FAIRING WELL: Classic cars can be an alternative investment that forms part of a wider portfolio Picture: SUPPLIED
FAIRING WELL: Classic cars can be an alternative investment that forms part of a wider portfolio Picture: SUPPLIED

COMING from a bygone era, they are usually older than the enthusiasts who drive them, but they capture the attention of all who see them.

Classic cars, such as the Aston Martin DB5 driven by Sean Connery in Goldfinger in 1964, are increasingly being looked at through an investment lens rather than just a passionate pastime.

Ian Holmes, chairman of the Vintage and Veteran Club, who has collected classic cars and motorcycles throughout his life, bought his first classic car in 1974 when he was 24. Holmes said that at the time he was driving a bakkie, his company vehicle, but felt that he could not attract women in that car, so he bought a nine-year-old Jaguar Mark 2.

He was its fourth owner and he still has the car.

He had bought it for R950, and its value today had by far eclipsed the original price, he said, without giving details.

Holmes said the prices people were paying for older vehicles had shot up over the past five years.

As a general guideline, a car you could have picked up three years ago for R150 000 would cost you between R250 000 and R300 000 today.

Ten years ago, Series 1 to 3 E-Type Jaguars were being sold for between R200000 and R300000. They now sell for up to R2-million.

WO Bentleys, which were manufactured while founder Walter O Bentley was still at the helm of Bentley Motors, are considered the Faberge eggs of the classic- car market. Holmes said he knew of a collector who had bought one for R6-million and sold it for three times that sum overseas.

But the big returns are not always easy to come by.

For example, a late 1960s Rolls- Royce Silver Cloud, which is not necessarily a highly sought-after car, could go for R350 000. But if it had to have the engine reconditioned, which involves rebuilding the engine, this would cost about R200 000.

Holmes said this could leave you paying R550 000 for a car that is still worth only R350 000.

"I have seen that, generally, one does not lose on an old car if you buy and sell it after a period of time. Of course, like anything, especially if I compare it to an artwork, there are some items that never appreciate significantly and others that do," he said.

Angus Macleod, chairman of the MG Owners' Club, said that what made a classic car an investment was scarcity more than anything else.

He said while classic cars had a charm of their own, the recent growth in interest was more about investment and less about passion for the cars. Cars being bought now were often put away, wrapped up and mothballed until they were sold again.

"If I drive my prewar MG to the local garage, invariably I have all the petrol attendants attending to me, asking questions, and half the customers get out of their cars to have a look ... because these older cars are certainly noticed and admired by many people," said Macleod.

Leon Strumpher, a portfolio manager at Sanlam Private Wealth, and a classic-car owner himself, sees classic cars as an alternative investment that can form part of a wider portfolio and are an under-utilised asset class in South Africa.

"People who in the past used to diversify away from the stock market and away from fixed interest and bonds, they used to buy physical commodities like gold and platinum ... but [those commodities] are only going to appreciate in times of distress, whereas vehicles - once they are rare they are rare."

Strumpher said well-recognised brands and specific models were being bought by wealthy customers, but at the same time there was an awareness among a small group of young professionals who were looking at buying a classic vehicle as a second vehicle. But this was not necessarily as an investment.

Strumpher said that many of them were buying classic cars for the "cool factor", but in time they might become an investment.

He said it was possible to buy a car for R50 000 and sell it for more than R1-million 10 years later, if it was the right car in relatively good condition.

"The key is trying to find a vehicle that is quite original but does not need much work."

But Strumpher cautioned that it was not the simplest of investments and not as easy as buying an old car and expecting to coin it.

A lot of research was needed before someone dived into investing in classic cars as not all such cars would make one a lot of money.

The advice he gives to people seeking to invest in classic cars is to spend a couple of years - not months - looking for the right car and doing research into what one wants to buy.

The way the car looks, its aesthetics, the number produced, the history of the car, the pedigree of the manufacturer, the colour, the condition it is in, and its heritage and how we drive it all play a role in its value at the end of the day.

As for the insurance costs, Strumpher said that insurance on classic vehicles was not much because the cars were not driven regularly and most policies had a set number of kilometres the car could be driven each year.

Holmes said that based on the inquiries he got, more people were now attracted to classic cars for an investment compared to the collectors who had mostly bought classic cars in the past.

But that has always been part of the classic-car scene.

Holmes said that when he joined his club, he was told that there were two types of people there - ones who would try to make money out of their cars and those who loved old cars. He was warned to be careful of the first group.

"More and more people seem to be [interested in classic cars] for the investment opportunity, but there is nothing wrong with combining the two," he said.

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