High Life. Ride on the vintage advantage

Like fine wine, cars too seem to get pricier with time. But there’s more to investing in vintage cars than meets the eye

 Not all that glitters is gold, and not all that’s old is ‘vintage’, especially when it comes to cars.  While it’s easy to use the general term ‘vintage’ for every car that’s from a decade past, the real definition and classification is much more nuanced.

 Cars manufactured from 1886 to 1909 are considered antique, while those made until 1919 are called Edwardian. Only those made between 1920 and 1939 are called ‘vintage cars’ and those from circa 1940 to 1949 are classic cars. Additional terms like “modern classics” may be used to further define them, but in terms of value, the buck stops here (quite literally).

A broader definition is often used, which defines cars between 20 and 45 years old as classic, and anything more than 45 years as vintage.

 CS Ananth, a vintage car restorer and avid collector, humorously describes it as a “madman’s hobby”, considering the number of man hours and effort that goes into it. But a quick look at the numbers indicates that there’s more to it.

 The Wealth Report for 2015 from Knight-Frank notes that “investments of passion, remain firmly on the radar,” and listed among these were classic cars, a luxury asset where interest is rising the most.

While globally, personal pleasure was the main motivation behind purchases for 62 per cent of those surveyed, in India, status appears equally important. Almost 38 per cent of Indians cited this as the reason for buying vintage cars.

This probably explains why investing in vintage and classic cars is at a relatively nascent stage. But the scenario has changed from 15 years ago; prices have gone up about seven to eight times over this period.

  As an investment, classic cars can be a top-performing asset. If chosen wisely, vintage cars can give manifold returns.

When observed over a period of two decades, the only asset that has outperformed classic cars is gold — something to think about for the gold-loving Indian.

You can compare a vintage car to a piece of art, says Ananth, in that it can fetch good returns. While paintings don’t require maintenance, a vintage car needs it periodically. While this can be a dampener for many, car enthusiasts often find the challenge a welcome one.

 The most expensive car ever auctioned was a 1962 Ferrari 250 GTO, sold by Bonham’s for about $38 million last August, up 30 per cent from the car that previously set the record — a Mercedes-Benz W196 that sold for $29 million in 2013. Considering that in the late 1970s a GTO — of which just 39 were produced — could be purchased for just under $10,000, it is a clear indication that if bought at the right time and at the right price, a vintage car is an investment worth its weight in gold. But what makes one vintage car so much more precious than another of a similar age can be due to a number of factors; unlike art, it’s not all that abstract.

The first reason is simple logic — the rarer the car, the more it fetches. Limited edition cars, like the Daimler Roadster 1934 of which only 150 were produced, are ones that will do well on the market, simply because there are very few like them.

 Also cars that have been owned by famous personalities — celebrities or royalty — are sure bets. The record for a celebrity car is for a 1961 Ferrari 250 GT California Spyder owned by actor James Coburn that sold for £5.5 million in 2007.

 Indian royalty and luxury cars have had a long-standing relationship, especially with the Rolls-Royce brand, of which an estimated 900 cars were imported between 1908 and 1939. Tales like that of the Maharaja of Jamnagar who sent his wife’s pink slipper to Rolls-Royce to ensure that his Phantom II was painted in the exact same shade, are ones that add value to a piece.

 The main motivation behind investing in a vintage or classic car is usually sentimental — first time collectors are often driven by appearance or nostalgia of having used these cars.

It’s most often a reflection of the buyer’s personality, which is why while some opt for rare and exclusive ones that no one else owns, others prefer cars from a later era for their ease of driving. Pieces from the 1920s and 1930s, while being great conversation pieces, can only be stored and cannot be used.

 But unlike most niche investment hobbies, vintage car collecting is not for everyone. Buying an antique car is just the first step, restoring it to usability is a painstaking process that requires an investment of both time and money — it’s not unusual for the cost of restoring to often exceed the market value of a car. Before buying, experts recommend hiring a trustworthy technician to oversee the repair process, and check for originality of specifications.

 While reselling, appearance and drivability are the main factors to keep in mind, how well-restored the car is matters as well. Well-known restorers bring a 10 per cent premium on the car, making a clear case for going to the experts.

But ultimately, like any hobby, buying vintage cars too is governed by what appeals to the eye; so go with your instinct but get an expert opinion to vet your choice finally.

Choose wisely and you’ll either be driving into the sunset in a beautiful vintage car, or laughing all the way to the bank.