Buying Classic Cars As Investments - What Are Your Chances of Making Money?

by Andrea L. Algar
Motorheads Performance

A few weeks ago, I read an article in Hemmings Daily (World's Leading Collector Car News Source) asking, "Are you smarter about cars than the Wall Street Journal?"  The gist of the article was about using classic cars as an investment tool, and how well past predictions have held up.

A 2004 collaboration of the Wall Street Journal and Dow Jones which produced a list of what cars to buy as an investment based on performance statistics during a ten year period from 1994 to 2004, was used as the basis for creating an updated list. Using the same method of computing values, utilizing Dow Jones Industrial average gain for the period from 2004 to 2012 and NADA car values and calculating new ROI's (return on investment) for this period, the author at Hemmings Daily compared the latest predictions to the previous ones to see how well classic cars have performed as investments. The author even took into account maintenance and upkeep, and any car that didn't get a 32% or higher return (factoring in maintenance costs along with the Dow's gain) failed as an investment tool as anything less than this would mean that the Dow Jones was a better investment overall. From there, a new list was created of cars that had significant enough quantities that collectors could actually find them. These were then rated as "Buy", "Sell" and "Hold". Hold cars may already be in line with estimated values, but are believed to still have room for continued growth in values.

Interesting note here car buffs...according to the author's calculations you need to spend about 10% of your car's value over 10 years for maintenance and upkeep...just something to keep in mind when calculating what you can afford to spend for your classic car!

Now, for the sake of this article, because Motorheads Performance clearly has a preference for American made classics, Guy Algar and I decided to list only American Classic Cars here. Visit Hemmings Daily for the complete article, which includes imports of all types.

BUY: 

• 1968 American Motors AMX (Frankly I'm shocked that AMX made the list as these are difficult to find!) These are expected to appreciate as much as another 100% in the next 8-10 years.
• 1976 Cadillac Eldorado Convertible (This doesn't shock me, as we've recently had two 70's luxury cars come to Motorheads Performance for restoration and performance work). These went from an 11% increase  '94-'04 to almost 30% from '04-'12. Hmmm...new trend?
• 1965 Chevrolet Corvair Monza Coupe (We've had one die-hard Corvair collector in the last 8 years). These cars went from 43% gains to 50%...not leaps and bounds, but slow and steady!
• 1970 Ford Boss 302 Mustang (This should be no surprise, as Ford fanatics insist they're tops!). These have had a 77% increase '94-'04 and 96% increase '04-'12. What will the new 50th anniversary edition to to Mustang collectability?
• 1970 International Scout (I agree with author that I don't see that there are enough of these to make the list) These had 50% increase through '04; 126% '04-'12!
• 1970 Oldsmobile Vista Cruiser (I can see other Olds models, but this one is a surprise!). These had a 102% increase '94-'04; 72% '04-'12 (hmmm...isn't this a decrease!)

SELL:

• 1957 Chevrolet Belair Convertible  Article's author notes that while the market is not shrinking for these, but it may have already plateaued. In fact has already had increases backslide.
• 1928 Ford Model A Roadster (I agree with author that he doesn't think things are flat for the Model A just yet). Values went from remaining flat from '94-;04, to increases of over 21% '04-'12.
• 1966 Lincoln Continental Convertible  (I think there is more room for growth due to recent interest). Values decreased 14% from '94-'04, and rebounded to increase almost 75% from '04-'12!
• 1949 Mercury Coupe  Again a car the author disagrees with the investor recommendations on as he believes the Mercury still has room for growth.
• 1932 Packard Dietrich Custom Sport Phaeton  Reason given is fewer active collectors
• 1970 Plymouth Hemi Cuda  Investors believe this market has flattened out.

HOLD:

• 1967 Buick GS400 Convertible  Believes could get a lift from the muscle car movement.
• 1963 Chevrolet Impala SS 409 (Can you actually find one with an original 409 anymore?)
• 1965 Chevrolet Corvette Mark IV (Wouldn't any Corvette from the 60's do well?)
• 1959 Chevrolet El Camino  Steady performer. (I think this is one of those sleepers!)
• 1934 Chrysler Airflow Sedan (One you don't hear much of).
• 1950 Chrysler Town & Country Station Wagon With original wood panels it's a hard find. (Who would ever imagined a station wagon for a collector car!).
• 1966 Ford Mustang Convertible (There'll always be a market for the 60's Mustangs).
• 1956 Packard Caribbean Convertible (I'm not sure these will do as well as investors predict).
• 1966 Shelby Cobra 427 (Another icon which will not go away for a long long time). 

So there you have the "expert's" list for American Classic collector cars! Can't say we agree with all of them, but we've always believed that the fun of owning a classic car or truck is NOT in the financial gain you might get from owning one. This can be a big mistake by buyers. It is purely in the joy that driving one can bring...even if the restoration costs more than the value will ever attain. It's a moment in history which stays frozen in our minds - taking us back to our youth when life was delightfully simpler, and cars were something that you actually enjoyed! As one person commented after reading the Hemming's article, "treating old cars as an investment would suck the fun out of owning them." Can't agree with you more David!

ABOUT THE AUTHOR:

Andrea L. Algar is co-owner of a classic car performance and restoration design shop in Leesville, Texas. Motorheads Performance specializes in repairs, maintenance, performance upgrades and restorative work on cars and trucks from the 1920’s through 1970’s. Her husband Guy L. Algar is a Mechanical Engineer with over 25 years experience. He holds 5 ASE Certifications from the National Institute for Automotive Service Excellence and has been working on old cars and trucks for over 37 years. Together they share their passion for old cars and trucks with other enthusiasts from around the country.