cars, this is caused by the fact that some cars have an extremely high demand whilst the production is (very) limited. To demonstrate the sort of profits which have been made, I will provide a few examples of current listings.
New price: $1.000.000 – $1.500.000
Current listings: $3.000.00 – $4.000.000
Introduced in 2013, the LaFerrari is a limited edition (500 examples) hypercar. Only extremely loyal customers were able to buy one. This caused the car to be unreachable for many, which led to prices skyrocketing. The price of the car from factory was somewhere between 1 and 1,5 million dollars, depending on the specification. These cars are currently being sold for prices in between 3 and 4 million dollars.
Porsche Cayman GT4
New price: from $84.600
Current listings: $105.000 – $125.000
Whilst not extremely limited at 2500 cars, it is a true driver’s car, which increases the people interested in the car, which creates more demand. The car was originally introduced in 2015, so the lucky few who were able to buy one at the time could now make a potential profit of around $25.000. That may not seem that much compared to the last car we just talked about, but keep in mind that it was relatively easy to obtain one of these cars. Also, during the ownership you were able to drive in this car without the mileage having a (or any) effect on its price.
New price: from $184.900
Current listings: $500.000 – $800.000
The last two cars we discussed are cars which are gradually increasing in price. However, with some cars the price skyrockets at first and drops down after a while. This was the case with the Porsche 911R. It was supposed to be the last ‘true’ Porsche due to its drivetrain. When the first deliveries took place, prices went up to $1 million. Now that all cars have been delivered and the hype is mostly over, prices start to settle at a price point which is a bit lower.
Classic car market
The problem with the new car market is that prices for cars with investment potential usually start upwards of $100.000. Another problem is that in order to be able to buy one of these special limited edition cars, you have to be a really loyal customer. For the LaFerrari which we just mentioned you needed to have at least 5 other Ferrari’s in your garage to be allowed to buy one.
In the classic car market there are cars with investment potential at almost any price point. From a wonderful Peugeot 206 GTI for around $20.000 up to a Ferrari 250 GTO for around $38 million.
Investing in cars is kind of the same as investing in art, every piece of art, or every car, has its own story. The stories can make a huge difference in the value of the car, every chassis number has its own pricing. With new cars, this is not really a big deal most of the time, but with classic cars it can add a lot of value to a car.
1962 Ferrari 400 Superamerica LWB Coupe Aerodinamico by Pininfarina
Auction price in 2012: $2.365.000
Auction price in 2016: $4.400.000
Classic Ferrari’s becoming more and more popular. In the days that these cars were built they were only meant for the extremely rich people. Ordering one of these cars was a very personal experience and there were no limited production runs, the amount of a type of car being built was determined by the demand for the car. In the 60’s, the annual production of Ferrari would usually be a few hundreds. Last year, Ferrari produced over 8.000 vehicles. This means that Ferrari lost part of its exclusivity and in order to have something really unique, more and more people tend to buy a classic car.
Auction price in 2009: $147.800
Auction price in 2015: $605.000
The BMW M1 is a very rare and collectible item because of its rarity. It is the only true mid-engined sports car BMW has ever built. With cars becoming more and more complicated, having a sports car without too much electronics in it is becoming very desirable.
It is safe to say that not all cars depreciate, and that it is possible to make huge profits in either a small or long period of time if you have the resources required for the purchase. And whilst making profits, you can also drive around in style.