Buying wisely and cars as investments
Discussion
Hi all. I keep seeing threads where someone is considering buying a car and asks about values only to be hit with the inevitable "Don't buy a car as an investment" response. Is it just me or is that not knee-jerk advice? Apologies if this has been done before - well of course it has - but I can't believe that anyone putting £50/100/200/300/etc thousand of hard earned cash into a car doesn't do the maths and see what it is going to cost over three to five years. Even if the answer is half it's purchase price and you are comfortable with that, surely you still acknowledge that before making the purchase?
Now I've never bought a new car, so I can't comment on showroom tax, but I've always known what I can afford to spend on a car before I start the search and I've subsequently always found the best deal in the used car section. And always, as part of my research, I estimate what I could sell the car for when I next want to change it and thus use the proceeds for my next purchase. Of course I could be way out but there is generally enough data available to at least be in the ballpark. So when, as part of that process, I ask people where they think the market is on a particular car, it's not because I am automatically considering the car an investment, it's because I'm a petrolhead and this is unlikely to be the last car I own hence my interest in what it will cost me over the period of my ownership. Surely this is buying wisely, and should apply to any car purchase where you intend to use the car a fair bit, if not daily.
As for buying cars as an investment, yes it exists and many investors have done very well out of the classic car market. It's a different sort of purchase of course, you're not going to put too many miles on, it's unlikely to circle a track in anger, and it will certainly see a lot more polish than spit. But what's with the general criticism of people looking to do this? All investments have risk, but the financial market has hardly been stellar over the last few years and the outlook isn't much better, so why not look for a car that you believe is at the bottom of it's depreciation curve, put it away except for a few summer day outings, and enjoy the role of custodian for the next generation. With some luck you will make a bit, at worst you are unlikely to lose much, and all the while the car is yours to enjoy. And don't tell me that the only enjoyment is to drive it. Sure it's the pinnacle, but pop a 288 GTO in my garage and tell me I can only sit in it and drive it a few times a year and you won't hear me complaining.
Then there is the middle ground. Let's say I have £150k or thereabouts to spend on a car. £150k of hard earned cash that I am now comfortable to spend but not to blow - it can be any number of course, £150k is pretty rare air but it makes for some interesting options. It won't be my daily but nor will it be a garage queen. Do I spec up the ultimate new Porsche, or a McLaren Sports Series, or do I go for the best manual F355 I can find? Or how about a 458, the last naturally aspirated V8 Ferrari, supposedly near the bottom of it's depreciation curve? 360 and 430 prices are continuing to go up. Or what about a 650S - have they reached the bottom of the curve? My point is simply that unless you are happy just to write the money off (and good for you if you can), most of us are faced with these questions, and they are absolutely valid and sensible ones to ask.
Rather than flame people for asking about market trends, we should ask what the intention is for purchasing the car. Why did you buy your car(s) and what are you aiming to realise over the next few years? Motoring nirvana regardless of cost, a tidy profit, or something in between while not losing your shirt? I'm happy to start, add your car(s) to the list and lets see what we have.
Ferrari F430 - Something in between.
Ferrari 612 OTO - Tidy profit.
Porsche 997 manual - Motoring nirvana
Now I've never bought a new car, so I can't comment on showroom tax, but I've always known what I can afford to spend on a car before I start the search and I've subsequently always found the best deal in the used car section. And always, as part of my research, I estimate what I could sell the car for when I next want to change it and thus use the proceeds for my next purchase. Of course I could be way out but there is generally enough data available to at least be in the ballpark. So when, as part of that process, I ask people where they think the market is on a particular car, it's not because I am automatically considering the car an investment, it's because I'm a petrolhead and this is unlikely to be the last car I own hence my interest in what it will cost me over the period of my ownership. Surely this is buying wisely, and should apply to any car purchase where you intend to use the car a fair bit, if not daily.
