Classic Cars vs. Inflation – Who Wins?

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A classic 1965 250 GTO Berlinetta Ferrari recently made headlines for the astounding $38.1 Million dollars it recently sold for at auction.  While this is an impressive amount, what’s even more impressive how relatively low the “Compounded Annual Growth Rate” of this amount works out to be.

According to Wikipedia, the original cost of the car was $18,000.  Over the last 49 years, this works out to a compounded return of 16.92% per year.  A return most investors would be happy with, but not eye-popping.  (Yes, this particular vehicle was originally purchased in Italy and probably not in U.S. Dollars.)

As a point of comparison, Gold priced in dollars has increased 7.61% per-year (on average) over the same time period and the consumer price index (i.e. the official inflation rate) has increased at 4.24%.

The 1965 250 GTO Berlinetta Ferrari

This Ferrari is the new record for a car sold at auction, however the current all-time record for a car is $52 Million for a 1963 250 GTO Racer Ferrari which sold less than a year ago in a private sale.  Amazingly, the compounded annual growth rate for this car is identical to the record auction price.  The extra two years add up to an additional $14 Million! (From what I can tell, the original prices were about the same.)

So how does this compare to a more typical collector car?   According to Hagerty, which tracks classic car prices, a 1969 Camaro (V-8, 255HP) range from $16,900 for “Fair” condition daily drivers to $38,000 for mint-condition show-stoppers.  From an original price of $2,726 in 1969 you’re looking at an annual return of 4.1% to 6.0% vs. 4.3% CPI and 7.9% increase in the price of Gold over the same period,

I think it’s safe to say that no classic car owner is in it solely for the “Return on Investment.”  If you can keep pace with inflation, you’re doing far better than any new car which typically starts losing value exponentially as you drive it off the lot.

And to the proud owner of the new Ferrari, Montway will be happy to ship it for you!

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