Cars as investments

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Tilly
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Cars as investments

Post by Tilly » Mon 21 Nov, 2016 11:59

I keep on hearing that cars can be a good investment and that some BMW's fall into that category. So I thought I would just look at the cars I have and see how much I have made. I have three cars, a 2010 525D Touring bought new, 1997 M Roadster bought in 2000 and a 1.9 Z3 auto also bought in 2000. I took the purchase price of each car, added servicing costs and parts, tax and insurance and finally MOTs. I then subtracted the current value for each car from the total. This gives me the total I have spent over the years. As a comparison, if rather than buying the vehicles I invested then money with a rate of return of 3% after tax, I calculated the money I could have accumulated. The difference between the two figures is how much I have made from investing in my cars. I know I would still have needed transport but when I lived in Switzerland I knew many people who did not own a car, they used public transport( does the UK have public transport?) and rented a vehicle if needed.
Conclusion from the exercise, do not seek financial advice from me. I have lost well over £200,000. That amounts to losing over £12000 per year. Putting it another way to break even the M Roadster would have to be worth around £240,000. I am now off to Halfords to buy a bike!

Wavesong
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Re: Cars as investments

Post by Wavesong » Mon 21 Nov, 2016 12:42

A sobering lesson in common sense versus allowing the heart to rule. My accountant always used to say that cars are a complete waste of money. However, we all need to get our fun somewhere. I know folk who have "put away" cars as investments. They tell me they have made money. They do not deduct the cost of accommodating and insuring the cars and the eventual cost of re-commissioning them when they decide they want to use or sell them. Not using them accumulates costs in the future. I suppose the moral here is, use it, enjoy it and don't calculate it's cost which will spoil the illusion.

mrscalex
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Re: Cars as investments

Post by mrscalex » Mon 21 Nov, 2016 14:55

But you're just calculating total cost of ownership of your cars. Investment doesn't come into it. And these are expensive new/nearly new cars. A 1.9 Z3 was about £25k new in 1999. It was not a cheap car! No Z3 is worth more than what it cost new, well maybe a low mileage Z3M Coupe.

I've owned Seat Alhambras for 17 years and the monthly TCO is about £300 on average. Over 17 years that's £60k. And if I had 3 cars like you do it would be close to your figure at £180k. We're all in the same boat.

There's some chance of Z3s going up in value which is fine if you pay £2k for it this year and sell it for £3k in 5 years. But that's about as good as it's going to get.

There's only a handful of cars worth more now than what they cost new.

Plenty of examples of used cars going up in value. 20 years ago I had a series of Mk 1/2 Escorts. By way of example I spent £1,400 on a Mk 2 1600 Sport. That same car would be worth £6-8k now. That's an investment although only if the car hadn't been used, otherwise running costs would have eaten the increase up. And if it wasn't used, storage insurance and recommissioning costs would substantially impact that uplift.

We all own cars on here that are best just considered as A to B daily transport or weekend fun. And any modest increase in value, assuming we've bought them secondhand later in their life will just be eaten up by running costs.
ImageImage
1999 Z3 1.9 Boston Green (Dimitri) - My brother's car owned from new and restored by me
2001 Z3 2.2 Topaz Blue (Trudy) - My car rebuilt from a write-off
2002 Z3 2.2 Titan Silver (Okus) - Project car waiting for a new engine
2001 Z3 2.2 Topaz Blue (Debra) - Donor car/breaker
1998 Z3 1.9 Boston Green (Allsworth) - Donor car/breaker now gone to Z3 heaven
Always happy to try and help with spares :)

Tilly
Joined: Wed 26 May, 2004 20:45
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Re: Cars as investments

