Get on Board: A Ride Through The Classic Car Market

1953,54,55 Alfa Romeo Bertone B.A.T. 5,7,9 3/4 Rear View On Pavement Ron Kimball © 2020 RM Sothebys

What you need to know. 

Last November, Phillips London hosted an exciting exhibition featuring the most popular Alfa Romeo trio, the Berlinetta Aerodinamica Tecnica (B.A.T.) 5, 7 and 9 - also known as the B.A.T. Holy Trinity. Built between 1953 and 1955, the three concept cars were designed by Franco Scaglione for Bertone, and the aim was to create vehicles with the lowest drag coefficient possible - aka the most aerodynamic. The Phillips show attracted a great number of car aficionados and was a feast for the eyes, but the legendary cars were not for sale. 

Fast-forward one year, the three cars are coming up for sale at Sotheby’s New York. While Sotheby’s has its own Classic Cars division - RM Sotheby’s - the cars will be featured in October 28th’s  Contemporary Art Evening Auction, alongside rare offerings by Mark Rothko and Clyfford Still. An interesting placement, although it’s not uncommon for non-Contemporary artworks and items to be included in a Contemporary evening auction (we’re looking at you, Salvator Mundi and Stan the T-Rex ).  

Alfa Romeo B.A.T. Triptych. Darin Schnabel © 2020 RM Sothebys

 Introduced as the Automotive Triptych of Unparalleled Significance by Sotheby’s,  the trio is estimated to reach 14,000,000 USD to 20,000,000 USD; an estimate some considered relatively conservative given the importance these cars hold in the history of automotive design, their condition, and the fact that they are reunited and sold as a bundle for the first time since their creation - 50 years ago. The Alfa Romeo B.A.T. 5, 7 and 9 are considered to be unique masterpieces; where design, functionality and beauty all meet to achieve perfection. Sotheby’s is not wrong to label them as “pure kinetic sculpture”. 

What Makes a Car a Classic?

The definition of what constitutes a classic car differs between countries and among car insurers. Although the word classic is used interchangeably to refer to any special old car, the term includes cars that are at least 10 or 20 years old and is commonly used to refer to cars builts between 1946-1987. According to State Farm Insurance, a classic is a “motor vehicle 10 or more years old, which is rare or of special historical interest because of exceptionally fine workmanship or limited production”. Antique cars are generally vehicles 25 or more years old with historical interest; while vintage cars are vehicles produced between 1919 and 1930. Insurers also distinguish between modified, racing, muscle, utility and modern and instant classics (from 1990-present). While there are no agreed standard definitions and categories, the general rule of thumb is you know one when you see one.

1955 Mercedes-Benz 300SL Gullwing  © ClassicMoto.

About the Classic Car Market.

The classic car market is generally scattered, and its drivers and sub-segments remain largely uninvestigated. However,  AXA Art and ADEMY started a collaboration in 2015 to generate an annual report, analyzing over 150,000 sales results from worldwide auctions and reporting market insights and trends. The 2019 report estimates the global classic car market to be worth between €18 and €20 billion, with the United States dominating the market with about 6-7 million collectable vehicles, and 68% of the auction 2018 global turnover. Global activity was concentrated on cars built between 1946-74, balanced against an increase in demand (from 3% in 1998 to 20% in 2018) for Instant Classic cars built over the last ten years. 

 From the 2019 report by AXA and Ademy

While there aren’t any industry-official segments either, AXA and ADEMY group cars into three segments:  Top Lot (Price>$1M), Mid Cap ($100k to $1M) and Small Cap (<$100k). They observe that the last decade has seen a growth in the mid and top-cap segments, confirming a trend towards collecting rare and high quality vehicles. In terms of  turnover, Ferrari continues to lead in the Top Lot segment, (with models 250 GTO and 290MM leading), with Porsche coming in second after dethroning other prestige marques in the past ten years, ahead of Aston Martin and Mercedes Benz. While there is no information regarding the top sellers in the Mid and Small Cap categories, is it possible to order tailored market insights and segments analysis on ADEMY’s platform. 

What drives the classic car market? 

The easy answer would be: The drive to collect. 

Most things we buy are usually worth less once we have used them. It is common knowledge that brand new cars lose about 20% of their value as soon as they leave the dealership, and about 60% in the following five years. However, that might not be the case for (some) classic cars. Collectible cars are what’s referred to as a passion asset and could be considered as an alternative investment option. However, a lot of variables and conditions apply and a return on investment is rarely a guarantee. As with all passion assets and collectibles, a classic car can appreciate in value over time, offer portfolio diversification and hedge against inflation. The capital growth and return potential depends on the car marque, model, condition, current and future market tastes, rarity, quality and demand and supply at the time of selling. The price a car could fetch will depend on the aforementioned but also on current market dynamics, which, just like the market for fine art, are subject to unpredictable forces, such as the state of the economy and the emotions of buyers. 

