Many car enthusiasts see classic cars as a staple of a different time. Some classic cars have a rich history behind them, and pinpoint significant moments in the automotive timeline. However, there are many collectors out there who only see classic cars as investments. But why do these people, with more money than most people ever make in my life, only buy classic cars as an investment?
Why do collectors “invest” in classic cars?
A recent survey recorded by The Classic Car Journal discovered that 30% of people looking to purchase a classic car in the next year are doing so for profit reasons. If that sentence made you wince, congratulations, you care about cars too. Ask any enthusiast who enjoys cars, and you’ll know there’s always more to them than money.
With that said, there is a ligament business behind buying and collecting cars, whether they’re classic cars or supercars. Many wealthy people use cars as a way to bump their net worth. It’s also a way to “diversify their holdings,” which is an economic term for spreading their money around.
So many collectors will buy classic cars and never drive them, letting them be maintained for years and kept in good condition, then sold for a profit. But what exactly makes a car collectible?
What makes a car a collectable?
For a classic car to become a collectible, there has to be something significant about it. Whether it’s a styling that’s aged rather well, or that it’s a piece of company history with a limited production run (rarity helps jack up the price). Sometimes, if a car is owned by a celebrity, such as Carrol Shelby and his Cobras, that’s enough to make it a collector’s item as well.
Racing history and pedigree also help make a car a classic, especially if the car has won. Now, this is trickier to attain nowadays, since production race cars aren’t really a thing like they were in the early days of racing. But plenty of cars have the engines of race cars.
The “rule of thumb” described by Investopedia is that, if the car was hung on a teenager’s bedroom wall, then it’s probably going to become a collectible classic car. At some point, those kids will grow up, and they’ll want to buy the cars they dreamed about as kids.
There’s a crash course on how classic cars could potentially make you money. But in truth, investing in classic cars is a massive risk. So unless you have a lot of money to blow, you may not make it out unscathed.
Why it’s a risk to invest in classic cars
Unlike other collectible items, such as coins or wine, cars need to be heavily maintained for years before they reach collector status. And many cars people think are going to rise in value over time may become total duds. The 1976 Cadillac Eldorado was said to be the company’s last convertible. That lead many investors to think it’d be a hot commodity, but Cadillac ended up building another convertible later on. Now the 1976 Eldorado was just another 70s convertible.
In other words, you never know what’s going to become a classic car, even if you make all the calculations. Classic car value doesn’t come from monetary, or even logical standpoints. Classic cars have sentimental value, and everyone has different values they hold dear. Only when many people have the same appreciation for a classic does it skyrocket in value. But in truth, you can’t predict what classic cars people are going to love and invest accordingly.
To sum it all up, buy a classic car because you love it, not because you’ll profit off it.