Post by Tilly » Mon 21 Nov, 2016 15:42

I totally agree with both wavesong and mrscalex. It still comes as a surprise as to the number of people who still consider a car as a potential money maker and then hardly drive their vehicle talking about the detrimental affect it will have on resale. Only a very few cars do consistently make a profit. I remember one such car that made a few investors a lot of cash. In 1981 a Ferrari 365 GTS( one of 7 RHD original Pininfarina designed cars) was for sale with 10,000 miles on the clock for £50,000. Over the next 7 years it was sold several times for £75,000, £150,000, £400,000 then £1.6M. In that time it put on 1000 miles. There was then a crash in prices and the car was once again up for sale at £390,000 in 1990. The same car has recently been sold again for an asking price of £2.4M. Two in the States have recently fetched over $3M each. Fine if you made money but one unlucky person lost over £1.2M. Recently the classic car bubble has been expanding again. I wonder when it will go pop?

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Robert T
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Re: Cars as investments

Post by Robert T » Mon 21 Nov, 2016 16:32

Out of the three cars, you have one that might make some money in the reasonably near future - the ///M roadster is sufficiently rare that people will want to buy it. You only have to look at the prices of the S54 creeping up that buying one at its cheapest a few years ago would now mean that it would at least start to be able to pay the running costs. However if you bought one new, it is going to take a long time to make its money back, as they are still not worth what they were new.

Older cars are easier to see starting to make a profit. Take my Sprite. It is worth nearly twice what I paid for it 8 years ago. Unfortunately I have spent about that much on getting it up to where I want it, but provided I don't need to do anything major to it, it might start to be looked at as an investment. I actually bought it as a bit of fun, so that's not how I view it.

If you then take an AH 3000, they are worth vastly more than the Sprites and they really would be an investment. Particularly if they have any interesting history associated with them. The race cars are worth eye-watering sums.

I look at my Z3 as owing me nothing. I have had 17 years of relatively trouble-free motoring out of it. I still enjoy driving it and it still puts a smile on my face. Yes, I have probably spent as much as the car again on parts and servicing over the years, but I don't see many other cars on the road that look anywhere near as good at that age (and I don't wrap it in cotton wool). If I'd bought something else more mundane, I'd likely have replaced it 3 times by now, which would have lost a lot more in depreciation than the zed.

Now in another 20 years it *might* be worth something....

Cheers R.
Arctic Silver '99 Z3 1.9 & Black '59 Frogeye 1275cc
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Tilly
Joined: Wed 26 May, 2004 20:45
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Location: Sussex

Re: Cars as investments

Post by Tilly » Mon 21 Nov, 2016 17:22

Don't think the M will be worth much in the years to come. I have already put almost 100,000 miles on the clock and I intend to put on many more. The same with the other Z. In some conditions it is a better car to drive and drive it we do. I have no attachment for the five at all. Within the first 6 weeks I scraped the rear wing on a wall. My fault even with all the reversing aids. The scapes are still on the car today along with all the other dings it has aquired over the years.The new touring is coming out in March but since it will be a further increase in size for what is already a large car and stuffed full of gimmicky electonics, I think I'll run this one into the ground and save some money. A friend has an AH 3000 in Switzerland. Although it is worth a considerable ammount he has to spend a considerable ammount to keep it in good condition since he does drive it several thousand miles each year.

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Jonttt
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Re: Cars as investments

Post by Jonttt » Mon 21 Nov, 2016 18:02

To show another side of the equation I'm pretty confident I'm on the plus side of owning a WB 993 and S54 Z3m and that gap will only widen on the +v side over time.

And yes I know how to factor in total cost of ownership and opportunity costs :wink:
Happiness is not around the corner........happiness is the corner
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Wavesong
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Re: Cars as investments

Post by Wavesong » Mon 21 Nov, 2016 19:18

The problem today is that folk who enjoy their cars, are encouraged and even whipped up by the media to feel they are missing out on something if they are not making money from the "automotive investment". The reality is that very few investors truly make money out of collecting and keeping cars. To make real money, the value of the car investment needs to be significant to start with - 10% per annum of a three grand car is just silly. So, a £50k to £100k car on its way up (in value), is going to produce an interesting return. However, never forget what it costs to even keep a static workshop ornament in top condition and yes bubbles come and go to bite the unwary or unfortunate. The chances are, if mere mortals like me believe they have identified a car that is going to rocket in value, they are probably already too late or, just plain wrong. It isn't easy money thats for sure and the wise will separate it from the car they own, be it a Z or anything else, so that they can enjoy the car for what it is; a thoroughly enjoyable car to own, and just because I like it enough to want one. I have never made money on any car. I have friends who claim they have. Sounds like man maths to me.

