Definitely, it’s a bubble, like Dutch tulips in the 1600s, but you—yes, you—can take some profit out of this go-go market. Classic cars are now the best investment around, better than paintings, gold, real estate, whatever. Even the art people are admitting it.
In a new analysis from Douglas Elliman and Knight Frank (realtors!), the conclusion is that cars trump art. In the year ending in October, collector cars gained 25 percent in value, compared to only five percent for art. As a longer-term investment, cars posted gains of—get this—111 percent over five years. Art showed just 17 percent growth. In 10 years, automobiles were up a whopping 469 percent, and art 226 percent.
Sorry, Picasso. Too bad, Matisse. Casino magnate Steve Wynn may want to reconsider his policy of buying a lot of expensive art. I told him to buy a Tesla Model S, and he said he’d consider it.
Other collectibles didn’t do so well in the poll, either. In the year that cars were up 25 percent, antique furniture dropped eight percent, jewelry held steady, and modest gains were scored by wine (three percent), stamps (also three percent) and coins (10 percent).
Let’s look at some recent numbers:
- A 1962 Ferrari 250 GTO fetched $38.1 million at Pebble Beach this year. Also at Pebble, a unique 1966 Ferrari 365 P Berlinetta Speciale (with three abreast seating!) was bid up to $22 million, but failed to sell because it didn’t clear the reserve. I can honestly claim to have sat in that car once. Ferraris have cleared $50 million, but not at auction.
- A 1954 Mercedes-Benz W196 Grand Prix race car made $29.5 million at a Gooding & Company auction last year. The W196 had a great race history, having been driven by the famous Juan Manuel Fangio to two Grand Prix wins, but that’s still a lot of money for a fairly scruffy car. Another Mercedes, a 1936 540K Special Roadster, reached $11.7 million at Gooding in 2012.
- In two sessions at Monterey this year, RM Auctions raked in a stunning $143 million.
- At Amelia Island, a 1988 Porsche 959 Sport achieved $1.1 million. Here's one they think is worth $1.45 million.
The latter is what I mean about a bubble. Porsches in particular seem incredibly overvalued at the moment. Early 911s are numerous on the ground, but are now fetching $100,000 and up. Even 912s, once scorned because of their VW engines, are exciting a lot of attention. At that Amelia auction, a 1973 Porsche 911S Coupe was bid up to $242,000, and a ’67 911E $137,500. In Monterey, someone at the Mecum auction paid $650,000 for a 1973 Porsche 911 Carrera RS 2.7L Touring.
The Mercedes 190SL I once bought and sold in the $3,500 range is now in six figures. I should have kept it, wouldn’t you say? Like I said, classic car values are nuts, but a better investment right now than art, collecting coins or buying big estates.
Wallace Wyss, author of the Incredible Barn Finds book series, has some thoughts on why cars have taken off more than paintings.
You couldn't burn a Warhol or Degas or Renoir and have anything left, but the right Ferrari, because of the chassis number indicating it is a valuable car, could be melted down to the frame rails, be rebuilt and then be worth several million. Classic cars aren't indestructible but they can take a heap of abuse compared to fine art. Plus new people are coming into the field: Russians, Chinese, Middle Easterners. They want to be showing something on the lawn at Pebble Beach along with the wealthy Americans, Japanese, British, French and Germans.
Here's a NBC chart on what your investments can buy these days: