We need more race tracks! Like this one.

A couple of investors are building a new race track in Germany, integrated into a natural scenery, leveraging an old military area. They will rent it to private drivers, car manufacturers and its own members. Sounds like an interesting concept, but doesn't come cheap. They are looking for some 30+ million Euro in financing, you can contribute starting at 100k. I like the idea and hope that hopefully soon somebody will implement a similar concept in my neighborhood. With all these traffic monitoring, speeding cameras and more and more regulated streets, the race track is the only place where classic sportscars really can driven as they should!
I wish all the best to the chaps from Bilster Berg, make it work, it looks great on the investment brochure!

Yet another extremely rare car - Beutler Porsche 356

There are so many cars of which very few pieces were built. Extremely rare vehicles, highly collectible, but not as famous as a 300 SL or a Carrera RS. I am so glad that there are so many addicts and fans in this scene that even cars that might not be that attractive are still cherished.
Here's an example of a rare car that probably few people even remember: The Beutler Porsche 356. It's a special body based on the famous 356, built in the early 60ies by two Swiss brothers.

Best 10 car investment opportunities for 2010

In their current issue Octane proposed "The Smart Buys of 2010". There list includes the following ten cars that they expect to rise in value: Ferrari 550, Porsche 911 Turbo, Aston Martin DB7, Jaguar Mk1 3.4, Jaguar E-Type S1/S2 FHC, Lotus Elan, Aston Martin V8 Zagato, Aston Martin V8 Virage, Ferrari 308 GT/4 and Mercedes-Benz SL (R107). While I do agree with some of these cars as good candidates to gain in value, I think the list is very "UK focused" and misses a couple of exciting investment opportunities. So here's my list as an alternative:

(1) BMW M3 (E30) - great car for everyday and exciting track cars for the special occasions, not too many were built and there's lots of racing pedigree
(2) Porsche 924 Carrera GT - I wrote about this car before, it's clearly undervalued, was produced in very little numbers and has more racing pedigree than any Ferrari since the GTO
(3) Ferrari 308 GTB/GTS - I consider these cars as still undervalued especially in comparison with some of the 12 cylinders. These cars are great to drive and less expensive to own than the bigger cars and the design is just magnificent
(4) Mercedes SL (R07) - great classics, were built over 17 years, the last ones are not only reliable but also inexpensive to own. They are not rare in comparison, but they even have catalyst converters and therefore can be driven even in protective cities
(5) Alfa-Romeo GTV 6 - again an instant classic with an unbelievable soundtrack. Not that expensive to buy, but some money is needed for maintenance. Many have disappeared appreciating the value of the remaining cars.
(6) Lotus Esprit S2, S2.2, S3 - great and fairly revolutionary shape in the 70ies, thanks to Giugiaro. S2.2 very rare, but even S2 and S3 reached small numbers in comparison to other classics. Inexpensive to own if it's a well sorted one.
(7) BMW M1 - as close to a race car as you can get. It was developed to win in racing, the road going sportscar was sort of a by-product, less than 500 cars produced make it very rare. Prices are climbing quickly though. A few years ago I was offered a M1 for less than € 50'000, now they are twice to three times this price level
(8) TVR 3000M/Taimar/3000 S - easy to own and maintain british sportscar, low number produced, especially in LHD. You can't go wrong if you buy a well sorted one
(9) Lotus Elite - less popular than the ever loved Lotus Elan, but actually much more nimble, exclusive and much closer to racing than its successor. The Elite competed in Le Mans successfully and the road car was fairly close to what the guys were using there. Prices are not too much higher than for good Elans but you get a Climax engine and lots of engineering ideas from Colin Chapman. Not a car for everybody though. But the shape is just exquisite, especially for a car of its size
(10) Aston Martin DB7 - okay, I had to take one of these onto the list. Not that it's really a great car in terms of technology and engineering, but the design is so much better than most alternatives you can buy for the same money that it's worth being considered.

So, that's the list, and of course there are many that could be added. And remember: if bought only for making money, probably none of them will bring enough interests due to all the cost that come with owning an exclusive car. But if you include your passion and pleasure in the equation, then you can forget oil, gold, platinum or any other investment ....

Investing in a BMW M3 E30? Think again!

Investing into a future classic car seems like a good idea. Let's take the BMW M3 E30, one of the best homologation specials on the market. It's an icon of the 80ies touring car scene. Awesome to drive, good to look at, even 20 years after its birthday.
And the value is increasing continuously. The cart shows (in green) how the money you have to put down for an M3 in good shape went up since 2000. And it can be expected that the value continues to increase.
So, this would be an ideal candidate to invest in, right?

