Coutts index says value of classic cars has risen forty percent compared to last year
Mohammad Kamal Syed, head of financial advice and investment solutions at Coutts, adds that passion assets are not for everyone because authenticating their originality can be difficult.
How do UHNW clients structure their car collections?
It depends a lot on where their main residence is and what the local rules are. Many will hold collectible cars under their personal names, others via company and trusts or via museums.
Are supercars a wise investment for UHNWIs?
Although the value of classic cars has risen significantly – those we tracked in the Coutts Index are worth forty percent more now than they were last year – there are careful considerations for those looking to invest in passion assets. Classic cars are illiquid, and they are opaque and can’t be easily valued, plus they are difficult to hold, considering regular maintenance, insurance and, of course, appropriate and safe garaging. Sourcing classic cars is not straightforward as there are a finite number of them as well as difficulty in authenticating their originality.
What other things should UHNW clients be aware of when purchasing luxury cars?
Passion assets are not for everyone. Buyers need to think about currency fluctuations as many passion assets are global and may be bought or sold in different currencies. Although passion assets can appear more exciting and deliver stronger returns than conventional stocks and bonds, they are also at the highest end of the risk spectrum with low transparency and liquidity.
What trends do you see?
Many wealthy individuals are drawn to the market by a passion for cars rather than wanting to make money. The fact that the price of classic cars has gone up significantly is a nice outcome rather than their desired intention. Indeed, many collectors wouldn’t consider selling their classic cars, even though they may be worth far more now than they initially paid. As a collector, the prestige of owning a particular model of classic car can far outweigh any financial gain.