Investing in cars

Investing in cars dr. Vincent van der Vinne

HIGHEST AUCTION RESULTS OF A JAGUAR C-TYPE IN POUNDS STERLING (PERIOD 1980-2015):

1952 Jaguar C-Type. Auctioned at Bonhams in December 2013 for £ 2,913,500.

Photo: Bonhams.

£ x 1000 9000 8000 7000 6000 5000 4000 3000 2000 1000 80

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Colophon Copyright @ 2015 dr. V. van der Vinne All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the Publisher.

ISBN/EAN: 9789490758004 Author: dr. V. van der Vinne, www.vincentvandervinne.nl Lay-out and formatting: Prezns, Marco Bolsenbroek, www.prezns.nl Lay-out cover: Prezns, Marco Bolsenbroek, www.prezns.nl Photo front cover: Bonhams Photo back cover: Ton van Til, www.tonvantil.nl Printed by: Grafistar BV Lichtenvoorde, www.grafistar.nl

Publisher: Uitgeverij M.G.S. Siemes IJsselkade 18 7201 HD Zutphen the Netherlands www.martijnsiemes.nl Investing in cars Original publication in Dutch: De auto als belegging: 2011 Revised version: 2014 First translated print: 2015 Both the author and the publisher have strived to handle copyrighted material according to the law. Nonetheless, individuals who are of the opinion that they are entitled to exercise certain rights, can at any time contact the author or the publisher.

Contents

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1. Introduction

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2. Structure of the book Investing in cars?

Facts and fables Expectations Development of prices Price indications in this book Highest auction results Constraints For whom is this book intended?

19 20 22 22 23 26 27 30 30

3. Are classic cars a good investment?

Private bankers No single classic car is like another Comparison with stock exchanges Comparison with gold Comparison with art market Price development of classic cars Financial aspects Advantages of classic cars Making choices Ever higher auction prices

35 36 36 40 40 42 42 47 47 52 52

4. The price-setting of classic cars Comparison with modern cars Driving up prices in the art market Limited choice in cars Magnet effect

59 60 60 60 64

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5. The influence of the economy Gradually increasing prices The eighties Japanese investors The market surges Higher prices The role of investors Price explosion Criticism of investors Doubt The price rise stagnates The market collapses Consequences of the price decline Disappointing expectations The nineties Slow price increase After the turn of the century The financial crisis of 2008 New records Worth more than in 1989 Future collectors The baby boomers The Veblen effect Factors explaining the price

71 72 72 75 75 76 76 77 78 78 79 79 79 79 82 85 85 86 90 90 90 91 91 91

6. Brand awareness Very famous and valuable classic cars Well-known and somewhat less expensive classic cars Famous, but not expensive Little known and relatively inexpensive Conclusion Famous, no exclusive image and yet expensive classic cars Classic cars follow image of manufacturer

97 98 98 101 104 106 106 109

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Moderating influence of manufacturer image Little known and expensive Enthusiasts keep names alive Other stimulating factors

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113 115 118 120

7. The original market segment The high market segment before 1914 in Europe The high market segment before 1918 in the United States The low-end market segment around 1900 Differences between European and American cars The higher market segment between 1918 and 1940 in Europe The higher market segment between 1918 and 1940 in America Not always expensive The higher market segment after the Second World War Low market segment, relatively expensive classic cars The affordability of cars Do exclusive cars retain their value?

Some examples Higher prices, but also more expensive? Incomes and exchange rates The price development of a Dino 246 GTS Higher prices, but for a long time hardly more expensive Comparison with gold Price and affordability How much may a car cost?