As for buying cars as an investment, yes it exists and many investors have done very well out of the classic car market. It's a different sort of purchase of course, you're not going to put too many miles on, it's unlikely to circle a track in anger, and it will certainly see a lot more polish than spit. But what's with the general criticism of people looking to do this? All investments have risk, but the financial market has hardly been stellar over the last few years and the outlook isn't much better, so why not look for a car that you believe is at the bottom of it's depreciation curve, put it away except for a few summer day outings, and enjoy the role of custodian for the next generation. With some luck you will make a bit, at worst you are unlikely to lose much, and all the while the car is yours to enjoy. And don't tell me that the only enjoyment is to drive it. Sure it's the pinnacle, but pop a 288 GTO in my garage and tell me I can only sit in it and drive it a few times a year and you won't hear me complaining.
Then there is the middle ground. Let's say I have £150k or thereabouts to spend on a car. £150k of hard earned cash that I am now comfortable to spend but not to blow - it can be any number of course, £150k is pretty rare air but it makes for some interesting options. It won't be my daily but nor will it be a garage queen. Do I spec up the ultimate new Porsche, or a McLaren Sports Series, or do I go for the best manual F355 I can find? Or how about a 458, the last naturally aspirated V8 Ferrari, supposedly near the bottom of it's depreciation curve? 360 and 430 prices are continuing to go up. Or what about a 650S - have they reached the bottom of the curve? My point is simply that unless you are happy just to write the money off (and good for you if you can), most of us are faced with these questions, and they are absolutely valid and sensible ones to ask.
Rather than flame people for asking about market trends, we should ask what the intention is for purchasing the car. Why did you buy your car(s) and what are you aiming to realise over the next few years? Motoring nirvana regardless of cost, a tidy profit, or something in between while not losing your shirt? I'm happy to start, add your car(s) to the list and lets see what we have.
Ferrari F430 - Something in between.
Ferrari 612 OTO - Tidy profit.
Porsche 997 manual - Motoring nirvana
Edited by anonymous-user on Monday 8th August 13:25
mwstewart said:
Well, that's how I buy cars. I see one I like, buy it, and write off that money.
I don't get buying as investments or buying something you're afraid to use because of mileage/depreciation, but then I'm a car guy not an investor.
And you can't be both? Does choosing to invest in cars, in addition to the ones you have to drive, instead of investing it elsewhere make you "not a car guy"? Surely you invest in markets that you are interested in and have some understanding of - that makes car investments an option for a "car guy" to put at least some of his money?I don't get buying as investments or buying something you're afraid to use because of mileage/depreciation, but then I'm a car guy not an investor.
Ferruccio said:
But a number of people on here seem to have become hooked on what their car might be worth, either today, or at some time in the future, because the value's gone up.
Totally agree, and the last thing I want is another thread on values. Rather I'm interested in why people here bought the car(s) they have. We're a small representation of 'supercar" owners, and we're clearly all interested enough in cars to participate in a car forum. Mark, you're a fortunate guy if you can buy any car you like and write the money off - although how many miles have you put on that F430 of your's? 
Look, I'm not trying to argue a point but I find it interesting how anyone considering buying a £100k car who asks about the state of the market is told to just buy what you like like and forget about values. I would imagine this is a pretty sensible part of the forum so I struggle to see that advice being applied elsewhere in your life.. or am I wrong?mwstewart said:
Ha - bugger all so far as it has been in bits. We're headed to southern Spain in two weeks then the Swiss Alps and south of France in Sept - it'll be a nice little interlude before I take it to bits again 
.
Nice, enjoy. A little more local but my wife and I are taking my parents for a tour of Scotland in the 612 in September. .Seems the car guys in General Gassing don't mind talking value http://www.pistonheads.com/gassing/topic.asp?h=0&a... Don't flame me but is it just beneath supercar owners to consider making a profit from car ownership...? Yes, yes, I'm stirring I know but not one mention of "Buy it to drive it!" in that thread. Maybe we just see too much of it here.
Some great input, thanks all. I'm not sure there is a consensus opinion but it would appear that we at least converge on a few areas. I consider myself first and foremost a car guy, and so am commenting from that perspective. I'm also no expert - so this is simply my opinion. However I do go driving on weekends, regularly take the long route to the office, have a full workshop with ramp, and most importantly - participate on car forums 
.
