When penny stocks and mutual funds lose their luster, some investors put their money into something shinier, like a meticulously restored 1916 Crane Simplex Torpedo Runabout or a 1971 Dodge Superbee.
Once the province of gearheads and hobbyists, classic-car collecting has entered the investment world as an alternative to paper assets and traditional physical assets such as rare coins, stamps or precious metals.
The market for many classic rides took a dip with the rest of the economy during the recession, but major collectors and dealers say investors from Asia and South America are likely to ignite a rebound.
“Classic cars as an investment are becoming more popular,” said Leon Kayarian, owner of Celebrity Classic Cars in Cranston, which reopened a showroom in the former Dayton Tire building this year. “The Chinese now are not buying soft investments, but they are looking for old cars and newly restored cars. They will pay $3 million for something if it is what they are looking for.”
The popularity of car collecting as a hobby and the steady proliferation of vehicle auctions in recent decades have expanded the market and made entry into it easier for amateurs.
“What is happening is people who don’t know that much about it are using the auctions as guidance, because they figure if Joe Blow bid $50,000 on something, they know it’s worth at least that and they will bid $52,000,” said Dick Shappy, owner of Dick Shappy Classic Cars in Providence.
But while the enjoyment of owning vintage wheels packs a more visceral thrill than shares in an oil company, local wealth managers describe classic cars as risky investments best explored with disposable income.
“We look at it as a volatile market and a very targeted market, where if you don’t know what you are doing, you can get in trouble,” said Peter Boss, business-development manager at WhaleRock Point Partners LLC in Providence, about the classic cars.
Boss, who was a professional race-car driver before getting an MBA and owns a 1965 Porsche 356, appreciates the appeal of collecting and the potential value of vintage vehicles, but doesn’t often steer clients toward them.