Are Classic Cars a Good Investment? (2024)

FAQs

Are Classic Cars a Good Investment? ›

Key Takeaways. For the automotive enthusiast, one way to diversify an investment portfolio is to start collecting classic cars. Most cars lose value immediately after they are driven off of the dealer lot, but classic cars gain in value over time, due to rarity, performance, or special attributes.

Classic cars can be a risky investment. Even if you purchase a model that significantly increases in value after you buy it, you may still put more money into it with repairs and maintenance costs. Additionally, collector trends are unpredictable, so you can't bank on a specific model dramatically increasing in value.

Many classic cars are growing in market value, especially those with unique stories or limited production numbers. However, not all classic cars appreciate; some models are losing market value due to changes in collector preferences or market oversaturation.

For cars that hold value in their rarity, it could be good news. Though running and maintenance costs are likely to increase, cars that are already rare may become even more sought-after as collector's items, pushing up their value.

Mileage. They say a new car starts losing value the moment it's driven off the lot and the odometer starts going up. Cars that have high mileage are usually more susceptible to general wear and tear, but if miles have been kept low on a classic car, over time it can regain that value.

A lot of people have made good money buying and selling classic cars over the past few decades. A common way to make money can actually take years to accomplish. You buy a classic car today in hopes that it will increase in value over the years to come.

The most significant con is the maintenance of classic cars. The cost of maintaining an old-timer, including insurance and maintenance, can be up to 20 percent of the classic car's value. Spare parts or even simple consumables may be really difficult to buy in auto parts stores, so you have to 'hunt' for them.

Old Porsches, Ferraris, Corvettes and high-end muscle cars from any period will usually retain some value, but the insurance giant also recommended affordable cars that you might be able to get for under $40,000 — like a 1967 Volkswagen Beetle or a 1970 Chevy Camaro.

Con: Maintenance and Restoration Costs

Classic cars require considerable upkeep and may need frequent mechanical repairs and part replacements. Since these vehicles are no longer in production, sourcing components can be challenging and expensive.

Are Millennials buying classic cars? ›

Most “classic” cars are collected by Boomers, the Boomer's Babies, and some Gen X. Millenials are, as you say, not as interested. They are, instead, increasingly going to the 1980s and 1990s cars that they remember from their childhoods and teenage years. Just as boomers and Gen X did.

Total auction sales of classic cars (for both online and live auctions) fell 3% last year to $4.19 billion from $4.32 billion in 2022, according to data from Classic.com. Prices for many models have fallen 10% or more, according to classic-car analysts.

Yes, there can be money in selling classic cars. The classic car industry is having a bit of a boom, according to a recent report from Creedence Research. In 2021, the global classic cars market was worth an estimated $31.1 billion.

Most cars are exempt from Capital Gains Tax (CGT), even classics. Why? Simply because they are deemed 'wasting assets' with a lifespan of under 50 years.

Cars lose the most value in the first year, and depreciation continues for about five years. A car can lose up to 20% of its value in the first year, and over the first five years fall to around 40% from the original price.

In recent years, classic cars have become more popular, both as investments and as a touchstone to bygone eras. One look at the prices commanded through car auction experts such as Barrett-Jackson or Russo and Steele show buyer demand is continuing to drive prices higher.

Classic cars are making a strong comeback, and it's easy to understand why. From their aesthetic appeal to their potential as an investment vehicle, these timeless beauties can bring joy and financial rewards to any car enthusiast.

Since they lack modern tech and safety features, classic cars have a more hands-on driving experience, and they can be easier to work on yourself. And while newer cars will depreciate with age, classic car values tend to appreciate due to supply and demand, especially for well-maintained ones.

Classic cars are personal and sentimental assets most people want to keep in the family and direct which family members inherit them. A California trust is one way to ensure your wishes are followed after you are gone.