Carroll Shelby poses with three Cobra roadsters from 1963. They’re the type of rare vehicles Peter Klutt, president at Legendary Motorcar Co. Ltd., likes to buy, sell and restore.Ford
There are numerous ways to build wealth, but for a certain group of investors, there’s one clearly preferred “vehicle.”
Most cars decrease in value the moment they’re driven off the lot. But some older, rarer, more iconic or limited vehicles appreciate significantly over time.
“With my background as a CA (chartered accountant), I know my way around a balance sheet and an income statement, but it still feels a little more like work when I’m researching a company to determine whether or not I want to invest,” says Toronto-based car collector David Case. “When I’m talking about cars, you can see the way my face lights up.”
After 25 years as an accounting professional and private collector, Mr. Case founded the online auto-auction website Collector Car Canada in 2021. “You’ve got to be careful mixing up your emotions with the common sense of an investment, just like with anything,” he points out. Collectors, he says, need to do their research before getting into the market, and they should be aware of the costs associated with purchasing, owning and maintaining what they buy.
In-person car auctions, for example, typically charge a 10-per-cent premium on top of the sticker price to both a buyer and seller, though online auctions typically only charge buyers around 5 per cent. There’s also the cost of safely storing a vehicle – which Mr. Case says can add up in cities like Toronto – and expenses related to maintenance.
“Ferrari suggests you change the belts on these cars every four or five years, regardless of the miles done on them,” he says of a pair of 1990 and 1997 Ferraris he’s selling privately. “If you bring that to Ferrari of Ontario, the only Ontario franchise dealer, you’re looking at a maintenance bill of $15,000 or $20,000.”
At least one expense is lower for car collectors than typical owners.
“Insurers fully understand that the collector cars really don’t get used very much, and they’re pretty much pampered and babied and looked after, only driven in nice weather, and don’t get driven very much – 1,000 miles a year would be a lot,” says Peter Klutt, president at Legendary Motorcar Co. Ltd. “They’re relatively cheap to insure compared to other vehicles.”
Legendary Motorcar buys, sells and restores some of the country’s rarest vehicles – from a 1927 Bugatti Type 35 Grand Prix to a 1963 Shelby Cobra to the Ferrari that Michael Schumacher drove over the finish line to win the 1999 Formula One race at Imola, Italy – all housed in a 75,000-square-foot showroom in Halton Hills, Ont.
“Whether it’s the stock market, real-estate market, or the car market, you have short periods with big run ups, short periods with declines, and then level years that go by,” Mr. Klutt says. “Just like the stock market, where you have the high-tech sector, or commodities, it’s the same in cars – you have your muscle cars, your supercars, your classic cars, pre-war, post-war – and those markets don’t all move uniformly.”
It’s not just old cars that potentially fetch a high price. Mr. Klutt says automakers are getting more intentional about producing limited-edition vehicles, which can increase in value almost immediately.
While more mid-range collector cars have seen a pullback in value since pandemic highs, the market for those at the highest end – the stuff of adolescent bedroom posters – never seems to decline. Even those who can’t afford their own supercars can now own a fraction of one.
“It’s kind of like a stock market for collectibles,” says Rob Petrozzo, co-founder and chief product officer of online platform Rally. “We find, manage and fractionalize the most important items in the world, including cars, sports memorabilia, rare wine and whisky, dinosaur fossils – anything with value and a significant history of returns.”
Though the platform offers a wide range of unconventional investment options, Mr. Petrozzo says rare vehicles were the first items to be listed, and they remain the most popular, especially with younger users. The average age of those using the site overall is 33, but its average car investor is 29. “Our assets are fully insured and kept in world class, climate-controlled facilities, watched over by our expert team and under 24/7 video surveillance,” he adds.
Mr. Petrozzo claims the average return for items on the U.S.-based platform – which will launch in Canada in the coming months – is about 40 per cent from the initial offering, and the average holding period is about one-and-a-half to four years, but many of the rarest vehicles have outperformed averages.
“When the time feels right, or the market dictates that we might have an opportunity to bring an asset to auction and achieve a big price, we’ll poll all the users.”
A rare Testarossa recently generated a 70-per-cent return, only to be outdone by an even rarer 1980 Lamborghini Countach Turbo – one of only two ever made.
“It was a project done by Lamborghini engineers – it looks and feels like the Lamborghini Countach everybody recognizes, but it’s completely souped up and done in a way that will never be engineered again,” Mr. Petrozzo says. “That was an IPO [initial public offering] that we did for around $630,000, the buyout was for $1.18-million, for an 86 per cent return over the course of two-and-a-half years.”
Mr. Petrozzo says that the enthusiasm for investing in collectible cars among younger generations suggests that the market will continue to grow in the years ahead. “When you allow someone young to have an ownership stake in something they’re passionate about it becomes something they’ll spend more time thinking about, researching, educating themselves on for years to come.”