Is There a Way to Stop This? Should We Care?

So I’ve been reading this morning about Classic Automobile Investment funds and it bums me right out. The worst part is that I don’t think there’s anything that can be done about it. The story is that there are investment groups creating funds and using these pooled investments to buy classic cars. What’s worse, there is more than one of these groups—virtually ensuring that their competition will artificially inflate prices in the vintage racing and sportscar world and put these cars outside of the reach of drivers who would use these machines for their intended purpose.

Maybe some of you view your classic car as an investment and maybe I’m insulting half of my readers here… and maybe (probably) I’m just naive… But it bothers me that speculators and investors who may or may not have any purer interest in their chosen investment are becoming an ever increasing percentage of the market for historic sports and racing cars.

I’ve long since come to terms with the fact that I’ll likely never own a 250GTO or 917 or Tipo 33—so I like to think this isn’t all just coming from a place of jealousy—but as this trend increases, even once affordable classic sportscars values are skyrocketing at a pace that puts even much more modest road-going sportscars out of the budgets of vintage sportscar fans.

I suppose I should have seen this coming in the wake of the Barrett-Jacksonification of the muscle car market. I would sit stunned and watch what seemed to me like fairly ordinary muscle cars change hands for stratospheric sums. It all makes a bit of sense, I guess. I’m sure there have been many, many vintage sportscar owners that have been more than happy that when it came time to sell their pride and joy that they could turn a tidy profit on it. Perhaps that profit would fund a new automotive dream. These profits were bound to be noticed.

Maybe I’m wrong on all of this and these automotive funds are buying these cars to be used. Sure, they see them ultimately as an investment, but there’s no reason it can’t compete at Goodwood or the LeMans Classic while they’re in our care. Even respected collectors who DO use their cars are on board. I can’t help but think though, that they’ll just be stored in vaults; perhaps visited by an occasional mechanic or significant investor or banker, hidden from the public. Not driven. Not owned by loving caretakers that will use them as intended.

It’s like hanging a Vermeer in an empty, unlit storage locker.

Am I being foolish? Or is this a real threat to our passion and community? What do you think?

9 responses to “Is There a Way to Stop This? Should We Care?”

  1. Mad_Science says:

    The optimist in me posits the following: the goal of the fund is to have the asset appreciate in value. More accurately, to reach a point where you can sell your share of the fund for more than you bought it.

    On something non-commoditized and of little intrinsic value, one good strategy is to generate hype and enthusiasm by showing (even racing?) the asset(s) as much as possible.

    Essentially, get that 917 out there with the message “wouldn’t you want a piece of this?”

    The pessirealist in me recognizes they’ll probably not want to risk diminishing value, so there’ll be no racing. But, really, any vehicle rare/special enough to treat as an investment was unlikely to see the track again, anyway. The awesome auto-barons out there who flog their classics are by far the exception, not the rule.

    The curious part is whether these are purely monetary in nature, or if they come with some kind of dividends/privileges on the assets. In purely financial terms, there’ve got to be better places to put your money, meaning these funds would likely attract car enthusiasts of some kind.

  2. And look out, there’s a company out there getting people to buy in to their organization with big success…claiming they hold car events all over the country…but to date, they finally only aligned with one event after posting Concours events in Phoenix/Scottsdale, Las Vegas, Connecticut and more! My phone calls were ignored for over a year until my message, “I think I’m the only person in the entire world who is watching what you’re doing” was returned in five minutes flat by the President….who had to dismiss himself after only two minutes and never fulfilled his promise to call me back! Caveat Emptor!

  3. Ronald Sieber says:

    This movement is called capitalism. Free markets generally are a good thing, with regulation.

    I don’t think that the cars I can afford will be affected by these investment groups. If anything, we enthusiasts may get a little more respect for our interest and investment in the car hobby as others see the worth of some examples of the species.

  4. Paddy says:

    Agreed. As a classic car owner and historic motorsport enthusiast with a job, mortgage, family and all the normalcy of a life, I find the community of owners around me are being seperated into the group that has $$ in mind against those who like to take a few risks with their cars and drive them in a spirited and ‘as intended’ manner. Like everything good in life, it gets wrecked by money, and the pursuit of more money…

  5. Mario Carneiro Neto says:

    It’s bullshit, but it was inevitable.

    The interview on their website is depressing, particularly when the guy says the cars will go to museums.

  6. Stupid. I can just see the faces of those pompous A…bragging about the great investments they´ve made. How shrewd they´ve been. I don´t mind if cars become more valuable as more will be worthwile restoring, but what about automobile LOVE?

  7. Mike Jacobsen says:

    “Mad Scientist” speculates that there are better places to invest for a bigger return, but I doubt it. Collector cars have made a far better profit than any other type of investment over the last half century. The whole phenomenon is merely a reflection of our main economic trend since the Reagan administration, which has seen a greater percentage of wealth concentrated in fewer hands than ever before: forty years ago, 10% of the population held 90% of the wealth, while today about 5% hold 95% (someone will come in with the exact figures!). A few of the big guns do race their cars, e.g. Peter Mullin, but their number is decreasing just as the number of genuine classic racing cars on the grid has diminished at all but the most glamorous events. And those events are becoming out of reach for some of us: Monterey entry this year was $650., they want us there for two extra days for tech and practice at minimum $250/nite for a hotel, and extra tickets to the drivers’ lounge are $600. I expect I’m going for the last time. MJ

  8. DougD says:

    I think the only ones who should be worried are those who can realistically afford top tier classics. For the rest of us there is still enormous room for fun on the lower tiers of the classic car / racing scene, unless these groups somehow corner the market on Bugeye Sprites, Porsche 912s and Studebaker Larks.
    As an investment it does come with a higher PITA factor though, as classics need proper storage, care and maintenance which will cut into any return.

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