Lifestyle

Car Collecting Is Burning Rubber


Thanks to wealthy baby boomers trying to regain a piece of their long-lost youth, aspirational cars are selling for increasingly high sums

The 2006 version of the Barrett-Jackson collector car auction, which takes place Jan. 14 to 22 in Scottsdale, Ariz., is expected to set a new world record of more than $100 million in sales -- up from an already-prodigious $68 million in 2005. An impressive gain in a year, but it's really just indicative of a market that, as a whole, has been doing an 18-month-long version of the drag racer's tire-squealing, smoky burnout.

The collector car market seems finally to have shrugged off the malaise it has suffered since the early 1990s. Then, enthusiastic but ill-informed dot-com-style speculators and briefcase brokers (who owned nothing) drove up the prices of everything from late-model production Ferraris to Fiats. The ensuing crash put hundreds of these wannabe investors underwater and left a bad taste in the mouths of many more.

Things are different today. Most of the recent gains appear sustainable because of the influx into the collector car hobby of baby boomers pursuing the aspirational cars of their youth.

SUSTAINABLE ACTIVITY.

For example, the 1968-1973 Ferrari 365 GTB/4 Daytona is, to many, the last "real" Ferrari built before emissions and safety regulations blunted most performance cars. The Daytona is a big brute with a top speed of over 170 mph and a macho reputation for being a workout to drive. A little over a year ago, $125,000 or so would secure a nice Daytona coupe. Today, you'll have difficulty finding a good one for $200,000.

The activity in the muscle car market -- especially for hemi-powered Chrysler (DCX) products -- is even more dizzying. If you think $1 million is enough for a 1970 Hemi 'Cuda convertible, you're only halfway there.

Is this recent spike another Internet-type bubble waiting to burst? Probably not. Demographics and simple economics are conspiring to create a supply-and-demand situation that should make the latest market activity sustainable. The huge population of baby boomers has accumulated a significant amount of wealth, and they're determined to acquire what they want. There are simply more moneyed boomers who desire the Hemi 'Cuda of their pimply-faced teenage dreams than there are Hemi 'Cudas.

A POWERFUL INVESTMENT.

While it may be tempting to sell your conventional investments and start your own "Car-01(k)," a word of caution: Unlike stock certificates, old cars require frequent maintenance, insurance, and a garage. Conversely, reviewing your portfolio performance is nowhere near as much fun as experiencing the vivid performance of a big-block '67 Corvette.

In actuality, though, most enthusiasts are happy to enjoy a car for a few years, do a few things to it, and break even when it's time to move on. For those who look at the old car hobby as a financial investment as well as an investment in pleasure, there's unanimous agreement in one area: In today's market, it's hard to get hurt buying a good collector car. If you do your homework, buy the right car, and enjoy it sensibly, you'll maximize the return on your investment.

Provided by Sports Car Market—The Insider's Guide to Collecting, Investing, Values and Trends

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