South Africans looking to invest in classic cars should consider a “pre-millennium V8 Ferrari”, according to Leon Strumpher, Portfolio Manager at Sanlam Private Wealth.
Potential investment opportunities include the Ferrari 308 GTB/GTS or Ferrari F355 Berlinetta/Spider, as South Africa is home to “some fine examples”.
Strumpher’s statement follows a consistent rise in the classic car market over the past 20 years – with many vehicles appreciating more than jewellery and art.
Buying a classic car
According to Knight Frank, there are several reasons people buy a classic car.
- Joy of ownership
- Capital appreciation
- Safe haven for capital investment
- Investment portfolio diversification
- Status among peers
When looking for a car to invest in, however, Strumpher stated that “not all cars are equal”.
“It takes deep knowledge of the industry and a lot of homework to know which ones will appreciate in value.”
“Investment cars vary dramatically in price tag and returns, depending on their rarity and condition, and the size of the buyer’s pocket.”
A good place to start is with internet searches, combined with talking to car collectors and enthusiasts.
“Most of the cars that will be great investments in years to come will be so in part due to unforeseen changes, for example, the introduction of electric cars and emissions taxes.”
The cars to consider
Another factor to consider is the “story” a car has to tell, and if it comes with a strong history.
For example: a 1965 Shelby 427 Cobra previously owned by Carroll Shelby sold for $5.94 million in January 2021.
Other brands with a strong history include Jaguar, Ferrari, Mercedes-Benz, Porsche, and Lamborghini.
Of these, Ferrari stands out as a good place to put your money – with 59% of the classic cars sold at auctions for more than $5 million being Ferraris.
“A potential opportunity may in fact be a pre-millennium V8 Ferrari, perhaps a 308 GTB/GTS or F355 Berlinetta/Spider, of which South Africa still has some fine examples,” said Strumpher.
These cars are not only built by a well-established and desired brand, they were also produced in limited numbers.
Limited production numbers, when combined with their good looks and strong performance, is an essential factor for driving up the value of a vehicle.
What to watch out for
There are several pitfalls buyers must look out for when buying a classic car, including rust, the use of non-original parts, and high mileage.
“Besides the initial cost, you also need to plan for taking care of and protecting your classic car, which includes some kind of real estate to house your vehicle, and reliable insurance.”
Strumpher added that investing in classic cars can be an exciting and rewarding venture, but it is “not for the faint-hearted”.
“These beautiful machines can take you on great ups and downs and bring back memories of past eras. But they are also an asset class that can be analysed like any other, and it is in the finest details where the rarity lies, and the real value emerges.”