Well, no. If you only assume reasonable cost to keeping the car in good shape (garage, basic maintenance, insurance, etc.) you will spend much more money on the car than what you can ever get back for selling it. That's the nature of car ownership. Doing nothing is not an option, storing it outside is a good idea neither.
So if you are looking for a good investment and you don't like stock certificates then maybe consider watches or stamps.
However, if you are also looking forward to having fun then owning a car like the BMW M3 might be one of the financially quite attractive hobbies and that's what it is meant to be. "Freude am Fahren" (driving with passion).

Looking for an Oldtimer - lots of choices

When a car turns 30 years old, then it's called an "Oldtimer". In Switzerland it's called a "Veteran". Being 30 years makes a lot of things easier (in Switzerland, but also many other European countries). You can apply for special number plates, cheaper insurance and you only need to go to the Swiss equivalent of MOT every six years, assuming the car is in good shape and original configuration. Now an interesting question is what cars would fit this scheme in 2010, ready for being used in the next season. Here a couple of examples, coming from the used car section in one of the online platforms:

• Lancia Gamma
• Alfa-Romeo Spider 2000 Veloce
• Alfa-Romeo Alfasud Sprint Veloce
• Puma 1600 GTE
• Lotus Esprit Turbo
• Triumph TR7
• Porsche 911 SC
• Mercedes 280 SL/SLC
• Fiat Ritmo Abarth
• Mazda RX7
• Ford Escort RS 2000
• ...

The list goes on. Some of these cars cost less than USD 10'000.-, so are truly affordable. And some will most probably gain value over the next 10 to 20 years. If you pick the right one, you are not only welcome in many Oldtimer event you actually may make more money with it than with alternative investment possibilities. And certainly you will have more fun.

Is good car design a question of time and context?

Recently I had discussions with friends what cars are beautiful and to what extent this changes over time.
At the end of the day we came up with a simple framework to group cars (see left picture).
"A" cars have been unattractive when they came out and we still see it the same way. Examples are the Ford Scorpio, some of the newer Lancias, some of the older Volkswagens (i.e. 411), etc.
"B" cars didn't appeal to people when new, but have gained in terms of attraction over time. An example to discuss here could be the R107 Mercedes (i.e. 280SL to 560 SL built between 1971 and 1989). This car was quite a disappointment for the "Pagoda" lovers and came across as being to plastic, too large, not elegant enough. It's quite different today when people name this car "pretty". The fact that many TV series showcased this car as the daily driver of their stars (e.g. Bobby in "Dallas", Hart in "Hart but Hart", but also Richard Gere in the movie "American Gigolo) certainly helped to make the car more attractive.
"C" cars are an interesting species. People celebrated them as being beautiful when new, but seem to like them less and less now. An example for this could be the Alfa-Romeo 164, pictured here. The car was described as a limousine beauty in the late 80ies, but looks rather boring and much to straight line cut today. It's certainly not yet a classic. Maybe we will change our mind in a few years. The Lotus Esprit (pictured here an S3) also may belong into this category, though already today people see him as a classic and collectable item. So if we ever thought it's actually not pretty, were are already again changing our mind. But yes, also the Esprit was very much a wedge type design and the flat front screen is quite special.
Last comes "D". This is the easiest category to find examples for. Cars that were beauties in its days and still are today are the ones that everybody knows, i.e. the Ferrari 250 GTO, the Lamborghini Miura, the Dino 246 GT, to just name a few.
Now the interesting question is where today's cars would fit. Let's take the BMW 645 Convertible pictured here. Is it pretty today? I don't think so. Will we consider it as being a beauty tomorrow? I can't imagine today, but I was wrong before about such things already. So maybe. But for the the time being, this is an "A" car for me. Let's take another example. The R129 Merdedes Benz SL (280 to 600 SL, built between 1989 and 2002 or so). This was a pretty car when it was new, people felt. But looking at it today, it's rather uninspiring. So this could be a "C" car, but maybe in few years people will see it as a "D" car.
What is clear is that "D" cars are probably the safest bet when you don't want to lose too much money, but "B" cars may make the best investment!

Where should car manufacturers spend their money?

Audi announced a new logo. Honestly I wouldn't have noticed it probably, if I hadn't been made aware of it. You can certainly call this a subtle redesign. Regardless of the nature of the changes though, something like a new logo is a huge investment for any global company. Figures in the 3 digit million USD range are not uncommon for these projects. So is it worth it? And wouldn't the money be better spend in developing attractive prototypes or making cars less expensive? I think so. For the money spent for this new logo companies like Connaught probably could develop three new cars including new engines!

