For many, the purchase of a luxury car is the convergence of investment decisions and child-like nostalgia. With future car regulation coming down the line and new EV (Electric Vehicle) speed records being set, how is the supercar market shaping up? We speak to investment experts and luxury automotive manufacturer, McLaren Automotive.
A couple of years ago, we noticed a quiet trend amongst clients buying a particular Ferrari – the Ferrari 812 Superfast which is Ferrari’s last naturally aspirated V12… I think they wanted to get their hands on what they believed to be an appreciating classic – something that would be valuable and have meaning in the future. - Edward Cave, Relationship Manager, HSBC Global Private Banking
The automotive industry is already well down the electrification path. Ultimately, the regulations are a framework, with each car maker able to pursue their chosen goals within balancing the delivery of ‘traditional’ driving thrills and meeting legislation. - George Farquhar, Global VIP Relations Manager, of McLaren’s Private Office.
Risk management for your purchase
Luxury car collections aren’t without the need for significant investment.
“Classic cars can appreciate in value, but I’m sure fellow owners will attest that you often spend more on them than you get back,” says Cave. “Like any good investment, keep an eye on the ongoing management fees! In the hypercar territory there is an investment opportunity, but you really have to be part of the club, with a track record of ownership before you can get your hands on that Ferrari.”
Common costs worth considering include general maintenance costs, alongside security, storage, and insurance. For buyers in the classic car market, gathering the correct documentation to prove provenance can be time consuming. And like any asset, knowing when to sell can be tricky.
“Buying a car is not a sure-fire bet,” adds Nicholas Dudley-Hammatt, Senior Relationship Manager, HSBC Global Private Banking. “There are some that are hard to get a hold of, or suddenly become popular, or a manufacturer stops making them. But the ability to predict that and get the timing right can be similar to the stock market. It’s a really hard thing to get bang on and so tends to reward longer term investors.”
“If purchasing / investing from new, then investors should also consider which options to specify – and those to avoid – when considering future resale values,” says Farquhar. “This can apply to body colour and interior materials, but also personalisation – not everybody shares the same view on extreme finishes.
“Enthusiasts should follow the same rules but if they are buying new and are less focused on immediate return, they will have greater freedom to choose their ideal car. If they are buying used, visiting a retailer to discuss the market and vehicle availability is a wise course of action.”
A place for petrol?
Is there a place for petrol in a net-zero world? Some supercar and classic car aficionados would certainly hope so, arguing that ownership is not as environmentally damaging in the long-term.
“I think classic cars can be really sustainable to own and run. You’ve got yourself an engine, a chassis, and a body that’s been around for 40 or 50 years. That is a very different kind of car ownership than buying the latest Range Rover every three years,” suggests Cave.
“Every company wants you to upgrade to the newest and the best. But actually, a lot of our clients are comfortable buying combustion engine cars because they’re doing so few miles in them. They’re not buying fuel-guzzling cars and driving them tens of thousands of miles,” says Dudley-Hammatt.
“I think the world is acknowledging that it's not a one-size-fits-all of electrification, and hopefully that gives us some positivity that these beautiful cars that were built over the last 100 years are going to survive.”
For so many, supercars are viewed as both pieces of art, and awe-inspiring technological feats. And the steady evolution of EVs, as well as increasing capabilities to retrofit without sacrificing on purpose and design, gives hope for a cleaner (and stylish) future.
1 ‘Meet the supercar spotters’, HTSI, Financial Times, 2023. https://www.ft.com/content/22b38695-e35e-4349-891f-f28f32ef2b57 ↩
2 ‘What is A Hypercar? Let Us Explain’, Howards Motor Group, 2019. https://www.howardsgroup.co.uk/news/group/what-is-a-hypercar ↩
3 ‘Hypercar Market Goes Hyperactive’, Forbes, 2021. https://www.forbes.com/sites/kbrauer/2021/09/22/hypercar-market-goes-hyperactive-whats-driving-the-explosive-growth-in-this-rarefied-automotive-realm/ ↩
4 ‘With Electric Car Investment, David Beckham Did It for the Trucks’, Bloomberg, 2021. https://www.bloomberg.com/news/articles/2021-06-10/david-beckham-invests-in-lunaz-electric-car-conversion-for-garbage-trucks#xj4y7vzkg ↩
5 ‘David Beckham promotes retrofit with electric Jaguar XkH140’, Gearrice, 2022. https://www.gearrice.com/update/david-beckham-promotes-retrofit-with-electric-jaguar-xk140/ ↩
6 ‘Downey Jr. targets EV sceptics in new series’, TechCrunch, 2023. https://techcrunch.com/2023/06/21/downeys-dream-cars-robert-downey-jr-targets-ev-skeptics-in-new-series/ ↩