Handmade classics beat gold as the value of collectable cars takes off

By Jeff Plungis Stephen Serio, a classic car dealer in Massachusetts, expects the 1966 Ferrari 275GTB on his lot to sell for about $810 000 (R6 million). Five years ago the same car sold for $500 000.

"When you have something they're not making any more, the value goes up," said comedian Jay Leno, the host of The Jay Leno Show, who has a collection of 105 cars, including eight Duesenbergs and 90 motorcycles. "If you're knowledgeable, you'll probably end up making money."

Prices on collectable cars have gained about 60 percent since September 2006, according to an index created by David Kinney, the publisher of Hagerty's Cars That Matter, a pricing guide and website.

His Blue Chip index of 25 vehicles tracks actual sales and includes cars, such as the 1960 to 1963 Ferrari 250 GT California Spyder, which has gained 112 percent since September 2006, and has a current book value of $4.2m.

Collectable cars have beaten art, wine, stocks and gold - up 30 percent since September 2006.

The Art Market Confidence index at Artprice.com has fallen 37 percent from a year ago and is down 69 percent since September 2006.

The WinePrices Fine Wine 100 index dropped 38 percent between April last year and January, and the Standard & Poor's 500 index has declined 24 percent over the past three years.

"It's an addiction, a passion," said Guy Anderson, a collector based in Georgia. "We all make sacrifices to have these cars. You can't have just one. Each car does something different." He rents buildings to house his 15-car collection.

A 1953 Aston Martin DB 2/4 Coupe sold at the Gooding & Company auction in California last month for $1.65m, more than triple some pre-auction appraisals of about $500 000, said Serio, the Massachusetts dealer. The last time the one-of-a-kind vehicle was available, in 2007, it sold for $887 000.

"That car just blew the roof off the market," said Serio.

"Everybody in the car world was looking at each other and saying, 'Are you kidding me?'"

Television helped fuel today's market boom, said Ford Heacock III, the president of Heacock Classic, a collector-car insurance company. The Speed Channel, a unit of News Corporation, has been expanding coverage of car auctions since 2002.

Bidding under cameras and lights got people excited, Heacock said.

Transactions among private parties were generally priced well below auctions, he said, a flaw most pricing guides did not account for. "There's a lot of glitz and glitter. It's hard not to get mesmerised. The whole industry is driven by passion," said Heacock.

Some collectable cars, such as the '57 Chevy, had declined, said Richard Lentinello, the editor-in-chief of Hemmings Motor News, a collector-car publisher in Vermont.

The most desired cars, such as Italian-made Ferraris and Bugattis, had held up very well, Lentinello said. A 1938 Bugatti Type 57C sold at Gooding & Company's August auction for $1.38m. Collectors were attracted to features such as hand-made bodies, small production runs, certain types of engines and a racing pedigree.

"If you're reasonably know-ledgeable and you know what you like, there's a good chance other people will like it too," Leno said. - Bloomberg