The former TV heart-throb, who played a California highway cop in the series “CHIPs” in the late 1970s and early 1980s, has put up for sale his 1980 Rolls-Royce Silver Wraith II. It’s on the docket at the annual Barrett-Jackson classic car auction in Scottsdale, Ariz. — alongside a vast range of other cars dating from the 1930s all the way to the present.
Gross returns from classic and vintage cars overall worked out at 5.6% a year from 1998 to 2015, or 3.4% a year after inflation.
If you want to score a 1940 Plymouth Deluxe Sedan, a 1950s Porsche, or a 1960s Corvette or Mustang, this is the place to go. Organizers say they’re expecting a busy week, with an estimated 300,000 people turning up.
The Scottsdale car show from Jan. 12 to Jan. 20 is one of the biggest classic car shows of the year. Estrada’s Rolls has no published reserve price. The TV star could not immediately be reached for comment. (One of the three 1978 Pontiac Firebird Formulas used in the 1970s TV show “The Rockford Files,” which starred James Garner is also on the block. It too has no reserve price.)
Everybody loves classic cars. They can be gorgeous to look at, own, and — in some cases, at least — to drive. But if you’re thinking of them as an investment, think again. Two researchers went through the auction data of 29,000 car sales going back to the late 1990s. Their conclusion? Most of these cars have been mediocre investments — at best.
Oh, and famous American marques have been among the worst.
Gross returns from classic and vintage cars overall worked out at around 5.6% a year over the period 1998 through 2015, or 3.4% a year after inflation, found economists Luc Renneboog and Dries Laurs at Tilburg University in the Netherlands.
Buyers want classic or vintage cars that have been retrofitted with modern engines, power steering, and even air conditioning.
But that was before deducting all the costs involved in buying, owning and eventually selling the cars. “Transaction, storage, transportation, insurance, maintenance and restoration costs can be substantial for classic cars, and vastly surpass the costs of (financial) asset classes,” they admit. They calculate that the commissions on buying, and later selling ,a car can add up to 25% of the total value. Even car auctioneers concede these are unlikely to be below 20%.
There is no figure for the net returns.
The gross returns figures looked better than most stocks and bonds over the same period, the authors note. But it was a poor period for stocks, as it started near the peak of the 1990s bubble and encompassed two big bear markets, financial experts note.
Over the long term, stocks have tended to earn on average somewhere north of 4% a year above inflation, note experts. And stocks, unlike classic cars, cost next to nothing to ship, store, restore, insure or maintain.
‘The Ferrari boom was incredible. It was the hype. There’s only so many people that can play in that level of the market.’
“What’s really hot now is the ‘Restomods,’” says Nickolas Cardinale, executive vice-president at Barrett-Jackson. That means classic or vintage cars that have been retrofitted with modern engines, power steering, and even features like air conditioning. “Old cars don’t drive well,” says Cardinale. “They don’t have air conditioning… People want their cars to look old on the outside, but they want them new on the inside.”
If this continues, the real economic opportunity may simply lie in buying vintage chassis on the cheap and then either retromodding them yourself — or “pimping your ride,” to quote an old MTV
slogan — or selling them to those who know how.
The return figures for classic cars were also flattered by a mania for Ferraris that peaked several years ago. “There was a crazy Ferrari boom,” Cardinale adds. “The Ferrari boom was incredible. It was the hype. There’s only so many people that can play in that level of the market.” Ferrari could not be reached for comment.
During the same period, the average real returns on classic U.S. cars were 2.3% a year — before all those costs. As a general rule, classic U.S. cars did worse than British, German or Italian equivalents.
manufacturer of the Corvette, did not immediately respond to requests for comment. Ford
manufacturer of the Mustang, said prices for some high-end models from the 1960s have risen by 7% a year or more above inflation for the past 10 years.
Classic cars don’t change. But tastes do. The vintage cars that used to command the highest prices were those that were effectively unchanged. No longer.
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