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That said, some cars -- a 1957 Chevrolet or a Shelby Mustang, for example -- will always be sought after, says Gary Bennett, the automotive director at Barrett-Jackson, an auto auction house whose auctions are televised live on the cable channel Speed.
"These cars have become household names, just like blue-chip companies like IBM," he says. "The 1957 Chevrolet is by far the most recognizable and consistent in terms of value increase. It's an iconic car."
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If you've got a six-figure spending budget, you can't go wrong with a pre-1940 classic like a Duesenberg or a Packard, says Edmunds.com's DiPietro."It's supply and demand: There's just not that many of them as compared with more modern-day collector cars," he explains.
These cars were also made-to-order to their original buyer's preference, so many of them are one of a kind. The most expensive ones -- now fetching millions at auction -- are those with "provenance." The richer a car's ownership history, especially when garnished with celebrity names or a race history, the higher its value. At this year's Pebble Beach show, RM Auctions sold a 1935 Duesenberg Model SJ Town Cabriolet once owned by candy company heiress Ethel Mars for a whopping $4.4 million. RM Auctions had estimated the car's value at $2.5 million to $3 million.
Not all pre-1940s cars fetch such impressive bids, of course, but even the "average" ones -- you could get a Packard for anywhere between $300,000 to $500,000, for example -- will be solid investments that will retain value no matter what, DiPietro says.
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But don't expect to see them appreciate as rapidly as, say, muscle cars have appreciated over the past several years.
"Just because you're spending $300,000 on a Packard doesn't mean it's going to increase any greater in percentage than a Camaro you buy for $60,000," DiPietro says. "The $60,000 might go up to $100,000, and that's almost double the growth. The Packard won't go from $300,000 to $500,000 in the same period of time."
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Risky IPOs
As with stock IPOs, purchasing a car made today that you believe will be the classic of tomorrow is a risky proposition. Just ask the investors who in 1990 bought up new Corvette ZR-1s for $60,000, thinking in five or so years they could sell them for $100,000 or more. That never happened.Over the next five years Chevrolet improved the performance on its standard Corvettes -- which cost half as much -- to the point where spending a premium on a ZR-1 didn't make sense, DiPietro explains. Today, a 1990 ZR-1 can be had for less than $30,000 on eBay.
Market risks
It goes without saying that the collectible car market is highly volatile."What you have in the collector car market are people who spend irrationally and spend emotionally," says KBB's Nerad. "The thinking is, 'My great uncle had a 1957 Pontiac Chieftain, and I want that exact same car, and I've got the money.' They'll pay $150,000 for it when it should actually cost $27,000."
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Classic cars fetch big moneyNBC takes you inside a vintage-car auction in Scottsdale, Ariz., where auto enthusiasts eye 1957 Chevrolets and pink Thunderbirds.
A collectible car, after all, is worth what anyone is willing to pay for it, and that's determined by emotions rather than price-to-earnings ratios.
The best way to protect yourself? Buy cars you love. "This way, even if the value of the car goes down, you've got a nice toy to play around with," Nerad says.
This article was reported and written by Aleksandra Todorova for SmartMoney.
Published Sept. 25, 2007
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