Classic cars: passion and market value

Classic cars as an asset class — these factors determine the selection

Private investors who want to choose vehicles as an investment cannot ignore Classic Cars. Because although new luxury vehicles sometimes cost a great deal of money, they quickly lose value. New cars are unsuitable as investments, as they experience a significant loss in value rather than an increase in value, especially during the first few years of use. This is different with classic cars, which are like a Fine Wine gain value over the years. They are not only cultural and aesthetic treasures of contemporary history, but are also characterized by the fact that, as an asset class, they have relatively little dependence on the stock market.

Classic cars are an important economic factor and have a high level of acceptance among the population: according to a current study 43 percent of the Association of the Automotive Industry are happy when they see a classic car, and one in three would like to drive a classic car. In addition, classic cars promise prestige and status. In addition to tough market factors, classic cars as an asset class are characterized in particular by emotionality: Owners care for their young and classic cars with dedication and proudly present their noble collector's item to friends and fans. Owning a classic car opens doors to an exclusive social class and provides valuable insider insights into the special, very closed world of classic car collectors, about which there are only a few insightful analyses.

With classic cars, investors must show the right instinct. Models such as the Mercedes Benz 300 SL gullwing door, for example, were still available in the 1980s for around 50,000 euros. Today, buyers have to spend around 500,000 euros on one of the iconic gull-wing doors in good condition. Porsche's legendary “911” sports car series also promised solid returns in recent years.

When investing in a classic car as an investment, private investors should bring a certain amount of expertise. Because in addition to the model itself, the condition is also decisive for the value. Is the engine intact and does the chassis number match the engine? Is the vehicle's CV complete? What is the mileage of the vehicle? Does it consist mostly of original parts or have modern components already been installed? These are all questions that need to be considered in advance and investors must have technical knowledge to answer.

Reports for classic cars — the first basis for determining the vehicle value

Just as investors scrutinize securities, stocks, funds, or ETFs as closely as possible before investing, classic cars should only be selected for their own portfolio after careful consideration. Investors can only obtain clarity about the actual value of a classic car with expertly prepared appraisals. The reports state in detail whether the vehicle consists largely of original parts, whether the general condition of the mechanical components is okay and how roadworthy the vehicle is.

The following content is part of an appraisal:

• detailed description of the condition of all relevant components
• List of technical data
• Restorations and alterations are documented
• Market value/current value and replacement value

Experts usually prepare either cheaper short reports, which are suitable for used cars or new vehicles up to around 50,000 euros, or detailed appraisals, which are much more detailed.

In many reports, the result is also summarized as a kind of school grade of one to six, so that buyers and investors get a feel for the condition of the vehicle at a glance.

Technical functionality, equipment and storage of classic cars

The value and increase in value of a classic car depend in particular on the technical condition of the vehicle. One of the top priorities for the expected increase in value is whether the vehicle is functional. Is the engine running and is the classic car ready to go? Does he still have a valid TÜV sticker? In addition, the function of the brake system, transmission and lighting also play an important role. Original interiors and seat covers are also of great importance for classic cars as an investment.

The body of many classic cars was still made of ungalvanized sheet metal. Rust is therefore a frequent companion of old vehicles. Once this has settled, extensive work may be necessary to maintain the condition. Regular rust care and prophylaxis are therefore mandatory for classic cars.

A classic car should be stored as far as possible against all types of weather effects. A garage or warehouse is ideal for this. The vehicle can also be covered with a tarp to protect the paint. It is important that moisture cannot settle outside or inside. This is because moisture in the interior can lead to mold formation or defects in the electrical system.

It is also important that the young or classic car is moved regularly to maintain functionality. All moving parts are lubricated and kept running only by moving. It also prevents important seals from becoming brittle. The regular joyride is therefore an important ritual after buying a classic car as an investment.

Invest in classic cars — pay attention to insurance and tax

An important part of covering classic car damage is taking out comprehensive insurance. Most providers require the presentation of an appraisal in order to be able to determine the insurance amount. It is important that the following damages are financially covered:

• Accidental damage
• theft
• Damage caused by natural disasters

In addition to insurance, tax is also a fundamental cost factor. Classic cars are approved with an H license plate. Owners of a vehicle age of at least 30 years and provided that it is in original condition will receive this. The major cost advantage lies in the fact that vehicles with H-plates are taxed on a lump sum basis.

Digital shares in classic cars — dynamic addition to the portfolio

For a long time, classic cars as an investment were only suitable for expert and wealthy private investors. In addition to technical understanding and good knowledge of the classic car market, classic car enthusiasts in the past had to bring not only the necessary nostalgic flair, but also the appropriate investment capital. As an investment for a longer-term investment horizon, classic cars are high-yield investments when properly maintained and stored, as global demand is high.

Digitalization enables this illiquid asset class to be broadly opened up to private investors through new technologies. Thanks to the tokenization of tangible assets, today you can also Retail investors benefit from the increase in the value of classic cars. Digital shares in classic cars can already be purchased at low prices via special investment platforms and can also be traded peer-to-peer via a secondary market.