Seems the advice for those buying their first or only car in this category is to buy something you love and will be able to drive without concerns for diminishing value. Of course be smart, spend only what you can afford, but certainly don't expect to get a return. Happy days if you do, as long as that has not been at the expense of enjoyment. In fact, expect it to cost a fortune and make sure you have worked that into your sums. This does not mean that you can't be fortunate and benefit from some appreciation, but if it's new it's going to depreciate first, and if it's old then the mileage you add (because you bought it to drive, right?) will diminish any subsequent appreciation. This is of course unless you have managed to get on a manufacturers short list for a special edition although I would argue that many buyers of these cars, but not all, do so for the investment rather than the driving pleasure - which is rather sad. (Car manufacturers take note!)
As for investing in cars, I think the jury is out. I have taken a position that if you buy wisely, as you would with any high risk investment, then it is possible to match the returns realised in more traditional sectors. Add to this the tax efficiency and enjoyment of ownership and it certainly can be rewarding. It is high risk though, so this needs to be treated as you would any other high risk investment - i.e. it's money that if lost won't break you. Some firm provisos though: we're talking multiple car scenarios here, you don't want this to be the only special car you have available to drive, and we're also going to be using the car putting on 1 or 2k annually and not having it rot under a dust sheet. Lets face it, once you have more than one weekend car (plus family) it becomes difficult to put more than that on each year - not impossible of course - but unlikely. Furthermore, even if investing, buy something you love, investment grade cars deserve love and attention, and if they don't appreciate then you still have the car. After all you only lose (or gain) when you actually sell it.
There is also a middle ground, car lovers who wish to own a supercar but cannot afford to lose the money. This is possibly the riskiest category for all the obvious reasons. You need to buy near the bottom of the market but avoid high repair bills. You must also limit your mileage so as to protect resale value, and even if you do you may still be forced to sell in adverse market conditions. It's not that it can't be done successfully with proper research and diligence, but it carries the highest risk.
Bottom line would appear to be that supercar ownership is costly and should be entered into for the enjoyment and not the investment. These cars are built to be driven and should be used as such. The nature of the market means that opportunities to make a profit will always exist but they are difficult to predict and generally realised by those with a wide spread of cars. That's not to say that it cannot be done but make sure you love the car enough so that if the market tanks you are just as happy to hold on to it. I've taken a punt but I'll certainly be more than happy to have my Scaglietti for ever if that's the way it unfolds.
. Seems the advice for those buying their first or only car in this category is to buy something you love and will be able to drive without concerns for diminishing value. Of course be smart, spend only what you can afford, but certainly don't expect to get a return. Happy days if you do, as long as that has not been at the expense of enjoyment. In fact, expect it to cost a fortune and make sure you have worked that into your sums. This does not mean that you can't be fortunate and benefit from some appreciation, but if it's new it's going to depreciate first, and if it's old then the mileage you add (because you bought it to drive, right?) will diminish any subsequent appreciation. This is of course unless you have managed to get on a manufacturers short list for a special edition although I would argue that many buyers of these cars, but not all, do so for the investment rather than the driving pleasure - which is rather sad. (Car manufacturers take note!)
As for investing in cars, I think the jury is out. I have taken a position that if you buy wisely, as you would with any high risk investment, then it is possible to match the returns realised in more traditional sectors. Add to this the tax efficiency and enjoyment of ownership and it certainly can be rewarding. It is high risk though, so this needs to be treated as you would any other high risk investment - i.e. it's money that if lost won't break you. Some firm provisos though: we're talking multiple car scenarios here, you don't want this to be the only special car you have available to drive, and we're also going to be using the car putting on 1 or 2k annually and not having it rot under a dust sheet. Lets face it, once you have more than one weekend car (plus family) it becomes difficult to put more than that on each year - not impossible of course - but unlikely. Furthermore, even if investing, buy something you love, investment grade cars deserve love and attention, and if they don't appreciate then you still have the car. After all you only lose (or gain) when you actually sell it.
