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Classic cars as an Investment!
The Reality…
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Definitions…
Quiz:
Do you own collectibles?
Who owns a classic car ?
What is a classic car?
A car not produced anymore….
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Classic cars- Historic vehicles:
30 years and more….Youngtimers: 15 to 30 years!
FIVA says:
• Minimum 30 years.
• Nice history conservation status.
• Not a daily commuter.
• Is part of the technical and wolrd cultural heritage.
A classic car is also a specific leather and oil scent, and has a soul !
Men and women are again the actors….
The classic car scene (Monterey Car Week, Goodwood, Le Mans Classic, Grand Prix
de Monaco Historique, Mille Miglia, Concorso d’Eleganza Villa d’Este..and many
more!).
Price Trends…
Price evolution tangible assets…
T0 Q2 2015
Art
Furniture
Watches
Wines
Cars
Stamps
10-year change
276
%
-31%
71%
239%
497%
166%
Five year change
60%
-27%
45%
38%
168%
27%
One year change
21%
-7%
5%
7%
23%
2%
Six-month change
9%
-3%
2%
2%
10%
1%
Source: Knight Frank Luxury Investment Index
Trends
After months with exponential increase, prices tend to flatten…
•But this is not the case for sportscars from the 70’s and 80’s.
•
•Ex-works cars are in high demand.
•Trophy cars also, Ferrari 250 California barn-find ex-Alain
Delon (Collection Le Baillon) .
•Unmolested and unrestored cars are rare.
But reversals can be severe and last long ( 1989-2004)!!!
Price evolution (1984-2015 in £)
Make-Model
Price 1984 in £
Price 2015 in £
Porsche 911 2.4 T
4’950
80’000
Aston Martin DB4
6’975
650’000 to 1 million
Ferrari 375 GTS
28’500
2-3 millions
Jaguar E 3.8 S1 Roadster
9’000
150’000
Lamborghini Espada
7’850
160’000
Bristol 411
6’950
60’000
Dino 246 GT
14’950
250’000
911 2.7 RS Touring
19’500
1’000’000
A bubble….
« Dépêche-toi d’acheter cela monte! »
« How to get rich quick with a classic car? »
•Zero interest rate policy and the Hamptons’ inflation…
•Scarcity.
•Internet.
•Baby-boomers and Asia….
•New cars are boring!
But beware the price boom could be on the radar of fiscal
authorities…especially in an indebted Europe.
An Investment…
A decorellated investment…
Yes ..and no…!
Investment profile:
A Collector…a Driver…..an Investor…it’s not the same!
Investment funds in classic cars:
•IGA (Nick Mason).
•Ultimate Classic Car Fund Capital Management LLC.
•Family Classic Cars Fund (California).
•The Classic Car Fund (Custoza).
•CAF (Classic Auto Funds).
•many projects in Luxembourg.
Not a liquid asset…so beware…
Issues with tangible assets in a fund!
Liquidity of the tangible assets have to match the liquidity of
the fund!
Changing legislation (example: trash ratio).
Performance fees!
Custody (responsability) and maintenance (costs).
The best way to set-up a fund with classic cars…
Private equity modell
or
One compartment for one collection.
Advantages:
•Possibility to stay off the AIFM scope (Alternative Investment Fund Managers).
•Official valuation (NAV) and ISIN Code.
•Full alignment of interest.
•Custodian bank has the legal obligation to guarantee the ownership right on the assets in the
structure.
•Possibility to organize wealth transmission.
•Possibility to provide classic cars in kind.
•Possibility to list the fund on the Luxembourg Stock Exchange.
•Investment decisions may remain with the investor or their respective investment/advisory
committee of experts.
•Distribution of monies., reimbursement of capital, income reinvestment via automatic issue of
new shares.
•Capitalization of income….
How to buy…
Fakes are a real issue…
..logical with the prices explosion…
•33 MG K3 produced…more than 100 are registered today!
•Auctionners are not always «brave» (commission business).
«Make a fake»: an industry that is getting bigger and bigger.
Just buy what you like…
How to buy…
•Become yourself an expert…
•Availability and costs of the spare parts…
•Go for quality.
•Use the Clubs.
•Commission an independent expert.
•It’s also possible to rent a classic car.
Buy for fun and do not get carried away too quickly!
Fuchs & Associés Finance S.A.
Address: Boulevard Prince Henri, 47 • L-1724 Luxembourg
Tel: +352 26 26 49 83 • Fax: +352 26 26 49 52
Mail: pierre-yves.augsburger@fuchsgroup.com Senior Consultant: P.-Y. Augsburger
www.fuchsgroup.com