HEY BIG SPENDER

Published in Issue #5 | Summer 2016

By Ryan Toth

$38.6 millionNo that’s not Kayne’s latest debt relief fund, it was the official sales results of the RM Sotheby’s Amelia Island Concours d’Elegance, held annually at the Ritz-Carlton on Amelia Island, FL.

Described lovingly as the event for the 1% that Bernie Sanders complains about, the Amelia Island Concours is not your Friday night assembly at the local Wal-Mart. It is the top 1% of classical and modern collector cars and does truly bring out a crowd. Consisting of the main RM Sotheby’s auction, a number of other smaller unofficial auctions, and the grand event, the Concours d’Elegance on Sunday, the lush greens of The Golf Club of Amelia Island become a parking lot for some of the world’s most precious metals. 

Lucky for me, I was asked to attend the event by a friend. Arriving on Friday afternoon, I made my way to the pre-auction viewing event – basically an excuse to drink top-shelf liquors with a group of people who have to provide certified bank letters in order to attend - and quickly picked out some of my favorites. A 1955 Mercedes-Benz 300SL Gullwing expected to bring home a cool $1.5M (sold for just shy of $1.4M after fees), a 2014 Pagani Huayra (est. $2.2M), and what was arguably because the star of the show, a 1957 Ferrari 250GT Berlinetta ‘Tour de France’, whose price was withheld for all except for those truly special enough to be granted access. I say “arguably” as a recent 250GT TdF sale managed to net $13.2M – however it was the 1962 Ferrari 400 Superamerica LWB Coupe that was this year’s most coveted prize, netting $4.4M.

So why is this important and why would anyone in their right mind pay $4.4M for a car? Investments. Classic cars, especially those in original and unmodified condition, have long been used as a hedge for diversifying one’s portfolio. Described as “passion investing”, CNBC recently quoted classic car investors were seeing returns of up to 500 percent during the last decade, “outpacing art and wine by more than 100 percent” (see source below). Recently defined as ‘assets’, classic cars and even modern supercars are quickly garnering attention from strategic investors. So much so, that a number of classic car funds have popped up throughout the country and European Union. 

During the summer of 2015, Ferrari’s exclusive LaFerrari, which sold a total of 499 units worldwide, saw a jump from the original MSRP of $1.4M skyrocket to averages in the $3-4 million mark.

A good question is, “How do I get a piece of the action? I can’t afford to drop $4 million on a car.” There are two ways to get involved. One is the old fashioned way of sourcing a car that is experiencing or expected to experience greater than average demand over the next few years. For example, the Datsun 240Z has done relatively well as an investment and if you found one a few years back, you would have paid around $5,000 for a solid car. Fast-forward until today, and you could be sitting on a $40-50k investment. It’s all about timing. 

If you are anything like myself and don’t own the proverbial “car collector crystal ball”, you could get involved with one of the classic car funds mentioned earlier. The Ultimate Classic Car Fund (ultimateclassiccarfund.com) is an example. Each fund will have different entry requirements, however you will be able to participate in an investment with a far larger return, and substantially less risk than buying up all the brown 1992 Ford Taurus’ at your local used car dealer. 

Whether you are interested in an investment or simply enjoy cars, by catching one of the larger auctions such as the Amelia Island Concours d’Elegance, you’re bound to have a great time. Besides being a fantastic experience for the auto lover, there’s always a good bunch of people and really interesting events. For some local Charleston fun, check out Cars & Coffee on Saturday mornings in front of Atlantic Bread (Towne Center Mt. Pleasant). Rain or shine from about 8-10 am there’s always a crowd. Who knows? You might find the next $4M classic.

Cited: cnbc.com/2016/01/04/passion-investing-in-classic-cars-is-gaining-speed.html – Deborah Nason

Laura Olsen

Houston, TX