There is also a middle ground, car lovers who wish to own a supercar but cannot afford to lose the money. This is possibly the riskiest category for all the obvious reasons. You need to buy near the bottom of the market but avoid high repair bills. You must also limit your mileage so as to protect resale value, and even if you do you may still be forced to sell in adverse market conditions. It's not that it can't be done successfully with proper research and diligence, but it carries the highest risk.
Bottom line would appear to be that supercar ownership is costly and should be entered into for the enjoyment and not the investment. These cars are built to be driven and should be used as such. The nature of the market means that opportunities to make a profit will always exist but they are difficult to predict and generally realised by those with a wide spread of cars. That's not to say that it cannot be done but make sure you love the car enough so that if the market tanks you are just as happy to hold on to it. I've taken a punt but I'll certainly be more than happy to have my Scaglietti for ever if that's the way it unfolds.
OK, so on topic and trying hard to steer clear of values, what do people think are wise buys in the supercar market at the moment? If a friend wanted to experience ownership of a car in this category, not new but used, what would you suggest? And this is not about 0-60 times since none of that is really relevant anymore, what would you put forward as your wise buy? My advice is to look at the best example of a well known car from ten years ago. Ferrari 430 or 599, Lambo Mercielago or Gallardo, AM V8 Vantage, TVR Sagaris..?
z4RRSchris said:
thecook101 said:
OK, so on topic and trying hard to steer clear of values, what do people think are wise buys in the supercar market at the moment? If a friend wanted to experience ownership of a car in this category, not new but used, what would you suggest? And this is not about 0-60 times since none of that is really relevant anymore, what would you put forward as your wise buy? My advice is to look at the best example of a well known car from ten years ago. Ferrari 430 or 599, Lambo Mercielago or Gallardo, AM V8 Vantage, TVR Sagaris..?
430 - mass market. Scuds are overpriced 599- mass market. GTO are over priced
Murci and Gallardo - Lamborghini never followed the Ferrari blue chip. Muria only exception and over priced.
Aston and TVR - no chance
Bluebottle911 said:
Assuming the £150K budget from your original post and that you seem to be thinking in terms of cars less than about 10 years old, I would go for a 458 or a 599, or you might like to add a touch of practicality to the mix and go for an FF.
Ye I wasn't actually thinking of a specific number - just a car that you could use regularly for a few years and then sell with at least a chance of not losing half your money. I agree on the 458 though, I'd love to upgrade my 430 to a 458 at some time. z4RRSchris said:
FFM said:
z4RRSchris said:
..
Aston .. - no chance
Guess you've never visited AM Works (i.e. AM Heritage centre)? Well if you had done so, I am sure you wouldn't have written that. There are many AM collectors out there from different countries that surely won't agree with your statement, too.Aston .. - no chance
..but, I bet you did your own research before giving such insightful advices, didn't you? Maybe, you could have shared a bit of that with us..
jshell said:
Are they not subject to CGT if they bust the £6k allowance?
Private cars are CGT exempt - https://www.gov.uk/capital-gains-tax-personal-poss...jshell said:
No I realise that, but was questioning the other listed items in the post. Art, jewelry etc.
Ah - yes, sorry. Actually I am more interested in this..twoblacklines said:
There are far better investment vehicles out there than 33% in a whole year. In my industry a ROI of 1-1000% is not uncommon after 1-3 months of optimisation.
Would love to hear what industry that is..? And on the subject of cars as investments - and here I am referring to cars bought in addition to those that you bought to drive - not sure if people follow this but Knight Frank published some interesting data recently http://content.knightfrank.com/research/540/docume...
_Leg_ said:
Most importantly don't put yourself in a situation where you have to sell something at the wrong time. You'll often hear, "Don't invest money you can't afford to lose". I think "Don't invest in things you can't afford to keep until the right time to sell" is more relevant.
The bonus with cars is you can drive them when you own them, stocks, property etc don't have that aspect.
So true. If you buy wisely, and buy cars that you love, then you only lose if you are forced into a sale. The bonus with cars is you can drive them when you own them, stocks, property etc don't have that aspect.
Edited by anonymous-user on Sunday 21st August 09:43
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