Affordable classics in demand

Classic car prices are accelerating faster than a Bugatti Veyron on steroids, but there are still plenty of affordable cars to choose from.

July 25, 2013

by Lee Wild

Thousands descended on West Sussex earlier this month for the annual Festival of Speed on the vast Goodwood estate. Amid the screaming engines and burning tyres, auctions broke records and millions of pounds changed hands. But away from the big bucks, prices for more modest motors are starting to soar and some of the winners might surprise you.

Of course, it's the top end that makes the headlines. These cars are often one of a kind with enough provenance to make enthusiasts weep. A 1954 Mercedes W196R twice driven to victory by Formula 1 legend Juan Manuel Fangio sold for £17.5m at Goodwood, a record for any car at auction. Add in £2.1m of auctioneers' fees and it's almost double the previous best.

Over £36m of motoring history went through Bonhams' makeshift auction room, but most big deals still take place away from the public glare. I've spoken to classic car owners with incredible tales. One who paid £650,000 for a Ferrari 275 GTB has been offered £850,000 six months later. Another sold 18 months ago for £750,000 is now worth over £1.2m. A Ferrari 250 GTO worth £6,000 new is now a £25m car.

For most of us this is fantasy land, but demand for million-dollar vehicles is on the rise, and the trend continues to look sustainable. Unlike previous booms in the late 1980s and early 1990s, and before the credit crunch in 2008, it's not fuelled by debt. Most buyers have cash and little to gain from low interest rates. Buyers from the Middle East and China are muscling in on the action, too, and supply, of course, is finite.

The investment Angl(ia)

And there's little sign of a slowdown, either. In the first six months of 2013 alone, the HAGI Top index of rare vehicles rose 21 per cent, and the Mercedes sale can do no harm. "I expect that the overall car community might attract some new interest from speculative investors, which may well drive up the overall values of classic cars," says Angus Forsyth, managing director of classic car insurer Hagerty International.

This is certainly good news for car enthusiasts of more modest means with one eye on the investment angle. And prices are already on the up. According to Hagerty, which has just launched a free online price guide, the average cost of a Ford Anglia 105E (see main image above) rocketed about 60 per cent in 2012 to almost £5,500. Ford made almost a million of the saloons between 1959 and 1967 - an early model would have cost almost a year's wage. There aren't many up for sale, but expect to pay well over £6,000 for a 1964 model in excellent condition.

"Even if a car is built in the millions it's worth something in great condition," says Dietrich Hatlapa, the man behind Historic Automobile Group International (HAGI). "But most have either been scrapped or are in poor condition." Indeed, the old Morris Minor was prone to rust, but is worth about the same as the Anglia. "Cheeky and easy to live with as a starter classic," is how automotive journalist Paul Duchene describes it.

And check out the Toyota Celica 2000GT. There was a time when wise heads argued there'd never be a collectible Japanese car. They were wrong. A 1967 Toyota 2000GT sold for over $1.1m (£0.7m) in April, a record for a Japanese supercar. And the Celica 2000GT is gaining popularity, too, with prices up 50 per cent last year. Expect to pay just over £7,000 for one in good condition, but north of £9,000 for a show winner with prices only going one way.

Porsche claims pole position on affordability grid

"Porsches are damn good value at the moment," says Jonathan Kaiser, who runs the sales operation of London dealer Hexagon Classics.

They've certainly been a good investment in the past year or so. Some cars have doubled in price and an ultra-rare 1973 RS sold last month for almost £300,000. Now, that's partly down to the 50th anniversary and hype from Porsche, but it also reflects the acceleration toward classic car status. And there's a more affordable element to the Porsche market, too.

The Porsche 930, better known to us as the 911 Turbo, "has to be a £200,000 car one day, purely due to the shape and limited number left in half decent condition", reckons Mr Kaiser. But you can get one now for £40,000-£50,000. A 1980s model with 47,000 miles on the clock is in his showroom at £48,995. "It will be worth £100,000 in five or six years," he says confidently.