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Gazza
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Re: Cars as investments

Post by Gazza » Mon 21 Nov, 2016 20:11

You need to look at different cars :wink:
Gazza

"Understeer is when you hit the wall with the front of the car, oversteer is when you hit the wall with the rear of the car. Horsepower is how fast you hit the wall and torque is how far you take the wall with you"

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deni2s
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Re: Cars as investments

Post by deni2s » Mon 21 Nov, 2016 21:11

If you bought cars as investment, why are you loosing the value of investment by driving them?

I know someone in my country who bought one-77 as investment, it's never been seen on the roads.

I feel like z3 value is at is lowest point, can't imagine price going even lower. So we just need to wait for rust to do it's job on low value z3s, keeping the value of the rest well kept cars to climb. Not sure if that will make owner on positive side financially after all investments in parts, but it's still so nice to own such a non practical beauty :) And it's not built to last just a few years as modern cars.

Wavesong
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Re: Cars as investments

Post by Wavesong » Mon 21 Nov, 2016 22:38

Gazza wrote:You need to look at different cars :wink:
I have different cars, ranging from a year 2000 Z3 through 70's MGs and one early 60's Austin Healey Sprite. I also have classic bikes. None have made me any money in reality though that hasn't been tested as none are for sale. The cost of purchase, upkeep and improvement together with accommodation and insurance and incidentals, outstrip their values. I could easily produce figures to demonstrate a profit by conveniently leaving out some overheads and incidentals but that would be illusionary. However, I don't own them as investment. I own them because I like them and for differing reasons.

There is a common dilemma facing investor buyers today when they buy a low mileage immaculate example of a classic car in that using it for enjoyment will incur wear and tear and accumulate mileage which in turn will see a loss in value. However, keeping it cocooned in a garage will have detrimental effects too as, in time, it will require recommissioning.

Z3's, in my humble opinion, remain affordable because so many remain. Currently, supply outstrips demand which is holding prices down. Rust will not be their downfall but the cost of rectifying mechanical or electrical problems and failures. My own Z3 has had more spent on it than I could get for it. Effectively, its faults made it an economic write-off though I persisted. Only rarity will bring about classic collectable status which even then is not a guaranteed outcome as there are many examples of cars that have become collectable that beggar understanding and belief and yet some fine cars that for inexplicable reasons, just don't make it. Only time will tell for the Z3 but, many very fine cars from the late 90's can be bought in stunning condition for very little money and I think this is because costs of repair and maintenance can quickly outstrip value. They are not "durable" cars and are not infinitely repairable in the way cars of the 60's and 70's tend to be.

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pingu
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Re: Cars as investments

Post by pingu » Tue 22 Nov, 2016 00:56

It tends to be specific models of car that are the "investment". Lots of us talk about the "Z3" being a potential investment. Look at the reality of the current "good investments"...

Capri 2.8 Injection - not the Capri 1.6 Laser

Escort RS2000 - not the Escort 1.3GL

Original Audi Quattro - not the Audi 90

Even though the cars were basically the same, it's only the ones that were on bedroom walls that make the money when the child becomes a man (or woman).
Pingu

Wavesong
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Re: Cars as investments

Post by Wavesong » Tue 22 Nov, 2016 08:29

pingu wrote:It tends to be specific models of car that are the "investment". Lots of us talk about the "Z3" being a potential investment. Look at the reality of the current "good investments"...

