Classic cars as investments: do they really pay off?

Ask any classic car enthusiast why they own their pride and joy, and most will talk about passion, heritage, or the simple thrill of driving something with soul.  

But in recent years, the question of whether a classic car is also a sound financial investment has become increasingly common. Indeed, it was a main focus during a recent Fuel for Thought podcast with Footman James where a panel of experts addressed the question of whether classic ownership was, ultimately, about making money.  

So, can a vintage vehicle genuinely deliver strong returns, or is the romance of motoring overshadowing the hard economics? 

Craig Cheetham, co-host of classic car podcast, Clangers (which celebrates modern classics), has a collection of around 20 1990s/2000s vehicles. He contends that there is potential for money to be made in this category if you carefully consider your purchases. 

"So-called modern classics can make a really good investment – you only have to look at the way values of cars such as performance Fords and Land Rover Defenders have shot up in recent times to see that,” explained Craig. “A lot of that is down to nostalgia being evolutionary, as when people get to a stage in life where they have a bit of disposable income they buy the cars they wanted when they were younger. As soon as demand exceeds supply, that's when prices start to edge up. 

"The key is to buy cars before they start to really shoot up. There are few that I believe are really going to surge in value in the next few years, such as the Lotus Elise, MGF, Ford Focus ST, Range Rover P38 and MG Z-Cars, while others such as the Citroën Saxo VTS were such a part of youth culture 25 to 30 years ago that they're also bound to follow suit. Prestigious brands always come around too, and we're not talking just performance cars. Classy old motor like 90s Mercedes-Benzes, Jaguars, Bentleys, that sort of thing – they were aspirational then and they still are today.  

“But, condition is the most important aspect when buying, especially structural bodywork. A low mileage or a particularly interesting or comprehensive history are also factors that can really enhance a car's value.” 

The truth, as ever, is nuanced. Classic car buying, whatever the age or category, can yield decent returns, but only if you understand the market, buy wisely, and play the long game.

Unlike stocks, shares or property, classic cars offer a tangible reward. A mint-condition Jaguar E-Type or Porsche 911 isn’t just a piece of history to admire in the garage - it’s something you can enjoy on a Sunday drive or show off at a concours event. This combination of utility, rarity, and emotion is one reason why they’ve proven resilient as alternative assets.

Classic cars have even featured in high-profile investment indices. The Knight Frank Luxury Investment Index, which tracks assets like art, wine, and watches, has consistently shown strong long-term growth for collectible cars, with values rising more than 160% over the last decade. However, these headline figures can mask volatility and sharp fluctuations in certain segments of the market.

When it comes to making money on classics, timing is everything. Short-term speculation - buying a car with the aim of flipping it quickly - is risky. The market is prone to sudden peaks and corrections. For example, air-cooled Porsche 911s rocketed in value in the mid-2010s, before plateauing as supply and demand stabilised.

By contrast, long-term ownership has historically rewarded collectors. Cars that are well-bought, well-maintained and carefully stored often appreciate steadily over a ten- 20-year period. Even if prices dip occasionally, the overall trajectory for desirable models tends to be upward.

Not all classics are created equal. Some models consistently deliver strong returns, while others remain affordable enthusiasts’ cars with limited investment potential.

Cars with cultural significance or motorsport heritage tend to do best. Think Jaguar E-Types, Ferrari 250s, or early Porsche 911s. Their iconic status ensures enduring demand, and limited production numbers create scarcity.

Generally, cars with low mileage, original paint, matching-numbers engine, and full history will always command a premium. Modifications may add personal charm but often reduce collectability and investment potential.

Homologation specials, short production runs, and rare specifications all increase investment value. For example, BMW’s E30 M3 Sport Evolution and Lancia Delta Integrale Evoluzione have soared thanks to their motorsport pedigree and scarcity.

While classic cars can provide impressive returns, they aren’t foolproof investments. Buyers should consider: 

• Maintenance and running costs: Classics require regular upkeep, and servicing costs can eat into potential profits. A Ferrari V12, for instance, can cost thousands annually to keep roadworthy.

• Storage and insurance: Cars need proper storage to preserve value. A climate-controlled garage and specialist insurance (like policies offered by Footman James) are essential.

• Market trends: Popularity shifts with generations. A car beloved by today’s collectors may fade in desirability tomorrow. Understanding long-term trends is vital.

• Liquidity: Unlike stocks, selling a car can take time, and achieving top value usually requires auction exposure or the right private buyer.

Perhaps the most compelling reason classics endure as “investments” is that they offer more than financial return. Even if your car only appreciates modestly, the joy of driving, the community, and the satisfaction of preservation deliver value in ways no other asset class can.

For many, the best strategy is to buy a car you genuinely love. If it rises in value, that’s the icing on the cake. If not, you’ll still have years of enjoyment from owning and using it.

The answer depends on your perspective. If you’re chasing quick profits, classic cars carry significant risks and require expert knowledge. But if you’re taking a long-term view, focusing on desirable models, and caring for your purchase properly, classics can be a rewarding - and often lucrative - part of a balanced investment portfolio.

Most importantly, classic cars are one of the few assets that can be driven, admired, and enjoyed while they (hopefully) appreciate. Whether you choose a British roadster, a 1980s hot hatch, or a modern supercar edging towards collectable status, the golden rule remains the same: buy with your heart and your head.