"Porsches are still within reach for the man on the street with a bit of money put away," adds Mr Kaiser. "And it's the £20,000 to £30,000 cars that are the interesting ones. They're going up in value quickly, are lovely to look at, are perfectly drivable, come with many of the creature comforts of a new car and are reaching classic car status." Maintenance isn't expensive on the older cars, either. Many of the parts are still available off the shelf and are reasonably priced.

In fact, Mr Kaiser is so confident he's bought one himself. "I love old cars and Porsche was the poster on the wall when I was a kid," he says. "They're the ones that go on your wish list. I regard them as a piece of art." His 1987 3.2 litre Carerra with 44,000 miles on the clock and three owners cost him £21,000 a year ago. Now it's worth over £30,000.

"It is bullet-proof, both in construction and as an investment," he says, which ties in with Hagerty's assessment. "It costs hardly anything to maintain, has a simple engine and none of the intricacies associated with turbos." You might find one for £15,000, but it will need some work to get it up to scratch. His advice? Porsche owners are a fussy lot - perhaps more so than any other - so go for low mileage, full history and rarity. "If you've got dry, safe storage, you can't go wrong."

Park cash in a Porsche

This year marks the 50th anniversary of the Porsche 911 and it looks like another 12 months of scorching price appreciation. A few years ago you could have picked up an early-1980s model for around $10,000. Now it's more like $20,000. "There's an element of catching up from the Porsche segment," says Mr Hatlapa. "Prices are far lower than for a Ferrari, so the barrier to entry is much lower."

That's a fact not lost on those in the know. Ferrari has traditionally outperformed all other marques, but Porsche raced ahead in 2009 and has stayed there. According to Hagerty, there's no such thing as an undesirable 911. Still, it reckons the 1976 Turbo Carrera is probably the most undervalued of the lot right now. One in "good" condition will cost £26,000 and £36,000 for the best.

Want a rewarding drive and easy maintenance? Then go for the "unkillable" 3.2 litre Carrera at between £15,000 and £20,000, says Hagerty. Jonathan Kaiser at London dealer Hexagon Classics has one and swears by it. Mr Hatlapa agrees. "The lineage is completely uninterrupted. Porsche just increased the engine size and ironed out all the problems."

Even models that have clearly seen better days are fetching good money. A 1966 911S not driven since 1979 sold at Goodwood for £30,475. A so-called "barn find", they have been valued by collectors in Europe for years - original and often caked in filth, they're perfect for sympathetic restoration projects. Now that the Americans have cottoned on, totally untouched vehicles are selling for more than good examples of the same car.

GTO of the future

Once an £850,000 car, an early Bugatti Veyron can be had for around £600,000 these days - a 2008 model went at RM Auctions in London last October for £579,600. But that, say some, could be the bottom of the market and there's interest at these prices. News that Bugatti will stop production next year with a £5m extreme version could underpin valuations, but others aren't so sure.

One expert I spoke to called it an "odd one" and reckoned the Veyron looked more like a PR vehicle for owner VW than a future classic. McLaren boss Ron Dennis is no fan, either. A "piece of junk" and "pig ugly" he's called it. Ouch! Of course, the man behind the McLaren F1 is clearly biased, but his supercar is widely regarded as one of the finest of any era. A fleet of celebrity enthusiasts agree.

Launched in 1993 and sold for £540,000, the F1 now changes hands for upwards of £3m. No wonder insurers paid the £910,000 repair bill after Blackadder's Rowan Atkinson wrapped his F1 around a tree two years ago. Only 65 of the road-going three-seaters were ever made, and winning Le Mans in 1995 has added vital race pedigree. Not for nothing is it called the GTO of the future.

■ Of the 10m or so classic cars still around, many will divide opinion. One man's junk is another's treasure and, as with most things, there's a market for any vehicle in the best condition. Yes, rising prices are generating fat profits, but most agree the investment angle is the icing on the cake. Buy a car for love not money and you'll never be disappointed.