Ferrari 575M - a boy's dream and a worthwile investment?

This morning I read an ad in a newspaper promoting used Ferrari 575M (at about 50 to 70 percentages of the price when they were new). The title read as "a boy's dream and a worthwhile investment". I don't dispute the boy's dream. Many people admired Ferraris and were hoping to be able to buy one eventually. What I am wondering about is whether these cars are really good investments. This goes back to the blog entry "classic cars and their value over time" I wrote a week ago or so. The 575M is clearly a A1 or A2 in my graph. And it's not clear whether the value actually has already rockbottomed. I honestly doubt. And this car also brings back the question on whether modern cars actually ever will become "oldtimers" and vintage car classics. A car such as the Ferrari 575M has lots of complex electronics on board, it's full of digital processors, sensors, motors, etc.. This stuff is difficult to maintain. If a mechanic in 25 years will try to find an error in such a system he might be in big trouble. If he tries to find the parts needed to fix it, it could be even worse. For some of the early "electronic" cars not even the manufacturers of the digital gizmo is still alive, no blueprints exist (thanks to proper outsourcing). Will this be better with a Ferrari of the year 2001? Small production cars will not be the first target for a potential electronics spare part industry.
Which brings me to another point. How many Ferraris 575M were actually built? I would estimate a few thousands, probably 4'000 to 6'000. That's a lot. If you compare this with the three digit numbers for 330 GTCs or 250 GTEs or even with the low four digit numbers for Ferrari BBs or Daytonas, the Ferrari 575M is clearly less exclusive than one of these early classics.
So, should you worry. If you have the cash and want to drive a great car, the Ferrari 575M may still be a good car to go for, but buy it for the fun (and boy's dream aspect) and not as an investment. This way you won't be disappointed.

Really rare cars

When thinking about collector's cars then usually premium brands pop up, such as Ferrari, Porsche, Bentley, Jaguar, Maserati and the likes. Thinking a bit longer the list may be extended by companies such as Lotus, Alfa-Romeo, Bugatti and more. But few people actually are able to name small production car manufacturers such as TVR, Marcos, Ginetta, Bizzarini or Monteverdi. And these produced significant numbers of cars. Beyond these there have been a quite a few very small companies that produced cars in the two digit number range: Diva, J.W.F., Devin, Apollo, Scarab, Bollwell, Connaught to list just a few. Isn't it so much more attractive to drive one of these cars? An Apollo 5000 is substantially more exclusive than a Ferrari Daytona, a Diva GT beats any GTO in terms of rarity, you probably will never meet another Connaught on the street if you drive one. But still these cars fetch much less value than some of the better known classic cars from the better known brands. Value isn't though the only measure. Isn't it more about pleasure and fun to drive something that only exists in extremely small numbers and is somewhat unique? People following this blog have seen the post on the JWF Milano GT earlier this year. From the approximately built 30 cars only about 10 still do exist and each and every one is quite different in terms of components used and history. And that's why I love these cars so much.

Is a classic car a good investment?

There is an ongoing debate on whether classic cars are good investments. A recent catalogue from "Oldtimer Markt" with market prices covering 4'500 models and comparing these prices with the price when new triggered some analysis on my side. I selected a few models and compared an indexed price when new with the current market price for a "condition 2" car, something that is usually to find in the market and is a well maintained car. Given this data you can draw a number of conclusions.

• There is no real correlation between age and financial gain you can make with a car. However it is clear that it is very difficult to make money with more recent cars.
• There is no real correlation between the price level of the new car and the return on investment. However very cheap cars have difficulties to produce high returns as they lack exclusivity.
  
• It's probably not very obvious what car will become a pearl when they are new. Actually cars with really good returns on investment probably were not really loved when they were new. Other cars you would expect to be good investments aren't.
  
• When moderate maintenance costs are included (to keep the car in the needed condition to remain a valuable investment) then most car fall short of being a great investment. Exceptions in my sample are Ferrari 250 GT SWB, AC Cobra 427/289, Aston Martin DB4 GT Touring, Ferrari 275 GT/B 4, Bizzarini/Grifo A3/C Strada, Porsche 356 B1600 GS GTL or the Ford Mustang Shelby GT 500. Including more costs like insurance, storage space, etc. makes the story worse.
• To really make a competitive return on cars over a longer period only few cars qualify.
• Interestingly cars were rather "cheap" in the past. Even when you apply cost of living indexes and the likes a Ferrari 250 GT SWB would be less than 90'000 Euros today. The comparable F40 however was sold much more expensive and by the way delivers a negative return until today.
  

