German banks suggest adding a classic car to your investment mix
13 July 2018 - Autoblog
German cars, Porsches especially, have outperformed the stock market
It's likely we'll see fewer classic Porsches on German roads in the future. There's no legislation that's clearing the roads of 911s: They're simply such a valuable asset these days, that owners of six-figure classic Porsches will just hole them away and wait for them to appreciate more, rather than endanger their wellbeing by using them on the road.
Bloomberg reports that German banks are now recommending investors buy classic German cars. Suedwestbank AG's Jens Berner told Bloomberg: "For customers with more than 1 million euros in liquid assets, a classic car can be an attractive addition to their portfolio in terms of yield and value stability."
And there are hard numbers to back it all up: Suedwestbank's OTX Classic Car Index — which follows the prices of classic Porsches, Audis, BMWs and Mercedes-Benzes in Germany — has quadrupled from early 2005 to early 2018. Germany's main stock index, the DAX, gained 204 percent in that time. But if you focus on the prices of classic 911s, the appreciation is particularly insane: In those 13 years, their values are said to have increased 683 percent, or nearly eight-fold. A 911 that was $20,000 just a while ago is now beyond reach for a lot of people.
The usual caveats apply: If you buy a classic car as an investment, it has to have the history to back it up. The more original a car is, the better it'll perform as an investment, and manufacturers' classic departments along with valuation specialists are there to provide proof of a particular car's lineage and condition. Suedwestbank's Jens Berner continued to advise that a customer planning to invest in a classic car should also only consider cars worth more than 100,000 euros, as below that value any return would likely be more significantly hampered by overhead costs such as proper insurance, safe storage, required maintenance, road tax and expert valuation.
We would also think twice before buying a cheaper project car to flip: As restoration costs can balloon and shoddy work can be sussed out by a skilled expert, one can end up with little profit. In this case, it might pay off to start with a certifiably nice car than an attractively priced basket case — the hard part would be to refrain from using it. Perhaps it would be best to set more money aside for a matching beater one would dare to drive.