If selected and purchased thoughtfully and restored professionally, some classic cars can appreciate - while plenty tend to depreciate. However, unlike other collectibles, the return of owning a classic car not only includes a psychological one - the pleasure derived from owning it and enjoying its aesthetics and beauty - but the acquisition can be physically used and maybe even generate a dividend from rent. 

Careful considerations must be made before purchasing a classic car for pure investment purposes. Glamour aside, classic cars are - first and foremost - used cars. Special used cars but still used cars, with all the hassle that can come with owning one. The carrying costs can be considerable: from storage, maintenance, insurance, potential restoration and body work (finding replacement parts can be tricky). The overall  opportunity cost can be high in terms of time and money.  This is why passion and an appreciation of rarity and quality must be the main driver in the decision to purchase and invest in a classic car. 

Concorso d’Eleganza Villa D'Este  © TheOutlierman

 The Classic Car World.

If you are thinking of going further on the classic car road, the advice would be to embark on a learning journey by seeing and reading as much as you can. The below resources will help you do so. 

Classic car shows and fairs are the best places to train your eye, get up close and personal with the cars, meet experts and fellow aficionados, and learn from their expertise all the while feasting your eyes on some exceptional beauties. There are classic car shows in most major cities, with the  most popular, to name only a few:  The Pebble Beach Concours d’Elegance , which takes place during the Monterey Car Week (USA),  Concours D’elegance, Scottsdale, Retromobile (France), the Goodwood Members’ Meeting, Le Mans Classic ( France), Concorso d’Eleganza Villa d’Este (Italy), Goodwood Revival (UK),  Amelia Island Concours d'Elegance (USA), Motorclassica 2020 (Australia), Salon Privé 2020 (UK), Milano AutoClassica (Italy). You can find a more comprehensive list here. 

Museums are also a great way to learn about classic cars history, models, mechanics and get up close and personal. Among the must sees are the Porsche Museum (Stuttgart-Zuffenhausen, Germany), Blackhawk Automotive Museum (California, USA), Museo Storico Alfa Romeo (Milan, Italy), Museo Lamborghini and Museo Ferruccio Lamborghini (Bologna, Italy), Museo Casa Enzo Ferrari (Modena, Italy). You can find a more comprehensive list here. 

Other ways to stay informed include joining a dedicated car club, such as The Porsche Club, The Triumph Sports Six Club,  and the MG Enthusiasts Club. Clubs usually have great resources and references and organize get-together events. 

Specialized platforms such as Classic Driver, Petrolicious and Hagerty are essential stops. Classic Driver is a renowned marketplace where it is possible to find not only classic cars, but also motorcycles, watches and even yachts. Petrolicious and Hagesty offer memberships with special perks. All three issue specialized magazines and newsletters to which it is a must to subscribe. 

Additional resources to stay informed on market trends include the Historic Automobile Group International (HAGI™) Hagi Index, ADEMY’s reports and the Classic Car Auction Yearbook. 

Where to buy.

Ok, now you are pumped and ready to embark. Where to buy? Sotheby’s, Christie’s and Bonhams all have classic cars departments and hold auctions regularly, with Sotheby’s leading the segment. Other auction houses include Barons,  Catawiki  and Historics Auctioneers. Additionally, most of the car fairs listed above offer the option to purchase cars on site. Online marketplaces can also be a good option to find good deals. Notably, Classic Driver, Dyler, Hemmings, Classic Cars and Barnfinds (for the highly motivated) offer sophisticated platforms where one can see and compare different models from individual sellers and boutiques alike. For a more personalized experience, you can enlist the services of a private trader or a dealer’s boutique such as Fisken’s. Professional restorers like Branbdoli  often offer consultancy services.

How to pick one?

So you found the marque and the model you want. What’s next?  1. Research: Invest your time in research before you invest your money. 2. Inspect: Don’t buy anything without an inspection or a condition report. 3. Assess the carrying costs (transport, insurance, potential repairs, etc.)  4. Follow your gut. No one said that collecting was rational. Owning a classic car can be a lot of work, and only love can turn this work into an enjoyable journey. As industry folks say, if you are not buying out of passion, the car will run you down.

1957 Alfa Romeo Giulietta 750G Spider ‘Sebring Competizione’ ©Classic Driver. 

I hope you enjoyed the ride. Make sure to catch the part 2 of this article where we’ll look at the current trends with a special guest. In the meantime, we’ll keep our eyes on the auction and envy the lucky owner of the B.A.T. Holy Trinity. Can money buy history? 

Ahlem Baccouche,

Contributor, MADE IN BED