How To Determine If A Car Will Go Up In Value
Cars are never a good investment for many reasons, most notably being a depreciating asset. If you want to grow your money, you often have to invest in real estate or the stock market. Buying real estate has become prohibitively expensive and owning stocks in a bear market has no tangible benefits. Let’s face it, you can’t take Google stock and drive it down a winding road through a canyon with snow-capped mountains as a backdrop.
With limited investment opportunities, there is a new generation of car collectors who are spending their money on future classics. With improved accessibility thanks to online auction sites, collectors can easily buy their dream car. This completely changed the landscape of car collecting. Collector cars are now more findable and accessible than ever. Consumers are no longer limited to classified ads in their local newspaper.
The question remains, how do you know which cars will increase in value? Like the stock market, there is no way to predict the future value of a vehicle. What you can do is analyze patterns and trends that have consistently helped increase the value of certain automobiles. Here’s what you need to know to start collecting cars.
Historical significance adds value
Most collector cars are coveted because they contain fascinating qualities. It could be the car’s styling, the mechanics, or the fact that it’s exciting to drive. Whatever it is, there must be something special about it that will pique the interest of an enthusiast. Very often, a collector’s car increases in value due to its importance in automotive history.
This could be a vehicle designed for homologation when race cars were commissioned and at the same time needed to produce a road legal version. The value of these vehicles often continues to increase because they were produced in small numbers. They also carry with them the appeal of driving a car with racing pedigree.
The sequel has never been better
Another trend to watch out for is vehicles that were the last of their kind. For example, the E46 M3 had the last naturally aspirated inline-6 power engine for BMW’s M division. Known for creating the ultimate driving machine, the German automaker was notorious for its straight-six engines. After the E46, BMW switched to a V8 and changed the driving experience of the M3. The loud-sounding engine of the E46’s successor was more powerful, but it didn’t really capture the essence of its predecessor.
As a result, BMW reverted to a straight-six engine, but introduced forced induction to keep up with efficiency standards. The turbocharged straight-six has been a mainstay in all M3s ever since. Even today, enthusiasts crave that feeling you get from a naturally aspirated straight-six found in a vintage BMW. The E46 generation M3 ended in 2006 and it took almost fifteen years for values to increase. This is because its value was based on the lack of success of the M3s that followed.
While difficult to predict, it’s important for collectors to understand these moments in automotive history. First you have to identify a feature that makes a vehicle special. As the auto industry transitions to electric powertrains, it may be wise to keep an eye on high-performance internal combustion engine cars. Some of these vehicles are at the end of their production. Hook in a manual transmission and you might have a future collector’s item.
Cars can be a good investment
New cars lose their value as soon as they leave the dealership. Limited production cars are valued after they leave the dealer lot. However, rarity does not always equate to value. Most limited-production vehicles are reserved for high-end supercars that the average person cannot afford. Other limited editions of more common cars tend to sell out soon after their release. These vehicles are made in small batches as they are for pickup. As a result, they are not driven by their owners, they are kept in a garage and their value rarely increases. Clean, low-mileage examples of limited edition cars are very common.
The key is to find a clean, low mileage example for a vehicle that has had low production numbers due to its low popularity. Take the FJ Cruiser, for example, which was first introduced in 2006 and received polarizing reviews. Its unique off-road styling didn’t match the basic aesthetics of mid-2000s SUVs. For the owners who bought one, they used it for what it was intended for; off-road. Toyota canceled the 2014 FJ due to falling sales. A few years after its demise, the FJ Cruiser became desirable again. These days, clean examples of four-wheel drive FJs sell for what they sold for brand new, even with a ton of miles on them.
Nobody bought an FJ Cruiser because they thought they would put it in the garage because one day it would be worth a lot of money. Instead, they were used in harsh environments and pushed to their limits. It can be difficult to find a clean example, combined with its reliability and low production numbers it’s not surprising that the value is skyrocketing.
Knowledge is power when it comes to automotive investments
Comedian, late-night TV host, and renowned car collector, Jay Leno once explained, “If you know something about cars . . . and you like something, chances are other reasonably knowledgeable people will like it for the same reasons you do.” .” You will make more informed decisions the better informed you are about a topic. Learning about market trends and tracking data points will help you understand values.
There are many vehicles out there that are on the lower end of their depreciation curve. Cars that retain something special mechanically, aesthetically and historically seem to be resurgent. A wise person with good judgment can certainly consider car collecting as a solid investment alternative.