Investing in Classic Cars: Tips for Building Your Classic Car Collection

In 2021, the global classic car industry was valued at approximately 42.4 billion dollars CAD, and it's projected to grow to 70 billion CAD by 2028. 

This only proves that many car enthusiasts find classic car collectionas a thrilling journey that combines the love of vintage automobiles with the excitement of making smart financial moves.

However, if you plan to venture into this hobby, you must approach this hobby with some knowledge and strategy to make sure your investment pays off in the long run.

In this blog post, we’ll share some simple tips to help you get started with classic car investing. So, let’s dive in and explore how you can turn your passion for classic cars into a savvy investment.

The Thriving Market for Classic Cars

The market for classic cars has been thriving, thanks to increasing global wealth and a limited number of vintage vehicles. Over the past decade, classic cars have often outperformed other collectibles like coins and stamps and have sometimes even beaten the broad stock index.

The Historic Automobile Group International (HAGI) tracks this market with several indexes, the most comprehensive being the HAGI Top Index. This index includes classic cars from brands like Porsche, Ferrari, Bugatti, and Alfa Romeo.

What Defines a Collectible Car?

Cars can become collectible for several reasons. Those with historical significance—like pioneering new technology or setting new standards for consumers—are often sought after, especially if they're rare and beautiful. 

Good looks definitely help. A car with a racing history or a connection to a respected designer, racer, or builder, such as Raymond Loewy or Carroll Shelby, also adds to its allure. Celebrity ownership, especially by famous car enthusiasts like Steve McQueen, Paul Newman, or James Garner, can make a car even more desirable.

Is Classic Car Investment Worth Considering?

Classic cars have always fascinated collectors and investors alike, but is putting your money into these automotive treasures a wise financial move?

1. The Historical Perspective 

Classic cars span a wide range of makes and models, some dating back to the early 20th century. Many of these vehicles have seen substantial value appreciation over the years, driven by their rarity, historical significance, and unique stories.

2. Market Trends

The classic car market has shown impressive growth, fueled by nostalgia, enduring appeal of iconic models, and increasing interest from collectors and investors alike. Rare and well-maintained classics have often delivered significant returns.

3. Risks and Considerations

Investing in classic cars comes with its share of challenges. Factors like authentication, assessing condition, ongoing maintenance costs, and market fluctuations all need careful consideration. Approaching this market with knowledge and caution is crucial for making informed investment decisions.

Getting Started with Classic Car Collecting 

If you're looking to steer your investments towards classic cars, here's how you can get started: 

Educate Yourself

To start your journey into classic car collecting, begin by exploring the different kinds of makes and models available. Gain insights into what distinguishes certain vehicles as particularly valuable. Familiarize yourself with the specific features and details that collectors prioritize and appreciate. 

Set a Budget

Determine how much you're willing to allocate towards acquiring and maintaining these vehicles. Given the wide range of prices in the classic car market, a well-defined budget will help you manage your investments prudently and avoid overspending. 

Start Small

Beginning with a modest collection is an excellent way to ease into the realm of classic cars. A smaller collection allows you to concentrate on acquiring high-quality, valuable vehicles. It also prevents the financial strain of diving into extensive investments prematurely. 

Invest in Quality over Quantity

Choosing a small collection of valuable cars surpasses amassing numerous average vehicles. Focus on investing in high-quality classics that boast good condition and originality. Seek out cars with low mileage, maintenance records, and comprehensive documentation to ensure their authenticity and value retention. 

Diversify Your Collection

Enhance the allure and value of your classic car collection by diversifying its composition. While muscle cars from the 1960s and 1970s hold appeal, also explore vintage British sports cars, Italian exotics, and early American models. 

Maintain Your Cars

Regular servicing and upkeep are crucial in preventing mechanical issues and maintaining the operational integrity of your vehicles. It's imperative to retain comprehensive documentation related to the maintenance and repair history of each car, as this enhances their authenticity and long-term value. 

How and Where to Buy & Sell Classic Cars 

Choosing the right marketplace is key for your classic car investments: 

1. CarHub

CarHub often has 1 or 2 classic cars in stock. Check out our inventory and trust in the authenticity and quality of our vehicles. 

2. Classic Car Shows and Auctions 

Classic car shows and auctions are prime venues to discover rare and valuable vehicles. These events draw seasoned collectors and dealers, which offers ample networking opportunities. 

3. Online Marketplaces 

Platforms such as Bring a Trailer, eBay Motors, and Hemmings feature vast collections of classic cars for both buyers and sellers. Online marketplaces provide convenience and connect you with a worldwide community of classic car enthusiasts.

4. Network with Other Collectors 

Connecting with fellow collectors is a valuable way to expand your knowledge and discover potential additions to your classic car collection. Attend car shows, auctions, and club events to meet enthusiasts and stay informed about upcoming sales opportunities.

5. Get Professional Help 

For those new to classic cars, seeking professional assistance is crucial. A skilled mechanic or classic car appraiser can provide expert guidance in evaluating potential purchases and offer advice on maintenance and restoration.

6. Display Your Collection 

Showcasing your classic car collection is a fantastic way to share your passion with others. Consider participating in car shows or hosting private events to exhibit your investment to friends, family, and the public.

7. Sell Smartly 

When it comes time to sell a classic car from your collection, approach the process strategically. Conduct thorough research, select a reputable dealer or auction house, and ensure all documentation is prepared. Be ready to negotiate effectively to maximize the return on your investment.

Pros & Cons of Investing in Classic Cars

Investing in classic cars offers unique opportunities and challenges. Here’s a closer look at the advantages and disadvantages to consider before diving into this niche market:

Pros:

• Diversification: Classic cars provide diversification in your investment portfolio, reducing reliance on traditional assets.
• Historical and Aesthetic Appeal: Many classic cars hold significant historical and aesthetic value, appealing to collectors and enthusiasts alike.
• Potential for Appreciation: Rare and sought-after classic cars can appreciate substantially over time.

Cons:

• Market Expertise Required: Successful classic car investing requires deep knowledge of the market, including identifying valuable cars and assessing their condition.
• Maintenance Costs:Maintaining classic cars in excellent condition can be expensive and may impact overall returns.
• Illiquid Assets: Classic cars may not be as easily sold as traditional investments, potentially requiring time to find suitable buyers.