Cars as investments

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Tilly
Joined: Wed 26 May, 2004 20:45
Posts: 428

  M roadster S50
Location: Sussex

Cars as investments

Post by Tilly » Tue 10 Mar, 2015 10:34

I have been reading several forum articles about cars as an investment. So I thought I would just play around with some numbers. Let us for example say you bought a very low mileage M Roadster in March 2005 for £25,000. When I looked at past adverts I believe that would have bought an exceptional car. Say you then stored it for zero costs for the last ten years. What would it be worth now?
If at the same time you bought the equivalent value on shares in a Footsie 100 company what would you have made. I just saw an ad for Aviva which over the last ten years has not performed anywhere near the upper end of the market. I decided to do a calculation and this is what I came up with. Your initial £25,000 share investment today would be worth about £22,000. However you would have made about £10,000 in dividends. If you had to pay tax at a basic rate your holding would be worth about £30,000. Now people will say about the volatility of share prices. But I can remember volatility in car prices. I watched a Ferrari 365 GTS go from £50000 to £1.6 M over a 15 year period. In that time the mileage went from 1000 miles to 1100 miles. Then in the space of a few moths prices collapsed and it was sold for about £300,000. Quite a loss! The car is currently valued at about £3M with less than 1500 miles on the clock.
Are cars a good investment? My personal take is very occasionally you can get lucky but most private individuals will lose financially. The real question is how do you cost pleasure of owning and driving?

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BladeRunner919
Joined: Fri 17 Feb, 2012 20:18
Posts: 2221

  Z3 roadster 1.9

Re: Cars as investments

Post by BladeRunner919 » Tue 10 Mar, 2015 12:01

I believe that as an asset class, classic cars have performed very well over the last 5 years, certainly compared to other investments. Genuine classics are like houses - they may have the odd dip, but over time they only ever go one way.

therealdb1
Joined: Tue 25 Jun, 2013 22:47
Posts: 244

  Z3 roadster 2.0

Re: Cars as investments

Post by therealdb1 » Tue 10 Mar, 2015 12:40

An interesting idea but personally if financial reward was my goal I would invest in bricks and mortar every time.
I would feel sorry for that poor M Roadster that was bought ten years ago (and the Ferrari also although I never understand what people see in them) to add a handful of miles.
BMW's are born to be "Ultimate driving machines" if you believe the company advertising campaigns of the past and not works of art to be stored in a temperature and humidity controlled climate only to see the light of day to be photographed for the next auction catalogue.
Tilly is correct, you cannot quantify the satisfaction of ownership in terms that Accountants understand so by all means buy the cars but enjoy them for what they are out on an open road and smile all the way; away from the bank! :lol:

Tilly
Joined: Wed 26 May, 2004 20:45
Posts: 428

  M roadster S50
Location: Sussex

Re: Cars as investments

Post by Tilly » Tue 10 Mar, 2015 15:28

Aston Martin One-77, dark blue, 900km
Aston Martin DB5, silver
Aston DB6 MK II, graphite
Aston Martin DB4 Zagato Sanction II, RHD, 9,000 miles
Ferrari F50,red, 21,131km
Ferrari 275 GTB/4 Cam, red
Ferrari 288 GTO, Red, 13,000km
Ferrari 512 BBI, red,
Ferrari Dino 246 GT
Ferrari Daytona plexiglass, red, 2,622km
Ferrari F40, red, 4,440km
Ferrari 250 Lusso red
Ferrari Testarossa, red, 1,788 miles
Ferrari Enzo, red 5,433km
Ferrari 575 Super America, red
Jaguar E-Type 4.2, 2,605 miles
Lamborghini Countach LP500s 812km
Lamborghini Miura SV, red
Lamborghini Countach LP400 Periscopo, yellow
Lamborghini Espada, silver, 4,280km
Mercedes-Benz 300 SL Gullwing, silver
Mercedes-Benz 300 SL Roadster,Dark Grey
Mercedes 190 SL, LHD, silver
Mercedes-Benz Mclaren SLR, LHD, silver
Mercedes-Benz Mclaren SLR 722, graphite
Porsche Carrera GT, graphite, 2,088km
Porsche 959, LHD, red 3,719km

27 cars just bought as a single lot by a dealer in UK from a collection just outside London for, wait for it, £20M. Already 10 have been sold on. Look at the mileage on some of them. What a waste.

eahornel1
Joined: Fri 09 Jan, 2015 19:46
Posts: 26

  M roadster S50

Re: Cars as investments

Post by eahornel1 » Tue 10 Mar, 2015 18:06

Load of tosh...... I bought Lloyds shares the same time i purchased my M and its only the m making money :lol:

chill4x4saph
Joined: Sun 26 Jan, 2014 09:56
Posts: 146

  M roadster S54

Re: Cars as investments

Post by chill4x4saph » Tue 10 Mar, 2015 18:16

eahornel1 wrote:Load of tosh...... I bought Lloyds shares the same time i purchased my M and its only the m making money :lol:
I concur!!

there has been more than one investment journal say the same!, how the classic car market has out performed quite a few other investment types.
ask anyone (like a friend of mine) who was lucky enough to buy a classic Ferrari (dino in this case) two years ago!!!..., more than doubled his money!!..., my house is worth around 2% more than it was 6 years ago.

no one can 100% tell you what will do what!!...., all investments are a gamble to some extent.

