Are Modern Classic Cars Worth Investing In?
Investing in the right modern classic car could lead to tremendous future gains, professional content writer and branding aficionado Annie Button explains.
Currently, the record for the most expensive car ever sold at auction is a Ferrari 250 GTO, worth £52 million. A modern classic won’t fetch that yet, but perhaps it could in the future.
Collecting cars isn’t always about making money, though, and some think of them as passion projects. However, if they just want the joy of driving a rare car then it’s often a no-brainer and the collector will pay whatever the asking price is.
A car is one of the most valuable investments most people make but are modern classic cars worth investing in?
What is a modern classic car?
As far as modern classics go, there is no official category of car that qualifies it as a modern classic. A car can evolve to become a ‘classic’ for a number of reasons:
- it had a large cultural impact
- its style is unique
- its design is exceptionally eye-catching and popular, or
- it belongs to a certain era.
Modern classics are typically seen as cars from the 1980s through to the 2000s. Some act as investment cars for those in it for the money, while others remain sought after for the pure driving pleasure gained by their owners.
Valuable reasons for investing in modern classics
Investing in a modern classic car could lead to significant gains in the medium to long term. Car auctions boomed during the pandemic and buyers didn’t lose their appetite for a ‘new’ set of wheels in that time.
“It’s a buoyant market and online auctions have made it more accessible to more people,” says tech entrepreneur Tom Wood, CEO of Car and Classic. “Modern classics – that’s anything from the eighties to the noughties – are really flying, both from an interest and a pricing point of view.”
A modern classic that is on the cusp of becoming a bona fide classic can see its value continue to soar while it ages. (As long as it runs and stays in great condition, of course).
Investing in classic cars can also turn out to be a great business decision if you intend on using them as a boost to your pension fund or savings pot. Naturally, as with all investments, there is a risk involved and no certainty. But, with classic car valuations increasing in recent years, a modern classic can be bought for much cheaper before steadily rising in value as the years
Things to consider before investing
Looking for an available modern classic can be a time-consuming search and it’s important to research prices before investing and consult the experts. It’s going to take time to gather the required car industry knowledge to have a good feel for what is a modern classic and what represents good value.
Investing in a modern classic can be more of a risk than something older, as there is still a chance it won’t remain favourable in the eyes of collectors. However, classic cars that are too old start to lose their value as investors get younger and no longer desire them. This creates a window of opportunity, albeit a pretty slow-closing one.
Servicing costs associated with classic and modern classic cars are worth considering before investment. It’s not just the labour you will have to pay for but the specialist parts that come with restoring or servicing the classics.
“Your classic Mercedes-Benz needs regular servicing to keep it running smoothly and maintain its history and potential resale value”, says John Haynes Mercedes, a classic Mercedes-Benz restoration and servicing expert.
Originality is important for the potential value of any classic car, including those in the modern classic classification. ‘Restomods’ have seen a surge in popularity, which are classic cars restored using unoriginal parts. These can be significantly lower in value than cars complete with authentic parts.
After investing in a modern classic, it’s vital to insure it. Classic car insurance typically covers extras like breakdown cover, salvage retention and spare parts.
Modern classic cars worth investing in
There is an ever-growing list of modern classics. One great example is the Nissan Skyline R34 GT-R. In 1999, it cost $45,000 new and now, over 20 years later it is worth closer to $71,000.
The Skyline was a Japanese import must-have in its heyday and its legacy has grown since then. If you can even get your hands on one, its value is only going to keep rising. Some dealers are even shipping out versions of this modern classic for as much as $300,000!
German cars from the 1990s are also seeing considerable interest in the auction market, with Mercedes-Benz, Porsche and Volkswagen all performing well and exceeding their estimated values. With classic cars increasing in value more quickly than gold in recent years, investing in classic cars, modern or not, is a fun way to grow your personal wealth.
How the pandemic affected car prices
Almost every industry proved it wasn’t ‘bombproof’ as the pandemic hit and hamstrung them. The car industry was no different and manufacturers are still feeling the aftereffects of the pandemic.
New cars are tougher to make than ever before due to supply chain issues, which has caused a boom in the used car market. However, just because used cars are now more valuable than ever doesn’t make them a modern classic or a great investment.
Prices in the used car market are all over the place and it’s dangerous putting too much stock in it right now. An expensive purchase doesn’t make it a good one, and when new cars do come out with more regularity, as expected in 2022, used cars bought during the pandemic will start losing value again.
At the right price, with the right knowledge and with all the expenses considered, a modern classic can be a shrewd investment. Values of classic cars continue to rise and while there is a risk, there is a really good chance to see a return on your investment.
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