Going Going Gone
The classic car market in South Africa is now facing a crisis: both short supply and ludicrously high price tags.
The classic car market in South Africa is on the hop. Not that we should be surprised: this is the case all over the world. According to the Global Luxury Investments market 2020 Foresight Report, published by Timetric, high-net-worth individuals (HNWIs) have been showing increased interest in alternative investments such as classic cars since 2007 – because, in times of economic uncertainty, they can deliver higher returns than equities.
High Net Worth Individuals
HNWIs in the United States lead the pack, last year spending US$118 billion on luxury investments (including, but not limited to, classic cars. Chinese HNWIs – with a total luxury investment of US$43 billion in 2012 – were the second-largest contributor to the luxury investment market. The market in the United Kingdom is especially rampant: the report states that, following the economic slowdown, car enthusiasts and investors in the UK have shown far greater interest in classic cars. So too have HNWIs from emerging countries in Asia, Middle East and Latin America, who are buying into this lifestyle by reportedly amassing their own collections of classic cars.
And precisely the same thing is happening here – as car enthusiast and classic car market follower, Jacques Rossouw, confirms: ‘The classic car market in South Africa has been growing steadily for the last decade or so. South Africa is following the worldwide trend, which has seen massive growth in the demand for classic cars as investment safe heavens. The return on certain types of cars can be very good if you purchase something desirable.
Just how good is ‘good’? Well, let’s just take one brand: Ferrari. ‘The growth in prices of classic Ferraris overseas has been extraordinary, with prices seeming to increase by the month,’ says Rossouw. This year, for instance, a 1963 Ferrari 250 GTO racer was sold for $52 million, earning it the tag of ‘the world’s most expensive car’. This particular sale, while exceptional, is not out of kilter with trends: prices of the rarest Ferraris have risen at an average annual rate of 15% for more than 30 years.
In fact, for the first 10 months of 2013, prices of rare Ferraris rose by 32,65% alone! This is according to statistics produced by the Historic Automobile Group International (HAGI), which monitors prices of rare classic motorcars. Rare Porsches have risen in value by 19,5% in 2013 (as compared to the preceding year).
Crème de la Crème
Of course, Ferrari is the crème de la crème of classic cars – and Porsches definitely have their appeal, too. But other luxury brands have also performed pretty well. HAGI reports that classic Mercedes-Benz automobiles increased in value by 25,78% in the first 10 months of 2013 (versus 2012). And an immaculate Dodge Charger is worth well over R1 million today.
‘That’s not a bad investment,’ notes Paulo Calisto, organiser of Johannesburg’s Classic Car Show. ‘They cost maybe US$4 000 dollars in the late 1960s, back when the rand was worth 75 American cents!’ Sheridan Renfield, owner of Sedgefield Classic Cars and chairman (for 21 years) of the Piston Ring Club in Johannesburg, concurs: ‘Classic cars are extremely good investments. I have been associated with the vintage car clubs in South Africa for over 35 years, and I have seen values increase by exceptionally huge amounts. For example you could purchase an excellent 1933 Plymouth Coupe in 1977 for R3 000. Today this vehicle would be valued at around R180 000. Similarly, in the early 1990s, a 1966 Ford Mustang in superb condition had a value of R6 000; today it’s worth R350 000,’ he reveals.
Sought-after Classic Cars
But Gareth Crossley, co-owner of Crossley & Webb, the new classic car lifestyle emporium in Cape Town, says that it’s important to put the market in perspective: ‘We need to bear in mind that only the most sought-after classic cars are increasing at the HAGI rates. Having said that, ‘they are still a much better alternative than buying the latest and most expensive supercars, which depreciate rapidly in value and will only rise again if produced as limited editions or after 20 years,’ he adds.
So classic cars are a good investment. Does this explain why they’re in such short supply in South Africa? Not fully. The situation is also thanks to import difficulties and a growth in exports. ‘It is incredibly expensive to import a classic car, the exchange rate hampers the market and the high import duty compounds this problem,’ explains Rossouw. ‘In addition, it’s extremely difficult (nigh on impossible, in fact) to import a left-hand drive classic car into South Africa. The net effect of this is that the supply of premium classic cars in South Africa is quite limited.’
Large-scale exportation of classic cars in the early 1990s and in the middle of the first decade of the new millennium has not helped the situation. ‘The allure of the weak rand and strong returns resulted in widespread exportation and this has also reduced the stock of classic cars in South Africa,’ says Rossouw.
Text: Charleen Clarke