125 126 130 133 133 135 141 142 146 146 146 148 149 151 152 153 153 153 153

8. Type of coachwork Closed cars were initially more expensive The prices change The Convertible becomes exclusive Current preference The difference in price between pre-war cars The difference in price between post-war cars The two-seater was originally cheaper Early large sports cars Early small sports cars American sports cars Sports cars from the thirties The Grand Routiers The post-war sports car The post-war American sports car Price differences between open and closed sports cars Differences between open cars Exceptions

159 160 160 161 162 164 165 165 167 169 172 174 175 181 181 182 187 190

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9. The coachbuilder Remarkably high prices Other examples French coachwork is relatively expensive The last French coachwork Valuable Italian designs

197 198 198 201 207 207

10. Special coachwork, built in limited numbers Pre-war coachwork Deviating designs Deviating combinations Special features Unusual design Artistic creations Standard coachwork starts to dominate Post-war coachwork British coachwork Italian coachwork More possibilities British cars with Italian designs American cars of Italian design Other designs American woodie Aluminium coachwork The prototypes Rare is not always expensive

221 222 226 229 230 234 235 240 240 242 246 246 249 252 252 254 254 258 264

11. The beauty of the coachwork Criteria for beauty Imbalance Streamlined cars Change in taste New design The sixties and seventies Judging proportions

269 270 274 285 285 290 294 296

12. Originality Earlier changes to the coachwork Later changes to the coachwork A Delahaye as an example From Coupe to Spider Replica coachwork Other original coachwork

301 302 305 306 308 309 312

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Modified cars Original engines Original?

Cars are multiplying Little known replicas Fraud Cars with replica coachwork are more expensive than original cars Shift Cars with replica coachwork are cheaper than original cars Cheaper post-war replicas Doubt leads to lower prices Originality cannot be replaced

313 313 314 316 316 320 321 326 328 328 328 332

13. Limited production totals Past production levels and scarcity Exclusive cars from Europe and the United States Examples from Germany Examples from France Examples from Italy Examples from the United Kingdom Examples from the United States Exclusive German cars from after 1945 France after the war Exclusive Italian cars from after 1945 Exclusive British cars from after 1945 Exclusive American cars from after 1945 Small totals built and relatively inexpensive Recent increasing interest Larger numbers built and relatively expensive Not exclusive and relatively expensive Presumed rarity

339 340 340 345 348 351 352 355 358 360 364 370 373 379 380 381 386 387

14. The condition Why undertake restoration?

The costs of restorations Reconstructing coachwork Replica coachwork Over-restoration Old or new cars?

Good, non-restored cars increase in value Demand for restored cars

391 392 395 395 397 399 399 402 402

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15. The history of a car A. The history of the vehicle itself Special chassis numbers and prototypes favoured (more) Retention of value (and of value appreciation) B. The history of the owner Cars belonging to well-known owners are more expensive Well-known owners sometimes add little value Risks related to cars of famous owners Unusual designs C. The history of use Use in films and series Use in races Racing cars are often expensive Factory replicas Present–day replicas

411 412 414 418 419 419 421 423 424 427 427 427 427 432 438

16. A changing public The interest in cars shifts with the age of collectors Changing prices Changing price ratios Changing prices in various time frames Exceptions Experiencing adventure and museum collection The best investment Fluctuation Interest continues to shift

443 444 446 447 454 459 460 463 463 466

17. Prognosis The demand for classic cars Not more cars Originality becomes increasingly rare Chassis are often identical Special coachwork is scarce New collectors Conclusion Addition: Pre-war: Post-war: Overview of bar graphs Cars:

473 474 474 474 477 480 480 484 488 488 489 491 491

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1953 FIAT 8V Series I Berlinetta da Rapi, Coachwork by Fiat Carrozzerie Speciale, Chassis no. 000027

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1950 Talbot-Lago Type 26 Grand Sport Coupe by Saoutchik. Auctioned at Bonhams in August 2006 for US$ 348,000 (£ 185,000). One of just 36 Grand Sport Talbot-Lagos produced between 1947 and 1953. Photo: Bonhams.

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1. Introduction

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n the last ten years, newspapers and magazines have been writing more and more about the price development of classic cars. It is evident that the prices of classic cars have risen sharply and there is some surprise at the large amounts that are paid for some models. Examples of this are the reports about the sale of several Ferraris type 250 GTO. Articles about the high prices appeared in countless newspapers and magazines.

