Can You Make 15% Per Year Investing In Classic Cars?

Edward Niedermeyer
by Edward Niedermeyer

IGA Automobile, a new closed-end partnership fund, is planning on investing $150m into “a collection of 20 to 40 trophy marque vehicles with distinguished race or ownership histories” which it claims will appreciate some 15 percent over the next seven years, according to the Detroit News. Though collective buying of super-exotic cars is not new in itself, IGA Automobile fund Director Lancaster claims

This is the first classic-car fund that’s purely for financial returns, rather than passion

The fund, which is advised by Pink Floyd drummer and car nut Nick Mason, has identified several “potential acquisition targets” including the Ferrari 250 GTO, Aston Martin DB4 Zagato, Ford GT40, McLaren F1, Shelby Daytona Coupe and Porsche 917. And, since investors in the fund will be shelling out a minimum of half a million dollars to buy cars that they won’t even be able to keep in their own garage, the investment had better have a chance of making some money. And the fund’s managers think they can make that pitch, as

The Hagerty’s Cars That Matter “Blue Chip” Index, based on the values of the 25 most collectable postwar vehicles, has increased 67 percent from September 2006 to the end of 2010… The Historic Automobile Group International (HAGI) Top 50 index of exceptional classic-car prices was up 6.6 percent in 2010, lower than its average annual growth of more than 12 percent from 2003-08.

That’s better than plenty of investments did over a similar time period… but luxury-goods speculation still has a shaky track record. Besides, doesn’t it seem just a little bit wrong to treat these epic classics like a bond certificate, keeping them stashed away in a vault somewhere? Here’s hoping there’s room in the business plan for some kind of museum.

Edward Niedermeyer
Edward Niedermeyer

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  • Chuck Goolsbee Chuck Goolsbee on Jan 27, 2011

    I know somebody who loves cars. Loves to drive them most of all. He's owned several post WW2 classics, from an old MG TD and a Jaguar XK 120, though an R107 Mercedes-Benz. In 2000 he chanced upon a dream car at a good price, a 1957 Mercedes 300sl and bought it. He loved it and drove it often. Last year however he decided he could no longer drive it because it had appreciated in value 450%(!) in nine years. It broke his heart, but he just could not justify the risk of driving a relatively low-tech, drum-braked car on roads surrounded by distracted, innattentive idiots when it was worth so damn much money. That and the fact that all his other investments had lost more than half their value at the same time. So he sold it.

    • Zackman Zackman on Jan 28, 2011

      That's pretty good - I'd have done the same thing. I post this because, ironically, a Chrysler ad on TTAC is advertising PT Cruisers! Didn't they stop building them last summer? I wonder if I bought one now, how much it would be worth ten years from now? It's a nice thought, as I don't have the resources to waste on such speculation anyway. I had an opportunity to buy a 1953 Mercedes 190 back before I bought my avatar in 1970 for $350.00. It was tempting, but I was afraid I wouldn't be able to afford to repair and maintain the thing. As it was, I spent approximately $2200.00 over the course of three years maintaining/repairing/fixing up my Chevy! Oh well, it kept me too broke to get into trouble while I was in the USAF!

  • GS650G GS650G on Jan 28, 2011

    Anyone who ever owned a classic car knows the bottomless pit of finance these cars reside in. Love is what keeps them together. I think I'll keep buying Ford Stock and short GM right now.

  • CanadaCraig You can just imagine how quickly the tires are going to wear out on a 5,800 lbs AWD 2024 Dodge Charger.
  • Luke42 I tried FSD for a month in December 2022 on my Model Y and wasn’t impressed.The building-blocks were amazing but sum of the all of those amazing parts was about as useful as Honda Sensing in terms of reducing the driver’s workload.I have a list of fixes I need to see in Autopilot before I blow another $200 renting FSD. But I will try it for free for a month.I would love it if FSD v12 lived up to the hype and my mind were changed. But I have no reason to believe I might be wrong at this point, based on the reviews I’ve read so far. [shrug]. I’m sure I’ll have more to say about it once I get to test it.
  • FormerFF We bought three new and one used car last year, so we won't be visiting any showrooms this year unless a meteor hits one of them. Sorry to hear that Mini has terminated the manual transmission, a Mini could be a fun car to drive with a stick.It appears that 2025 is going to see a significant decrease in the number of models that can be had with a stick. The used car we bought is a Mk 7 GTI with a six speed manual, and my younger daughter and I are enjoying it quite a lot. We'll be hanging on to it for many years.
  • Oberkanone Where is the value here? Magna is assembling the vehicles. The IP is not novel. Just buy the IP at bankruptcy stage for next to nothing.
  • Jalop1991 what, no Turbo trim?
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