Reuben Singh – car collector, entrepreneur and CEO of alldayPA – explains how to accelerate your profits
Cars aren’t typically a go-to category when it comes to investment options, with property, stocks and business ventures tending to take precedence. However, investors could be missing out on a hugely profitable market. This is especially true at the moment, as cars in general currently have excellent yield projections – both in the short term and long term – as long as you know where to put your money.
Of course, the potential returns are dependent on how much you have to invest initially, but there are a number of lower cost options that could generate a healthy profit, so the benefits aren’t reserved only for multi-millionaires. Car investments range from under £20,000 to over £5 million and many of the returns are outperforming other asset classes at the moment.
The reasons behind such a buoyant market vary from low interest rates, meaning car enthusiasts are able to fulfill their dreams, to the increased scarcity of iconic, traditional cars and modern classics. We’re in the middle of a motor evolution, with cars moving from manual gearboxes to automatic transmissions, and now even conventional petrol engines are being replaced by hybrid or fully electric systems. This leaves people wanting to purchase a piece of history and see its value grow.
The primary investment option when it comes to automobiles is the ‘supercar’ category, in which cars are typically worth over £100,000. The top one per cent of supercars are generally considered to be what we call ‘hypercars’ and are generally worth over £1 million. At this level, the cars that have seen a 100 per cent increase in their values over the last two years include the Porsche 918 Spyder, which sold for £700,000 originally and now sell for over £1.4 million. The Bugatti Veyron has also proven to be an extremely fruitful investment option, along with the new LaFerrari and McLaren P1. All of these cars have outperformed every other comparable investment category in the last two years and their values are still growing.
If you’re looking to invest in a supercar, as opposed to a hypercar, then it would be advisable to put a deposit down on a new, limited edition car as soon as its launch is announced. Being on this list is a one-way ticket to significant yields. An example of how lucrative this can be is the new Porsche 911 R, which was launched last year with a £130,000 price tag and is now selling for over £400,000. Alternatively, you could buy a very low mileage Ferrari or Lamborghini from the 1980s or 1990s. These are highly sought after, not least because so few of them are still left, with most having been crashed or written off.
If you have under £100,000 at your disposal, it has to be a well maintained iconic car from the 1980s, such as a Ferrari, Porsche, Lamborghini or Aston Martin. Naturally, the value growth is relative, but cars in this price bracket have still seen their worth rise by over 20 per cent year-on-year over the past few years. And when it comes to cars under £20,000, the best strategy would be to look at purchasing a low mileage iconic sports car from the 1980s or 1990s. However, in this lower price category, it’s worth bearing in mind that this will be a longer term, more stable investment, so if it’s a speedy return you’re after, other investments may be more appropriate.
Whether your funds are in the thousands or the millions, turning to the automotive market is a hugely viable route to profitability and shouldn’t be overlooked. A sizeable investment could see you double your initial outgoings within just a couple of years, while a more modest one may take a little longer – either way, the current climate in the world of cars is very encouraging indeed.
Top tips on investing for your budget
- Over £2 million – Bugatti Veyron or LaFerrari
- Over £1 million – Porsche Spyder or McLaren P1
- Over £250,000 – Very low mileage 1980s Ferrari Testarossa or Lamborghini Countach
- Over £100,000 – New, limited edition Porsche, Ferrari or Lamborghini
- Over £50,000 – Very low mileage Escort RS Cosworth or Mercedes 190E Cosworth
- Over £20,000 – Any well maintained, good condition and low mileage sports car from an era – if you can find one!