Anyone who delves into the development of prices of classic cars over a longer period can reach some surprising conclusions. One of these is that not every car enjoys the same level of interest and thus the same price development. Some cars attract far more attention, which in turn makes them more expensive. Others slip into the background and rise less in value. As an illustration, two well-known and highly appealing brands are discussed below, namely Bentley and Aston Martin.

Although the Bentley 3-Litre and 4.5-Litre were fitted with a wide range of coachwork from many suppliers, the Open Tourer by Vanden Plas appeals most to connoisseurs. At events, these cars enjoy considerable attention. In the sixties, such a car cost between 250 and 500 pounds sterling. In the early eighties, between 20,000 and 25,000 pounds sterling were asked for a Bentley 3-Litre fitted with an Open Tourer body by Vanden Plas.

In 1980, a similar 4.5-Litre Bentley raised between 25,000 and 40,000 pounds sterling at auctions. Ten years later, bids on these cars had reached 100,000 and 150,000 pounds sterling, respectively. Currently one can expect to pay more than 150,000 pounds sterling for a 3-Litre and more than 350,000 pounds sterling for a 4.5-Litre if these are fitted with coachwork in the style of Vanden Plas. In three decades, the value of both models in pounds sterling have, on average, increased more than tenfold. Cars fitted with

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Investing in cars

original coachwork are less frequently brought to auction and have increased even more in value. In March 2012, the British auction house Coys auctioned a 3-Litre with Vanden Plas coachwork for more than 200,000 pounds sterling. In March 2015 a 3-Litre with Vanden Plas coachwork cost the new owner 462,000 US dollars at Bonhams. This was the equivalent of 300,000 pounds sterling.

The prices of the Bentley 4.5-Litre are, as already mentioned, even higher. In March 2013, the American auction house Gooding & Company auctioned a 4.5-Litre Open Tourer by Vanden Plas for 2.75 million US dollars. This was 1.84 million pounds sterling. On the other hand, in January 2014, the highest bid at RM Auctions for an original 4.5-Litre Open Tourer by Vanden Plas was just over 1.1 million US dollars.

In recent decades, the interest in post-war cars has increased. This is particularly true of sports cars. Examples of this are the cars of the British brand Aston Martin. Around 1980, a DB4 could be purchased for about 8,000 pounds sterling. That was then just a third of the price of a Bentley 3-Litre. At the end of the eighties, the price of the Aston Martin DB4 had increased more than tenfold. In the years thereafter, the price dropped by half. For ten years, the price hardly rose above 60,000 pounds sterling. In 2005, the price again reached the level it had in 1990, and in recent years it has increased further. At auctions, prices have been reached above 300,000 pounds sterling. In three decades, the value of the DB4 has increased over thirtyfold. A similar price increase was also enjoyed by the DB5 and DB6. In recent years, the cars increased proportionately more in value than a Bentley 3-Litre.

Other Aston Martin models have increased even more in value, such as the open versions of the DB4, DB5, and DB6 and the DB4 GT. In 1982, a DB4 GT was advertised for less than 15,000 pounds sterling. Around 2000, they were sold at auction for circa 160,000 pounds sterling. Less than ten years later, in May 2008, a vehicle was sold at an auction at Bonhams for more than one million pounds sterling. This price was more than seventy times higher than in 1982. In August 2014, RM Auctions sold a DB4 GT for 2 million US dollars. This was the equivalent of 1,25 pounds sterling.

These examples show that, over a period of thirty years, classic cars have increased strongly in value and the interest in classic cars has, in the course of those years, shifted. The shift in interest means that one car has increased more in value than another. To see why one car has risen more in value than another, the publically available auction results of several reputable auction houses have been placed in a database, records starting from the eighties. Using these historical data, a price index can be created for a large number of car makes and models.1 The aim of this book is to indicate which factors determine the demand for classic cars, by using the price development of a large number of classic cars. These factors are brand awareness, the 1 It is assumed that the cars were sold for the actual published amounts.

