Gearing up for a revival

Gearing up for a revival

Given that fear and uncertainty are stalking financial markets in equal measure, you might think classic car prices would be going through the floor. Not a bit of it. Just a few weeks ago, a 1955 D-Type Jaguar sold for £2.5m, setting a world record price for that model and reaffirming the view that some people's wealth is in a stratosphere of its own.

Although the market in classic, or collectible, cars is still below the crazy heights achieved in the late 80s, the price of the most desirable cars has been creeping up in recent years.

"The best, or what I call the hyper-quality cars, will always attract extraordinary prices for one simple reason: demand exceeds supply," says Chris Routledge of London-based specialist car auctioneer Coys.

"When things get a bit hairy in the markets, investors inevitably look round for alternative investments. While we are still waiting to see how the credit crunch will affect the market, the recent Jaguar sale shows demand remains strong for the best cars."

Investors with long memories will know the classic car market went through an explosion during the "loads-a-money" period.

Cars that had been selling for many thousands of pounds were suddenly springing up with £1m price tags at the height of the mayhem.

"It was a spectacular bubble that was completely unsustainable - people were borrowing money at 15% and walking into showrooms with £2m to spend, and as a result prices went.....continued below

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crazy," says Routledge.

As all bubbles do, it eventually burst and prices fell off a cliff. It left many buyers nursing big losses, and the market flat for another five years.

However, since 1994, the market has been quietly growing and anyone who had the foresight to go back in then has done very well.

"Ferrari Daytonas that could be bought back then for £35,000 have been selling for around £200,000. Take another classic, the E-type Jag Roadster. These were selling for just £20,000, now dealers are offering them for £100,000. The feeling among the collectible car fraternity is prices are still relatively cheap," says Routledge.

He says the most expensive cars tend to be those with an established racing pedigree. "Cars such as the Ferrari 250 GTO will sell for $25m (£12.5m) - if you can find one. Aston Martins always command good prices - a DB4 GT will set you back £4.5m. These cars are like the very finest wines - there are very few of them in existence."

Despite their lofty prices, he says, they do get driven - albeit very carefully - usually to one of the many classic car rallies that now take place all over the world. So what should you be investing in, if you don't stretch to a spare £1m?

He says those looking for pre-war motoring could do a lot worse than look at an Austin 7 while later MBG Roadsters are always popular.

Meanwhile, he urges anyone looking for the "next" classics to look to the 80s and the first "hot hatches".

"Lots of people have been tipping the Audi Quattro. Since one recently appeared in the television programme Ashes to Ashes, the price of these has reportedly doubled," says Routledge.

"I've got a feeling the Peugeot 205 GTi is going to become more valuable - also the prices of early Land Rovers have been doing very nicely recently. Pick the next car to become highly sought after, and you should do quite well," he says.