The air was charged in anticipation of the magnificent work of art before the enthusiastic bidders. Paddles shot up like pistons. Then, the auctioneer’s hammer fell–”Sold for $7.25 million!”
An early Giacometti? A minor Picasso? No, the winning bid was for a 1965 Championship Shelby Daytona Coupe racing car, sold last August at the annual Monterey Peninsula vintage automobile auction in California. More than $116 million changed hands at this prestigious showing of fine cars.
Like great paintings and sculptures, rare automobiles represent more than just an investment to buyers. What captivates them beyond the financial appreciation of the vehicles is their sheer beauty and elegance. The difference is that owners can literally envelop themselves within the object, taking it out for a leisurely spin or revving it up on the racetrack. But, just like works of fine art, rare automobiles are investments that must be protected.
In the last three years, the collector car market has outpaced both the stock market and fine art market. Values are stratospheric. At the annual Ferrari Leggenda e Passione auction held last May by RM Auctions in Maranello, Italy, a 1957 Ferrari 250 TR chassis with pontoon fenders, one of only 22 such cars manufactured, sold for a record-breaking $12.2 million. Private sales of rare automobiles are said to be even higher. Preserving such valuable investments requires careful consideration of the myriad risks, from routine parts breakdowns and transportation mishaps to a harrowing crash at one of the many road rallies gaining favor around the globe.
The granddaddy of international rallies is the Mille Miglia. Its name refers to the one thousand miles entrants rack up on their odometers as they drive the ancient roads of Brescia, Italy. Only vintage racing cars dating between 1927, the year of the first Mille Miglia, and 1957, when the race was temporarily banned after several fatal crashes, are permitted to compete. The event is advertised as “the most beautiful road race in the world,” and it routinely attracts passionate car collectors as both entrants and spectators.
The Mille Miglia has inspired other rallies like the Colorado Grand (the word “grand” also referring to one thousand miles); 1,000 Millas Sport Argentina in the foothills of the Andes; and the California Mille, which touts the allure of the state’s wine country and great roads. A must-stop for many collectors of vintage automobiles is the London-to-Brighton Veteran Car Run, which limits the competition to automobiles built before 1904. Similar picturesque touring events are sponsored each year in Shanghai, Paris, Casablanca, Monte Carlo, Gstaad, and other exotic locales.
Part-investment, part-lifestyle, the ownership of rare vehicles is expected to mushroom as values rise. Not that collectible cars are restricted to the vintage automobiles that grandpa used to drive. So-called “muscle cars” from the 1960s and 1970s hold special appeal for affluent Baby Boomers who either drove them–or desired them–as teenagers.
Maintaining the value of rare cars requires vigilance beyond changing the oil every three months. The vehicles’ age assures mechanical and other failures. Fortunately, there are service shops that specialize in the maintenance, repair and restoration of rare automobiles. Such firms source needed parts globally, and when unavailable make the parts by hand. Damaged vehicles are repaired with the loving care that an art restorer lavishes on a Michelangelo fresco. Identifying the shops to assure topnotch quality is largely word of mouth and references. Although the Internet has broadened introductions, it has provided too many choices to make an educated decision. (Sidebar Two)
Damage and loss are as threatening to rare cars as they are to fine artworks. An important consideration for the car collector is quality insurance from a provider that appreciates the nuances of the unique financial exposures and high values presented, and possesses the capital strength to absorb multi-million dollar losses. As one would imagine, a standard automobile insurance policy falls short in addressing the unique coverage considerations of classic cars. Interestingly, since the vehicles are not used for everyday commuting, the risk of a collision is considered less. Rare automobiles also are typically transported in trucks or vans to rallies and shows, which specialized underwriters take into account in deriving the premium.