For those that can afford them, classic cars tend to offer far higher returns than more mainstream investments. Just don’t buy one if you’re looking for a liquid asset.
Take the BMW 507, a roadster that went out of production in 1959. In the 14 years through the end of 2018, the model’s value increased by over 800%, according to data compiled by Suedwestbank AG. The German lender’s OTX Classic Car Index climbed more than 450% during that time, while the benchmark DAX stock index rose about 150%.
The index is based on vehicles made by German companies such as BMW AG and Daimler AG that are at least 30 years old.
‘Vintage cars can be interesting for investors looking for alternative investment opportunities,” said Jens Berner, an expert on the subject who works at Suedwestbank’s asset-management unit.
They’re not for everyone, though. The BMW 507’s scarcity value means it will set you back about 1.7 million euros ($1.9 million), according to the index, and buyers of any classic car face a range of additional costs, from insurance to storage and maintenance.
What’s more, the vehicles may be hard to sell quickly and it’s not always easy too authenticate them. Suedwestbank recommends that they should make up no more than 10% of an portfolio.
The lender calculates the OTX index — which was started in 2010 — based on model prices provided by specialist magazine Motor Klassik. The performance of the BMW 507 compares very favorably with the car company’s own stock, which shows a total return of just over 200% during the same period, according to Bloomberg data.