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pingu
Joined: Fri 30 Apr, 2004 17:01
Posts: 3337

  M roadster S50

Re: Cars as investments

Post by pingu » Tue 10 Mar, 2015 21:07

Cars (unless you are lucky) are only an investment if you don't...

Tax them
Insure them
Maintain them
Drive them

and you have to keep them dry and warm if they are an investment.

Who in their right mind would buy a 15 year old car for £25,000 and just keep it under a cover in a field (the only zero cost storage option)?

I wouldn't invest £25k in a car, but I would buy a potential classic car for £25k and if it appreciated then two thumbs good.
Pingu

Tilly
Joined: Wed 26 May, 2004 20:45
Posts: 428

  M roadster S50
Location: Sussex

Re: Cars as investments

Post by Tilly » Tue 10 Mar, 2015 21:31

chill4x4saph wrote:
eahornel1 wrote:Load of tosh...... I bought Lloyds shares the same time i purchased my M and its only the m making money :lol:
I concur!!

there has been more than one investment journal say the same!, how the classic car market has out performed quite a few other investment types.
ask anyone (like a friend of mine) who was lucky enough to buy a classic Ferrari (dino in this case) two years ago!!!..., more than doubled his money!!..., my house is worth around 2% more than it was 6 years ago.

no one can 100% tell you what will do what!!...., all investments are a gamble to some extent.
Over the last couple of years many classic cars have appreciated. When the more traditional investments, like shares , houses, base metals and land don't perform people speculate in other areas. The added advantage with cars is they are tax exempt. However I am sure HMRC are closely looking at the situation and a form of capital gains tax will possibly be applied to any second or more cars a person owns, in an attempt to raise tax revenue. If they do it with property they certainly can do it in other areas. If that happens the bubble may well burst and cars could go into free fall. Like any other area the game is knowing when to buy and when to sell.
In my case hindsight is great but too late and my crystal ball doesn't seem to be too reliable!

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Jonttt
Z Register member
Joined: Sun 28 Dec, 2008 16:32
Posts: 6536

  M roadster S54
Location: Liverpool

Re: Cars as investments

Post by Jonttt » Tue 10 Mar, 2015 22:01

:)

I'm just enjoying making a good decision
Happiness is not around the corner........happiness is the corner
Image Video or Journal Garage: 2015 FFRR Black Edition, Porsche Boxster GTS, 1997 Porsche Carrara C4S, Ex 2001 BMW S54 Z3m Roadster

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pingu
Joined: Fri 30 Apr, 2004 17:01
Posts: 3337

  M roadster S50

Re: Cars as investments

Post by pingu » Tue 10 Mar, 2015 23:23

Re CGT. Unless you register the purchase price, how can this be enforced? I think there will be too much bureaucracy to make it feasible. Doesn't mean HMRC won't make a guess on the purchase and sale prices and you have to prove otherwise.

If you have invested in paintings or art, you can enjoy them in a controlled environment. If you invest in a car and use it, you have no control over the environment.

I think that anyone who puts their investment at risk by parking it in a car park or driving it down the road where someone could destroy it in a heartbeat is mad. Properly insuring the risk is eating into the investment potential and has to be accounted for.

Jonttt has made a great choice of car with his Porker and I'm not disputing that it will be worth more when he sells it, but is it an investment or a lucky purchase? I would expect at least 5%pa AFTER all expenses to call it an investment, otherwise it is just a lucky purchase.

If I bought an M for £25,000 now, I would need to be able to sell it for £28,250 next year to make 5%. This assumes no selling expenses and £2,000 cost of ownership.

If I bought a painting for £25,000, I would need to be able to sell it for £26,750 next year to make 5%. This assumes no selling expenses and £500 cost of ownership (to cover insurance).
Pingu

therealdb1
Joined: Tue 25 Jun, 2013 22:47
Posts: 244

  Z3 roadster 2.0

Re: Cars as investments

Post by therealdb1 » Tue 10 Mar, 2015 23:33

You have to compare like with like. The sort of cars that are making big money are exceptional and in the main fairly rare, low mileage examples. To compare you would need to be buying exceptional shares not those of a high street bank or exceptional property in an up and coming area not the house that you choose to live in. Don't forget also that the house that you live in is being used whereas an investment car cannot be used without eating into your investment.
The only car I've ever made money on was a 1984 Vauxhall Cavalier SRi. I bought it with an MOT for £60 and sold it the following year without an MOT for £75 having put 8000 miles on the clock. Even that wasn't an investment as it cost £240 to insure it but at least I never had to worry about where I parked it!

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Jonttt
Z Register member
Joined: Sun 28 Dec, 2008 16:32
Posts: 6536

  M roadster S54
Location: Liverpool

Re: Cars as investments

Post by Jonttt » Wed 11 Mar, 2015 19:28

Investments should always be mixed, on an island land and property will always be a safe bet in the long term. But it's nice when a mixed investment portfolio includes a bit of fun :wink:

Ps a 993 is not a car, it's a work of art, just not hung on a wall and its a more liquid investment than property with much lower selling costs and tax implications !
Happiness is not around the corner........happiness is the corner
Image Video or Journal Garage: 2015 FFRR Black Edition, Porsche Boxster GTS, 1997 Porsche Carrara C4S, Ex 2001 BMW S54 Z3m Roadster

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