1. Introduction

1929 Bentley 4.5-Litre Open Tourer by Vanden Plas. Auctioned at Bonhams in June 2012 for £ 471,900. Photo: Bonhams.

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1955 Aston Martin DB3S. Auctioned at RM Auctions in August 2012 for US$ 3,685,000 (£ 2.34 million). Ten Works examples of the DB3S were completed by the manufacturer. But the demand was growing for a production version for sale to privateers. Thus, a second series of DB3Ss was built, commencing in 1955, of which twenty were made. Photo: Darin Schnabel, RM Sotheby’s (formerly RM Auctions).

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original market segment, the type of coachwork, the coachbuilder, the rarity of the coachwork, its beauty, the originality, the production totals, the condition, and the history of the car. The last factor that exercises influence on the price of cars is the collector himself. A changing interest among collectors leads to shifts in the price development of cars.

This book does not aim to show which classic cars will enjoy a high return in the future. Times can, of course, always change, which could lead to declining prices. By studying the price developments of classic cars of the past thirty years, an outline of the interest can be provided. This book gives an explanation for the changing interest in classic cars. And with this explanation in mind, an estimation can be made of which classic cars will be most sought after in the future, whatever their price development.

To summarise, this book shows which cars enthusiasts have shown an interest in in the past, which shifts have taken place, and which cars can be expected to retain attention, enjoy increasing interest or possibly step into the spotlight in the (near) future. And thus, the book contains a vision on collecting classic cars.

I should like to thank Artcurial, Bonhams and RM Sotheby’s (formerly RM Auctions) for the possibility they offered for using photos in this book of cars they have auctioned in past years. Pictures are indispensable for this book. The development of the price of a car is shown in more than one hundred bar graphs. Combining the bar graph with an illustration of the model concerned, not only clarifies which car is being discussed. The illustration also gives an example of a car that is sold at an auction. By stating the year of the auction and the auction result, the development of the price can be placed in a better perspective. The illustration shows the condition of the car, and the caption gives the auction result and the month in which that auction was held. This can be compared with the development of the price in the bar graph. Without the cooperation of Artcurial, Bonhams and RM Sotheby’s, this book would not have been possible.

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1952 Ferrari 225S Sport Berlinetta by Vignale. Auctioned at RM Auctions in August 2009 for US$ 781,000 (£ 473,200). Four years later, in March 2013, the same car was auctioned at RM Auctions for US$ 1,237,500 (£ 829,200). Photo: Darin Schnabel, RM Sotheby’s (formerly RM Auctions).

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2. Structure of the book

M

1966 Austin-Healey 3000 MKIII. Auctioned at Bonhams in May 2009 for € 41,400 (£ 36,500). Photo: Bonhams.

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agazines about classic cars contain a lot of financial information about cars. They contain announcements of auctions to be held and reports on auctions that have taken place. In addition, they contain many dealer advertisements. The information you can deduce from this is, however, limited. For you can only get a picture of what a car that was auctioned several months ago cost and what the asking price is of a car that a dealer is offering (at

least, if the asking price is stated). No answer is given to the question as to whether a car is a good buy or not. And because the price applicable at that moment is given, you do not get much idea about the price development over a longer period or how this evolves.

Investing in cars?

In the past, articles occasionally appeared in magazines and newspapers discussing the question of whether ‘investing’ in classic cars was sensible. The conclusion was generally that classic cars were a fine ‘investment’. That meant that cars retained their value. These articles often made a distinction between normal classic cars, sports cars and more exclusive classic cars, cars that were one-off or only produced in small series and, finally, racing cars.