Capri 2.8 Injection - not the Capri 1.6 Laser

Escort RS2000 - not the Escort 1.3GL

Original Audi Quattro - not the Audi 90

Even though the cars were basically the same, it's only the ones that were on bedroom walls that make the money when the child becomes a man (or woman).
Yes agreed but all are valuable because they are rare and they were sought-after from the outset, not just later on and have become more so via demand, trend and hype. Few deserve their place in history with the exception of the likes of the Audi. The Fords in particular, are in a bubble fit to burst and I am very glad I don't own one that owes me eye watering money.

History does show us that it is mostly the top specced and most powerful variants or versions that become the most collectable over time so there is in deed a lesson there.

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pingu
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Re: Cars as investments

Post by pingu » Tue 22 Nov, 2016 12:58

pingu wrote:It tends to be specific models of car that are the "investment". Lots of us talk about the "Z3" being a potential investment. Look at the reality of the current "good investments"...

Capri 2.8 Injection - not the Capri 1.6 Laser

Escort RS2000 - not the Escort 1.3GL

Original Audi Quattro - not the Audi 90

Even though the cars were basically the same, it's only the ones that were on bedroom walls that make the money when the child becomes a man (or woman).
I've just done an AutoTrader search on my 2001 330 (77000 miles) and there is one for sale at £2850. A 2001 M3 with the same mileage is for sale at £9745. An M3 wasn't 3.5 times the cost of a 330 when new :wink: .
Pingu

Wavesong
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Re: Cars as investments

Post by Wavesong » Tue 22 Nov, 2016 17:08

Yep but the M3 is definitely at least 3.5 times more collectable, certainly rarer and possibly 3.5 times more desirable than the 330. Market forces then dictate what these things are worth. Its also easy to see how the 330 could become an economic write-off - a point I was trying to make earlier. Hell of a lot of car for the money though. :)

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Gazza
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Re: Cars as investments

Post by Gazza » Tue 22 Nov, 2016 20:16

Bmw Z1 - last year could be bought for 18/20K, this year 30/35K

BMW M3 CSL - last year 30/45k, this year 40/55K and rising.

Ford Mustang 1966 Coupe - last year 12/15K, this year 16/22K and will be increasing due to lack of good quality availability in the USA forcing prices up and also the bad currency exchange rates (down 20%)
Gazza

"Understeer is when you hit the wall with the front of the car, oversteer is when you hit the wall with the rear of the car. Horsepower is how fast you hit the wall and torque is how far you take the wall with you"

S54 M roadster Image Mustang Fastback, BMW Z1, BMW M3 CSL.

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mrscalex
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Re: Cars as investments

Post by mrscalex » Tue 22 Nov, 2016 21:41

Fair enough Gazza. Now the really important thing we need from you. What do we buy today and make £5k on in 6 months time :lol:
ImageImage
1999 Z3 1.9 Boston Green (Dimitri) - My brother's car owned from new and restored by me
2001 Z3 2.2 Topaz Blue (Trudy) - My car rebuilt from a write-off
2002 Z3 2.2 Titan Silver (Okus) - Project car waiting for a new engine
2001 Z3 2.2 Topaz Blue (Debra) - Donor car/breaker
1998 Z3 1.9 Boston Green (Allsworth) - Donor car/breaker now gone to Z3 heaven
Always happy to try and help with spares :)

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Gazza
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Re: Cars as investments

Post by Gazza » Tue 22 Nov, 2016 21:53

mrscalex wrote:Fair enough Gazza. Now the really important thing we need from you. What do we buy today and make £5k on in 6 months time :lol:

Mid nineties Mercedes R129 500SL
Gazza

"Understeer is when you hit the wall with the front of the car, oversteer is when you hit the wall with the rear of the car. Horsepower is how fast you hit the wall and torque is how far you take the wall with you"

S54 M roadster Image Mustang Fastback, BMW Z1, BMW M3 CSL.

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Wavesong
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Re: Cars as investments

Post by Wavesong » Wed 23 Nov, 2016 08:41

A bit like knowing the lottery numbers after the event. As they say, you have to be in it to win it.

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