Blue chip or black hole?

Introducing a new REIM feature series unpacking classic and collectible cars as an investment.


By Russell Bennett

Whether you already have a nicely diversified portfolio, and are looking for that final asset class to round it off perfectly, or you’re searching for something a bit speculative but with potentially explosive gains that isn’t connected with the cryptocurrency boom, you may already be aware of the HAGI Index.

HAGI stands for the Historic Automobile Group International, an organisation started ten years ago by Dietrich Hatlapa, serial car collector and an 18-year veteran of the European finance sector.

HAGI was born to address the lack of transparency in the rare and collectible cars investment market, and to this end through exhaustive research and a global network of principal players in the business began tracking and analysing the data to compile and publish the Index itself.

The Car Finders (TCF) International had already been providing its services to clients looking to invest in classic and collectable cars for two years in 2007, and was already garnering a formidable reputation as brokers who could track down and conclude the purchase of any potential investment-grade slice of true motoring exotica that their customers could think of requesting.

In 2015, SA entrepreneur Tommy Roes expanded this business into our local investment industry with the launch of TCF South Africa, offering a broad spectrum of auto-investment opportunities specifically tailored to the passionate SA investor.

“By the end of 2015, the HAGI Index was showing nearly 500% gains over the ten years tracked. It was a bit of a boom, and it’s cooled from that now, but there’s still a lot of potential for investors with the right approach,” opens Roes. “This year we brought Dietrich Hatlapa out to Sun City for the first Value in the Classic Car Market (VCCM) Conference ever held in the southern hemisphere, as it’s a very different market here to the one which the Index represents.”

“I knew we’d hit upon something once we’d put the event on. Although there’s not a lot of correlation with the HAGI Index and the actual dynamics of the South African collectible cars market in terms of prices, what was amazing to me was just to see the huge amount of enthusiasm generated around this concept of stunning examples of iconic engineering as an investment-grade asset. A tangible asset, that the owners can be passionate about, but still realise a stellar return from with the proper management.”

According to another influential marker, the Knight Frank Luxury Investment Index, classic cars have appreciated more aggressively than watches, wine, stamps, jewellery, or even art over the last 10 years. Some self-correction has resulted in the asset class lagging somewhat in 6th place over the last year tracked, but that just makes a careful, considered strategy all the more valuable to new investors looking to get involved.

Which is precisely where an organisation like TCF delivers a range of attractive options. “For those who do want actual ownership of a specific vehicle, we find the right car, will broker an off-market deal, ship the asset to any region the buyer would prefer it to be stored in, then take care of all the additional concerns like storage, maintenance and insurance to ensure that it remains a blue chip investment over the years.”

“We also offer alternative structures, including fractional ownership, portfolio syndication, private managed portfolios and, shortly, a new private equity fund we’ve been designing specifically for our South African clients – a US-based fund underpinned by cars that are just about to hit the vertical growth phase.”

Of course, you can always choose to go it alone as well. If you happen to be sitting on any of the cars listed in the HAGI Index as having strong growth potential, like an E46 BMW M3, a rarer example of the 993-generation 911, or even an A80 Toyota Supra, you’re likely going to want to keep it as fit as a fiddle for a few years while fending off buying offers from speculators. Or you can go hunting for a future classic to buy into now before it starts to appreciate wildly, with some help from our REIM series on classic and investment cars over the course of the year ahead.

Back to Mr Roes for some sage wisdom in closing; “Although future classics are a bit of a crystal ball exercise whereas we tend to be involved more with the established performers, I can say that it’s important to understand your intentions up front. An enthusiast buys a car to a different set of principles to an investor. And either way, buy what you like. Because then at least if you’re wrong and you don’t see the gains you were looking for, you’ll still have an asset that you can love and enjoy in its own way down the line.”

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