Normal classic cars include, for example, a DeLorean DMC-12, Chevrolet Bel Air, Jaguar MKII, Ford Fairlane and a Mercedes-Benz 230SL/280SL. These are sedans and lower-priced sports models, valued between 5,000 and 30,000 pounds sterling or 7,500 and 50,000 US dollars. According to the authors, these cars would not increase very much in value. These cars offer insufficient possibilities for sporty use or are insufficiently exclusive. The sports cars and exclusive cars include models from Jaguar, Maserati and Porsche, manufactured in the fifties and sixties. Their prices would continue to rise and for the same reasons mentioned earlier. Because these cars are suitable for sporty driving and are sufficiently exclusive, the interest in these cars would continue to rise. The one-off cars and those manufactured in small series include cars from exclusive brands that were produced before and shortly after the Second World War. The demand for these cars would, according to the authors, continue to increase (which would in turn result in ever higher prices). Generally, not much was written about the price development of racing cars. Articles would point out the importance of a racing car being fitted with the original engine and that it could make a considerable difference, financially speaking, if the car had won an important race.

1963 Maserti Sebring. Auctioned at Bonhams in June 2012 for £ 77,660.

Photo: Bonhams.

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1969 Maserati Indy. Auctioned at Bonhams in May 2006 for € 16,100 (£ 10,900).

Photo: Bonhams.

Whether cars such as an Austin-Healey 3000 MKIII, a Ferrari 308 GTB or a MercedesBenz 280SL should be considered investment objects is open to debate. One could just as easily categorise them as hobby cars that represent a certain value. In retrospect, these cars have also enjoyed a value increase in recent years, although less than the exclusive cars. The question of why collectors have an interest in a certain car is often ignored in articles. Those articles generally report a demand in the market. But why one car, say a Porsche 356 Speedster of which ‘many’ were made, has, relatively speaking, increased proportionately more in value than another, say a Lamborghini Islero S (see page 369) of which only a few were made, is seldom explained.

Facts and fables Rolls-Royce cars were often called a stable investment. In the book Automobiles as an Investment (1982), Richard H. Rush writes: ‘Rolls-Royce is one of the best and at the same time one of the most conservative investments in the entire field of investment automobiles.’ This remark can be viewed as both fact and fable. When the price development of cars of this brand is studied over a longer period, the prices have indeed increased over the years. But when these are compared with those of other cars, it is 22

Investing in cars

noticeable that those of Rolls-Royce have risen (much) less rapidly.

Three decades ago, a number of types of this British brand belonged to the very top range of the market. Today, the same types can be considered as belonging to the middle and lower range. That leads to the question of why the increase in value was less and whether this will change.

Expectations Facts and fables often go hand in hand. The expectation that certain cars will increase in value as years pass can regularly be found in publications. In 1982, Richard H. Rush, for example, had high expectations for the Maserati Ghibli and Indy. He writes in his book: ‘It is a very good car and may one day be sought by collectors.’ More than thirty years later, this prediction is still awaiting fulfilment.

Both models have increased in value, the Ghibli more than the Indy, but they still have not enjoyed a very high increase in value. He called the Ferrari 250 GT one of the best cars in which to invest.

2. Structure of the book

1963 Citroën Ami 6. Auctioned at Artcurial in July 2013 for € 33,700 (£ 28,950).

Photo: Artcurial.

That later proved right. A number of models increased exponentially in value. But Rush emphatically placed the 250 GT Lusso in the foreground. Yet it was not this model, but rather, for example, the 250 GT Tour de France and open versions such as the 250 GT LWB California Spider, that increased most in value.

Other authors stressed to their readers that a restored car was worth more than one needing restoration. This was because the parts needed and the wage costs of the restorer made a restoration very expensive. This assertion not only says something about estimating the price of a car (a sum of costs), but also about the viewpoint of the writer.

For this demonstrates a (collective) conviction that a restored car, based on this argument, is of greater value than one that is not restored. You can also apply other criteria, such as originality or rarity, which would make a car that is not restored of greater value.

At auctions in recent years, it has frequently been shown that non-restored cars are sold for higher prices than ones that had been restored.

Concepts used to determine the value of cars change over the course of time. For those wishing to invest in cars, it is important to be aware of changing criteria on which the development of prices can be based.