Now, very few people who want to make money with cars, buy them new and keep them until they can sell them with a decent return. A much better performance can be achieved buying the cars mildly used at the lowest point of their price curve. Using this tactics good money could be made with many competition cars and also many exclusive sports car over the last 10 years. But that's another story.

One additional point to make - buying cars to make money is not what I would recommend. People should buy classic cars because of passion and because the want to drive them. A positive return on investment should just be a nice add-on.

Here's the list of cars analyzed:

Car Indexed price (€) Gain/loss per annum Gain/loss incl. Maintenance
Ferrari 250 GT SWB 87'585 38% 28%
AC Cobra 427 49'950 22% 19%
AC Cobra 289 39'455 18% 14%
Aston Martin DB4 GT Touring 87'532 14% 9%
Ferrari 275 GT/B 4 86'645 20% 9%
Bizzarini/Grifo A3/C Strada 86'748 11% 6%
Porsche 356 B1600 GS GTL 37'452 29% 4%
Ford Mustang Shelby GT 500 33'194 7% 3%
Allard J2X 48'600 3% 0%
Porsche 911 Carrera RS Touring 47'925 8% -1%
Alfa-Romeo 1900 C Super Sprint 60'750 0% -2%
Ferraro 250 GT/L (Lusso) 88'055 8% -3%
Chevrolet Corvette Stingray Convertible 56'782 0% -3%
Aston Martin DB4 73'161 3% -3%
Mercedes 190 SL 31'821 2% -3%
Audi Sport Quatto 175'500 -2% -3%
Alpine-Renault A110 1600 S 31'909 1% -4%
TVR Griffith 200 31'529 1% -4%
Lancia 037 Rallye Stradale 65'007 3% -4%
Mercedes 300 SL Gullwing 55'929 13% -4%
BMW M1 94'737 1% -4%
Ferrari F40 374'625 -2% -4%
Toyota 2000 GT 49'844 5% -4%
Porsche 959 378'000 -2% -5%
Rolls Royce Corniche 181'587 -2% -5%
Lamborghini Mirua P400 S 106'179 4% -5%
Mercedes 300 SL (R107) 58'122 -2% -5%
Alfa-Romeo Giulietta Spider Veloce (101) 29'526 0% -5%
Ferrari Dino 246 GT 58'996 3% -5%
BMW Z1 72'000 -3% -5%
Sunbeam Tiger Mk1 28'655 0% -5%
Maserati Ghibli SS Spider 123'424 2% -5%
TVR 3000 S 33'382 -1% -5%
Aston Martin DBS 113'613 -2% -6%
Mercedes 350 SL 36'873 -1% -6%
VW Käfer Export 13'886 0% -6%
Honda NSX 98'873 -4% -6%
Monteverdi High Speed 375 L Hemi 92'045 -1% -6%
Mercedes 280 SE 3.5 51'916 2% -6%
Ferrari 365 GTB/4 Daytona 99'048 3% -6%
De Tomaso Mangusta 81'000 -1% -6%
DKW Monza 20'154 1% -7%
Datsum 240 Z 26'325 -1% -7%
Triumph TR3 18'804 1% -7%
Ford Capri 2600 RS 22'813 -1% -7%
Porsche 911 Turbo 74'025 -1% -7%
Jaguar XK 120OTS 48'600 1% -8%
Jaguar E-Type 3.8 S Convertible 45'290 1% -9%
TVR Grantura MK2 17'768 0% -9%
Ferrari 512 BB 104'073 0% -9%
Maserati Ghibli SS 118'313 -1% -9%
Lotus Elite SE 44'743 1% -9%
Lotus Esprit S2.2 51'998 -2% -11%
Porsche 356 C Carrera 2 43'026 11% -11%
Honda S800 Convertible 12'309 1% -11%
Mercedes 280 SL Pagoda 35'871 1% -11%
BMW 3.0 CSL (bat mobile) 29'430 3% -12%
Austin Healey Sprite Mk1 12'176 0% -12%
Porsche 356 A Speedster 22'950 6% -14%
Porsche 356 A 1600 S 26'614 2% -15%
Lotus Elan S3 Convertible 29'945 0% -15%
Morgan Plus 8 (Moss) 26'392 1% -16%
Porsche 914/6 27'289 0% -16%
MG A Twincam Roadster 22'661 2% -18%
Lancia Thema 8.32 65'340 -4% -19%
Fiat 124 Abarth Rally Stradale 20'864 0% -22%
NSU TTS 11'571 2% -37%