Do classic cars hold their value?

Do classic cars hold their value

It depends. A classic car certainly holds its value better than most new models.

One of the biggest expenses when owning a new car is depreciation – in other words, a car’s loss in value over time. A car loses its value most quickly when it is new. The rate then slows down as it ages.

Eventually, after a decade or more, a car is just plain old. It has probably been replaced in the showroom a couple of times over, and will now be worth a fraction of what it cost new.

What happens next depends on the car. If the model was one of the best of its kind, or particularly stylish, or fondly remembered, it may begin to creep up in value. Instead of being an outdated model nobody wants, it becomes a classic.

Just what is and isn’t a classic? For some car enthusiasts, even quite ordinary cars deserve classic status once they reach a certain age. These are sometimes called ‘popular classics’. Even an everyday runabout will start to hold its value or even become worth more once it is rare. If you’ve ever watched one of those car restoration shows on TV you’ll have seen grown men and women going misty-eyed over an old car that most of us would see as nothing special.

Cars that really hold their value and achieve genuine classic status are ones that were sought after when they were new. They tend to be made by famous names with a long history, and they may have a connection with racing or rallying. It helps if a car is especially distinctive or good looking.

Many Aston Martin, Ferrari, Porsche or Lamborghini cars are pretty much guaranteed classic car status in the future. High-performance models from BMW’s M-division and Mercedes’ AMG models also become bona fide classics. The same tends to be true of a Ford with an RS badge, or a VW GTi.

Once these cars reach a certain age, the depreciation slows down or stops. Drivers who wanted the particular make or model but could never afford a new one start to buy up used examples. As the number of used cars shrinks and demand increases, the model may begin to appreciate (increase in value).

If you are buying a classic car as an investment, the clever part is choosing a model just as it’s about to start increasing in value. It’s more art than science, but that’s the key to making money from a classic car.

Which classic cars hold their value?

Classic cars with famous names often hold their value best. Some celebrated owners help too. Just about the best-known fact about the Reliant Scimitar GTE  is that Princess Anne has owned several, and the royal connection adds lustre to the car’s reputation.

It really helps if the car was highly rated in its own time. Good looks also make a huge difference. Just compare the value of the beautiful Jaguar E-type with the less glamorous Jaguar XJS.

Another factor that inflates values is when a car has a legion of fans who couldn’t afford one when they were new. Prices for fast Fords from the ’70s, ’80s and ’90s are very strong, because many enthusiasts who grew up in those decades can now buy the cars they dreamed of when they were young.

Although it helps if a car was class-leading back in the day, it’s not essential. Nostalgia outweighs objective quality when it comes to classic cars that hold their value.

Here are three classics which our experts believe hold their value best:

Aston Martin DB7 (1994-2004)

It has the badge, the looks and the performance. What more do you want? Buy now before the prices really pick up.

Audi TT Mk1 (1998-2006)

Nothing else looks quite like the Audi TT. The first generation set the template for the models that followed. Surely prices can’t go any lower?

BMW E46 M3 (2000-2006)

Now is the time to buy the E46 M3. It’s an investment you can use and enjoy every day and won’t be this affordable for much longer.

Pros and cons of investing in a classic car

The dream is very appealing. You buy a car you’ve always wanted. You enjoy driving it and take pride in owning something so beautiful. After several years of blissful ownership, you sell the car on, and discover the car is now worth twice what you paid for it.

Usually, such a dream is exactly that –  a dream. Older cars can be very expensive to maintain and are often unreliable. If – and it’s a big if – your classic car is worth more than what you paid for it that profit could be swallowed up by maintaining your pride and joy.

Older cars are more prone to rust than new models. Even if you rarely take your investment classic out on the road, rust can take hold. If you do go to the trouble of keeping the car in a dehumidified storage unit, that’s another expense to add to the list.

It can work. There are people who have owned their favourite classic car for a few years, sold it on, and paid for a home extension with the profit. They are the lucky ones.

There are others who have sunk their savings into a classic, spending more than the value of the car. As investments go, they may as well have set fire to a pile of £20 notes.

In between are the ordinary classic car enthusiasts. They go into classic car ownership hoping to make a profit, but conscious that it may not work out. They don’t spend more than they can afford to lose, and are careful to buy the best example they can afford.

A classic car may be a risky investment with a long list of cons, but the biggest pro is the car itself. It’s not like investing in stocks and shares, or other intangible assets. A classic car is an investment that can be enjoyed. Buy a classic to enjoy or to fulfil a lifelong dream. If it makes you money, well, that’s a bonus.

Pros of investing in a classic car

· Potential for big profits
· You can enjoy your investment while making money
· The chance to own the car you’ve always promised yourself

Cons of investing in a classic car

· Storage and maintenance costs eat into your profit
· Classic car values can go down as well as up
· The classic car market isn’t easy to predict

Are classic cars a good investment?

It depends what you mean by ‘good’. You could make a small fortune. Or you could lose a bigger one.

If you are looking at a car purely with a making-money motive, then classic car ownership probably isn’t for you. There are too many variables, too much unpredictability in the market.

Making money from classic cars takes knowledge, experience, and a handful of luck. Even successful and knowledgeable investors can be burned by the market.

The best way to look at a classic car is as a beautiful machine that will bring you great satisfaction. Buy a classic, relish driving it, take pride in caring for it.

A classic car could make a good investment, but the rewards should be more than just financial.

Classic car value FAQs

·         Are classic cars going down in value?
It depends on the car. The market is moving all the time, with some cars going up in value and some dropping down.

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