Classic Cars: Making a Comeback
After a dip in the international market over the past two years, classic cars are making a comeback – in South Africa and around the world.
So far in 2022, the value of rare, desirable collectible cars has leapt by as much as 30%.
Recovery in the market for classic cars
The double-digit increase far outpaces four-year market forecasts by international analytics company Statista.
According to estimates, the US$30.9 billion global market is expected to grow by US$12.5 billion over a five-year period between 2020 and 2024.
In the US, a key index gauging the strength of the classic car sector is at record highs. This positive sentiment is mirrored internationally.
Trading volumes at auctions have risen from 31,098 listings in Q1 of 2021 to 44,417 in Q2 of 2022.
In terms of value, the actual spend almost doubled from US$1.28 billion in 2021 to US$2.16 billion by mid-2022.
Investment value of classic cars
Classic cars are increasingly seen as solid long-term investments, particularly in today’s volatile economic climate.
Investors of the most desirable makes and models can expect an annual appreciation of around 25%. That’s approximately double the average annual return for the JSE.
If history is anything to go by, the long-term growth potential of this niche asset class is limitless. Since 2000, some classic machines have appreciated in value by up to 500%.
What’s driving the value of classic cars?
The number of younger investors – who are choosing to put their money into classic cars over modern machines – has increased significantly. Young investors are drawn to the unique driving experience the cars provide.
They’re also attracted to the comparatively low entry cost into a market that has proven robust over the years.
Besides the financial benefits, classic cars are unique, exclusive tangible assets. They’re fun to drive, satisfying to restore and preserve, and can be used as collateral to secure funding, if the need arises.
Cautions for investors
Classic cars are unlike other assets classes. To retain their value, they require maintenance, special care and indoor storage – all of which is costly.
Insurance premiums are typically high and there are tax implications in terms of capital gains when cars are sold.
Mechanical issues, rust and corrosion, and poor restoration techniques can often be overlooked, to the detriment of the investor.
Investing in classic cars is a long-term commitment. It’s only suitable for South Africans who are prepared to tie up their money for up to a decade and more.
Loans against classic cars: a way to unlock their value with Pawn My Car
One way to leverage the value of a classic car is to use it to secure a cash loan.
Pawn My Car is a specialist asset-based financing company. We accept classic cars and all types of debt-free vehicles as security for a loan, with no delays or laborious paperwork. You can use a car, a bakkie, truck or boat that’s in your name.
The loan amount is dependent upon the appraised resale value of the car, which remains with us until the funds are repaid.
Contact us on 0861 112 866 or complete our online loan application form, and we’ll get back to you with an initial offer.
