Classic Cars Outperforming Financial Markets According to Index

It is nice to think that all of the buyers at the Pebble Beach or Goodwood car auctions are buying cars for hundred of thousands or millions of dollars and are driving them the way that there were designed to be driven. However, it does not take a cynic to know that this is not the case. In a world where many investments are returning just a few percent a year, classic cars actually represent a good investment, for now. 

The Historic Automobile Group International (HAGI) is a financial institution that has been set up to create an index of classic car auction prices. Like a stock index, it was created to give investors a general idea about the health of the classic car market. While individual cases may vary, the index tells potential buyers how the market is doing in general. It updates the index monthly.

In its July 2013 report, HAGI gives the indexed price of the classic car market of 203.49. This is calculated based on an indexed value of 100 when it set up the price index on December 31, 2008. This means that the price of a classic car on the auction market has increased 103.49% in the past four years. Compared to last year, the prices are up 27.05%, and compared to June 2013, prices are up 4.71%. 

In comparison the Standard & Poor's Global 1200 stock index, which indexes the price of 1,200 stocks in 31 countries has grown 11.64% in the past year and was up 5.03% compared to June. 

This shows that for 2013, if someone had bought a classic car at auction in 2012, its price would have increased more than if that person had bought one of the S&P 1200 stocks. For an equal investment, the person could have seen a 15.41% better profit. 

HAGI does not just index the classic car market in general. It also provides individual indices for PorschePorscheGermany, 1931 > present43 models
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, FerrariFerrariItaly, 1947 > present233 models
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and Mercedes-BenzMercedes-BenzGermany, 1924 > present197 models
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vehicles. It means that their relative values on the classic car market can be compared fairly against one another. 

Of the three makes that HAGI presents a public index for, Porsche leads slightly with a 205.91 index price, compared to 205.20 from Ferrari. In the past year, Ferrari prices have seen a 34.31% rise, compared to a 21.75% rise for Porsche. In July, Ferrari prices increased 5.1% from June, and Porsche prices went up 2.31% from June.

HAGI also indexes Mercedes-Benz prices, but it only began on December 31, 2011 that means that the index price and changes can only be compared to that point. Mercedes' index price is 138.84 meaning that prices are up 38.84% since it began indexing them. Mercedes prices are up 24.36% from last year and are up 5.05% from June. The index did not factor in the sale of the W196RMercedes-Benz W196 Motort...Germany, 1954 > 195515 photos
for £20.9 million because the car was so rare. 

In a way it is a little sad that the world market is so poor that classic cars have become an object to enjoy to an investment, but it is amazing how quickly prices are growing for classic cars. 

Source: HAGI