Most people reading this post will probably be aware of the frankly ridiculous amount of money old, late 80s and early 90s small hatchbacks are going for nowadays.  If 15 years ago you told people that Peugeot 205 GTIs, which were readily available for £500 to £1,500 at the time, would one day be regularly changing hands for well over £10k and even £20k in unmolested, low mileage, parcel-shelf-intact condition, they’d have laughed at you and called you a raving idiot.  But in this time of 320PS Honda Civics and Golf Rs which can get to 62mph in nearly 4 seconds people seem to be lusting after, and handing over large wads of cash for, old fast hatches. It doesn’t stop there, even Vauxhall Nova GSIs and Fiat Uno Turbos are commanding good money now too, probably more than they were actually worth new.  It’s not limited to 80s hatchbacks either. Think of a mid-90s to early-00s car and if it’s vaguely interesting then there’s a good chance it’s worth more today than it was a few years ago. 

If you’d invested £15k in a Renault Clio V6 just five years ago you’d have a car worth nearly £30k sat on your driveway – try getting that return on your ISA!  At one time Ferrari F355s dropped as low as mid-£30ks, today the same cars are around double that price. So does that mean that you should empty your bank accounts, remortgage your house and sell a kidney to buy a Renault Clio Williams, or a dodgy old Porsche 996, like I did?  I guess this depends on how you look at life and how you approach the following.

Convenience and comfort.
Things don’t work as well as you expect them to.  I’m sorry but in my experience a car made the best part of 20 years ago simply doesn’t work as well as you’d like it to.  Firstly our expectations have risen, a lot. Bluetooth was an option on most cars back then, and that was to make and receive a phone call, not stream music.  Ok, some basics are the same, a sunroof or heated seats can’t really be revolutionised but most of the technology, especially around infotainment has. Lighting has changed. Orangey-amber bulbs with their candlelight glow have been replaced with bright white LEDs and the ability to blind on-coming cars 4 miles away. Conversely comfort has gone backwards, as no self respecting car leaves the forecourt today without 20″ wheels, rubber band tyres and ‘sporty’ suspension. It wasn’t that long ago at all that 17″ alloys were an optional extra and people preferred their cars to be fine tuned and tested around Northampton rather than the Nordschleife. 

Costs.
It will undoubtedly be more expensive to run a modern classic than a new car. For starters you don’t have to MOT a new car. You probably don’t need to service it for the first 2 years of its life either, and that’s before you get to car tax. Pretty much all of the interesting stuff you’d want to own costs a minimum of £300 per year to tax. The slightly more modern (post 55 plate) cars will cost nearly £600! During the first years of your ownership an older car will probably need new brakes, tyres and suspension components, and that’s before you start fixing the broken stuff which caused the previous owner to get shot of it. Now don’t get me wrong, you might be fortunate to find a ‘one fastidious owner’, ‘no expense spared’, ‘only used in the dry’ cherished example of your chosen car but I’m not sure if they really exist. You might be lucky, but expect to pay more to maintain a modern classic than you would a new car.   Admittedly this will be off-set by a newer cars’ depreciation but I’ll save that discussion for another day.

You might get it wrong.
There are some cars which will continue to plummet in value with no sign of ever turning your investment into a profit. Big, luxo-barges and rep-mobiles are unlikely to make your fortune anytime soon.  Think Audi A4, A6, A8 and their equivalents and you’re not going too far wrong. Interestingly E34 (5 Series) and E30 (3 Series) BMWs seem to be going up in value… I’m wrong, that’s not at all interesting. It does however point to the fact that there is no certain, bet on your bottom dollar logic, to which cars will increase in value and that’s the point I’m making.  Sure there are some safer bets than others but you can’t be certain you will get a good return on your investment.

My final thought is this: If you want a cast iron guarantee that your investment will grow in value, put your money in an ISA, as buying a car based solely on its prospective future value will always be a gamble.  However, if you can put up with not being able to stream music from your phone, higher running costs and your investment might not turn a profit then buy a cool, old and interesting car.

It’s worth mentioning at this point that about 15 years ago McLaren F1s were changing hands for well under £1m.  Today those same cars start at £15m.