Ferrari fever? Classic cars roar into investment funds

by Giulio Piovaccari and Valentina Za

Milan( Reuters )- According to Andrea Modena, mind of Ferrari’s’s iconic vehicle department, a Ferrari owner sold his 1962 250 GTO in 1977 after his family complained it was too noisy. Either it was her or the vehicle.

I’m’m not sure the wife would have prevailed in modern times.

However, times have changed. The same Ferrari model sold for$ 48 million at auction in 2018, making it the most expensive car ever. A 1955 Mercedes-Benz 300 SLR Uhlenhaut Coupé that raced to 135 million euros($ 149 million ) broke that record last year.

In a flood of choice in this other asset, billions of dollars are being spent annually on classic cars worldwide. These kinds of megadeals are at the forefront of this trend.

According to Knight Frank’s’s 2023 income statement, the value of classic cars has increased by 185 % over the past ten years, surpassing the development of luxury rivals like wines, watches, and art and coming in second only to extraordinary whiskies.

Beyond a relatively large group of collectors, the market has grown to include traders attracted by the promise of higher returns and the lack of association with traditional portfolio assets like stocks and bonds.

Giorgio Medda, CEO and global head of asset management at Italy’s’s Azimut, stated that” We’ve’ve been monitoring the market for a long time.” Antique cars have evolved into a financial asset class that we want our customer to have in their portfolio, according to the track record of the last 30 years.

The resource manager is launching what it calls the second” evergreen” fund in history this year, and it promises to only wager on vehicles for more than one million dollars each.

The bank will choose vehicles with a distinctive history, according to Alberto Schon, mind of Ferrari and Maserati seller Rossocorsa.

Small European plus coach Hetica Capital launched a 50 million euro” closed-end” stock in 2021, which it also claimed was the first of its kind, while Azimut’s’s fund will have no end date and you have new money indefinitely.

The Hetica fund has purchased 12 cars so far and plans to add 30 to 35 more by the fifth year, leaving the final two years to sell the vehicles and pay investors. It is aiming for returns of 9 % to 15 % after seven years.

The strategies are audacious.

In the past, there have been more than 100 attempts to raise money. According to Dietrich Hatlapa, the leader of the renowned car research firm HAGI, which provides the field data used by Knight Frank, no one was able to create both a diverse investor base and varied car portfolio.

Additionally, it’s’s not a field for the financially vulnerable.

Both the Azimut and Hetica income have a 125 000 euro access invest cap when they are registered in Luxembourg.

According to Walter Panzeri, the manager of Hetica’s’s Klassik Fund,” We receive a lot of visits from people looking to invest 1, 000 to 2, 000 dollars, and we have to turn them down.”

Additionally, a minor scratch, thorn, or replacing component can cause significant financial damage. According to Modena, replacing just the bumper of a rare vintage car can cost up to$ 15,000.

Investments of Passion in Graphic: https :// fingfx.thomsonreuters.com / gfX / MKT / JnvwylBgZvW / Knight-frank-luxury-investment-index.png

REMAINING THE Vehicles

According to Florian Zimmermann, who began purchasing vintage cars while working for Mercedes-Benz and has since amassed a collection of 300 automobiles, running costs for cars selections, including high hardware and security charges, could easily amount to 5 to 6 % of the portfolio’s’s value annually.

Finding the right mechanics to continue these cars running is becoming more and more difficult. And keeping all of these vehicles in good working order requires a sizable financial commitment, he added.

For the traditional vehicle groups of manufacturers, which not only provide upgrades and objects but also certify the authenticity of vehicles to participate in shows and competitions, investment funds managing vehicle portfolios can be a money-spinner.

According to Peter Becker of Mercedes-Benz Classic, who claimed that only the carmaker’s’s experts with connection to its archives may certify the uniqueness of a traditional model, the certification process alone can cost around 20,000 euros.

The value of vintage cars increased 25 % in 2022, their strongest performance in nine years and second only to art’s’s 29 % increase, according to Knight Frank, despite the fact that the classic car market is growing as the number of wealthy people also rises.

Hagerty, a classic vehicle insurer, estimates that, including all auctions and private sales, there are about$ 80 billion in collector vehicle transactions worldwide each year.

Despite Hagerty’s’s record$ 3.4 billion in auction business in 2022 compared to$ 774 million in 2007, North America continues to be the largest auction markets. According to Zimmermann, the Middle East, India, and China have seen an increase in buyers in recent years.

THEY’LL BE DESTROYED Images.

According to some market players, the global competition to abandon fire engines cars will only serve to increase interest in these artifacts of a bygone era.

According to Cristiano Bolzoni, mind of Maserati’s’s vintage car division,” Electricity will favor traditional suvs.” ” Over day, they will develop into religion symbols.”

According to Adolfo Orsi, the creator of the Classic Car Auction Yearbook, which has been tracking bid prices information since 1990, Ferraris are the most prized classic automobiles. He called them” certainly the blue-chips of this business.”

Ferraris had an average auction value of$ 589,000 in 2021 – 2022, followed by Mercedes-Benz vehicles at$ 378, 000 and Porsches at$ 348,000.

According to Zimmermann,” Over the last five to ten years, the antique car community has changed significantly.” ” Again, it was just people who were familiar with the vehicles from the inside out.” Others, however, eventually came to the same conclusion:” I like these cars, I can obtain one, and I don’t lose money by buying it.”

( Edited by Pravin Char, reporting by Valentina Za and Giulio Piovaccari )

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