Development of prices The development of car prices can be studied in different ways. The prices stated in car magazines published around 2000 are different than those of 2010 and 2015. Results from the past can often be found on the websites of well-known auction houses. However, much information that can be referenced on the Internet or in books and magazines about car price developments has an important limitation. No classic car is like another. Cars differ in colour, use, condition, trim levels, etc. At auction, it emerges that cars can differ considerably in value from each other. One car may be auctioned for almost twice as much as another. In February 2015, two Ferraris type F40 were auctioned in Paris. One was bought for nearly 1.2 million euros, the other for less than 725,000 euros. A month later, another Ferrari F40 was auctioned in the United States. The car was purchased for the equivalent of 1.4 million euros.

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1953 Ferrari 250 Mille Miglia Berlinetta by Pinin Farina. Auctioned at Bonhams in August 2014 for US$ 7,260,000 (£ 4,349,900). Photo: Bonhams.

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1967 OSI 20M TS Coupe by Ghia. Auctioned at Bonhams in April 2014 for £ 17,250 (€ 20,950). Photo: Bonhams.

The results of auctions can be followed on the Internet, but this is not true for the prices of cars sold by car dealers. Often, the compilers of price lists of cars and the compilers of price indices claim that they base their lists on the sales results of auctions and dealers. But whether this is true the reader cannot verify. An illustration of this is that both Thoroughbred and Classic Cars and Classic and Sports Cars published lists giving classic car values. Sometimes, there were large differences between the values given by each of the British magazines. This also sometimes applies to cars that have their values listed in the Sports Car Market Pocket Price Guide and those in the Hagerty Price Guide.

The conclusion that can be drawn from this is that summaries of values of cars and the price indices give an estimation of the development of the value of a car. Because of this, the lists or graphs cannot be used to decipher what a specific car is precisely worth or by how many percentage points a certain car has increased or decreased in value compared to the previous period. This can differ from car to car.

That the development of the price of cars can prove capricious is shown, for example, by a Ferrari 250 GT Berlinetta Low Roof by Boano. The car was sold in January 2007 by RM Auctions for 726,000 US dollars, in August 2009 by Gooding & Company for 550,000 US dollars and in March 2011 again by RM Auctions for 605,000 US dollars.

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Investing in cars

Another example is a Delahaye 135MS Coupe by Figoni & Falaschi: in August 2006, Bonhams auctioned this car for more than 1.7 million US dollars. This car was then restored and some time later, in January 2013, auctioned by RM Auctions for over 1.5 million US dollars. Two years later, in March, the car was sold by the same auction house, but this time for just under one million US dollars.

Price indications in this book In this book, price developments of more than one hundred cars are given in bar graphs. This was done over the longest term possible and the data are primarily based on auction results. The reason for this is that these prices had been made public and so auction prices in earlier years could also be investigated. Furthermore, it can be assumed that the cars were actually sold for these prices.

The prices that dealers apply are sometimes slightly higher than the results achieved at auction, at other times they are slightly lower.

However, not all prices that dealers apply are made public and in 2. Structure of the book

1973 Volvo 1800ES Sport Wagon. Auctioned at Bonhams in June 2014 for US$Â 92,000 (ÂŁÂ 55,100). Photo: Bonhams.

most cases the asking price will not have been paid. Furthermore, by no means all cars are paid for in cash. Often, it is possible to trade in one or even more cars when purchasing a car. In that case, an agreement is reached about the amount that remains to be paid.

Highest auction results In order to be able to compare prices from year to year, the highest auction results from year to year are, wherever possible, entered in the bar graphs. This allows a picture to be made of the highest prices achieved in a number of years. The reason that not much attention will be paid in this book to the price development over the years of certain cars with a specific chassis number, is that it cannot be assumed, that these cars have remained in the same condition. When a car in the course of ten years is sold twice at auction, the possibility that the condition has changed in the intervening period cannot be excluded. Cars could have been used intensively or could have been restored. In addition, one must not assume that the price development of these individual cars reflects the price development of the model concerned. The auction of a Ferrari 250 GT LWB California Spider can serve as an example. In August 2008, the car was auctioned by 27