Are vintage and classic cars financial assets that you invest and trade in to multiply your wealth? If yes, you shouldn’t be reading this, says Srini.
There are purchases of the heart and purchases of the mind. When you replace the word ‘purchases’ with ‘investments,’ where do classic and vintage cars fit? Are these something like real estate or jewellery that you buy up because you have some surplus cash lying around? Or do you acquire them because it’s an emotional thing? It’s obviously the latter because a vintage or classic car reaches parts in your brain and heart that a tiny apartment in Juhu or Gurgaon’s Golf Course Road just cannot match. At least for most of us.
I meet a lot of old-timer collectors and what dazzles me is not just their cars, but their passion and knowledge, and a keen desire to enjoy the experience with the machine. You need to be slightly wonky (and have a weird sense of money and finance) to develop a collection of classics. Because of the sheer effort, time and money that you need to keep your precious set of wheels in fine nick, house them safely and run them so that they fulfil their purpose of existence, more than overwhelms the ‘return on investment’. To adapt the old motorsport/aviation joke: How do you become a millionaire? Start by being a billionaire and turn to collecting vintage and classic cars.
Yet, going by the crazy values that you see for great machines on RM Sotheby’s or Gooding auctions, you would think that wealthy people invest in them so that they can become even wealthier when they sell them. Yes, an investment in the right set of wheels does deliver better returns than you’d expect. Especially if they have a terrific pedigree, unbeatable provenance and are extremely rare. Unmolested barn finds are another thing altogether.
There’s no doubt that, as a rule of thumb, old-timers are decent investments – because there is a limited supply and emotionally besotted collectors would be willing to pay a pretty price to fill that hole in their soul. So much so that old-timers are considered great investments for the wealthy, despite the costs associated with these cars. What triggered this column is the latest attitude survey by Knight Frank. It says that globally, after art, classic cars are second on the list that attract the attention of ultra-high-net-worth individuals (UHNWIs) to splurge their money on, followed by jewellery. As for Indian UHNWIs? Well, art-jewellery-classic cars, in that order.
Knight Frank’s The Wealth Report 2022 surveys the investment attitudes of UHNWIs the world over regularly, and, as per the latest findings, Indian UHNWIs invested more in objects of passion in 2021 than before. In other words, the heart ruled over the mind. Why would that be? I believe it’s that dreaded five-letter acronym: COVID.
COVID, I guess, was a wake-up call. Even for those living up in the stratosphere. Suddenly, life, as it turns out, is actually fragile. So why not live it up by using the money you have to acquire and drive the old-timers that you always dreamt of? No wonder the market for classics in India has taken off. It is not just restricted to high-end cars, but Ambassadors, Padminis and a host of terrific two-wheeler brands too. Newer collectors have emerged, and others are investing in proper restorations with the idea of using them regularly. And the profile of these collectors, I dare say, is younger. And more than vintage cars, they are going for classics and modern classics – which justifiably is something that they relate to, as compared to the oldies. What’s more, modern classics are usable as daily runners as compared to vintage cars that are an occasion by themselves – though there are collector-owners who would bash me up for saying this! And that’s the spirit.
What value you place on a Volkswagen Beetle, for example, is different from mine, simply because we all react differently to the car. A Beetle gives me joy, but I know collectors who simply abhor the Bug. Would they then add a Bug to their collection because it is a terrific investment? Probably not. Which is why I feel it’s unfair to label classics as financial assets. Classic and vintage cars are moveable works of art and the reason they are appreciated is not because of their monetary value but because they tug at powerful emotional strings. How can you put a price on these emotions?