Investing in a classic car: advantages, disadvantages, return
Combining the pleasure of a passion for vintage cars with the
prospect of financial gain, here is an investment that will not leave collector vehicle enthusiasts indifferent.
Can this type of investment be profitable? What vehicles should it be on? We tell you everything, including the advantages and disadvantages so as not to hide anything from you.
Classic car: definition
A priori, one would easily think that a vintage car is a vehicle old enough to be noticed. Not so long ago, many criteria had to be met to talk about a classic car.
However, the tax administration has changed the situation for the sake of simplification thanks to a new customs circular dating from 2014. Thus, we will retain 3 main criteria for classifying a vehicle as being collectible:
- Be in its original condition, without substantial modification to the chassis, bodywork, steering, braking, transmission or suspension system or the engine (repairs and restorations are authorized without modernization or modification)
- Be at least 30 years old
- Correspond to a model or type whose production has ceased
Competition motor vehicles with a significant sports record, as well as vehicles that have participated in a historic event can also be admitted as a collector’s vehicle.
The advantages of investing in a classic car
A fun investment
Collector cars are above all a pleasure investment. Lovers of the 50s, 60s, 70s and 80s will find what they are looking for, if they also appreciate mechanics. This type of acquisition effectively requires you to pamper your vehicle, but also to carefully maintain the bodywork, the interior linings and the engine.
Like investments in GFV, Groupement Foncier Viticole, for wine lovers, the collector’s vehicle is an investment like no other, in which one does not venture without passion.
A worthwhile investment
A car, even an old one, can of course drive itself and be the occasion for trips on the roads. As soon as sunny days appear, it’s time to take out your Ford Mustang or Volkswagen Beetle.
Not only is it a real moment of relaxation, but it is also necessary to run your fine investment a little to maintain it and detect possible failures. It should be noted that it is also a heritage that can be transmitted from generation to generation.
An attractive tax system
As it is an old property over 30 years old, the owner of a vintage car benefits from several tax advantages:
- Property not taxable within the framework of the IFI (Impôt sur la Fortune Immobilière), formerly ISF
- Capital gain exemption on resale if the vehicle has been owned for at least 22 years
- A deduction of 5% per year of ownership if option for the general regime of taxation of capital gains on resale
- A taxable capital gain only beyond 5,000 euros and a flat rate tax of only 6.5% (CRDS included)
The advantages of investing in a classic car must however be considered against the disadvantages…
The disadvantages of investing in a classic car
Rising purchase prices
In general, the collector vehicle market is constantly climbing, so much so that it is becoming more and more difficult to access the ownership of the most popular vehicles.
However, it is still possible to find some good deals under the 20,000 euro mark, but they will concern mass-produced vehicles whose rarity is relative.
Vehicle maintenance costs
If it can be pleasant to maintain and take care of your classic vehicle, the annual maintenance costs should not be overlooked. Indeed, you will have to keep your car in perfect condition for it to retain or increase in value.
The following costs are therefore the bare minimum to be expected:
- The costs of car insurance, even if the vehicle is immobilized, because car civil liability meets a legal obligation when the car is equipped with an engine
- Car maintenance and repair costs (washing, changing worn parts, restoring upholstery, etc.)
- The technical control, which remains compulsory for all vehicles put into circulation from the year 1960
- The obligation to park the vehicle in a garage, a shelter and to dedicate part of your space to it to keep it in good working order and preserve its aesthetics
Difficulty finding the vehicle
The collector’s vehicle market requires time to find “the rare pearl”. Thus, it is recommended to accumulate the means of research to get your hands on a rare vehicle at a reasonable price.
Advertisements between individuals on the Internet, but also in local physical newspapers should be monitored. Frequenting auction rooms and specialized garages is also an additional choice.
Finally, a good knowledge of the value of collector’s vehicles, depending on their year and their rarity is recommended.
Strangely, the oldest vehicles are expensive, but do not have the same potential for added value as recent vehicles…
Which collection vehicle to choose for an interesting return?
We can roughly classify collector vehicles into three main categories, namely:
- Pre-war vehicles: produced before 1950, they are more than 70 years old, and although their historical value is indisputable, their great age makes them exhibition vehicles of a “museum”
- Rare vehicles from the 1970s and 80s: still in good condition, and very popular with lovers of beautiful cars and sensations, their price can range from 10,000 euros to several million euros
- “Youngtimers” vehicles: these are recent vehicles (about fifteen years old) on which speculation is rife, they are financially accessible and will quickly become collector’s vehicles
For an investment offering better profitability, it will naturally be youngtimer vehicles that will be favored for purchase. Some vehicles from the 1990s considered collector’s items today will delight investors, such as the Alfa Romeo Spider, the Lexus LS 400, the Mazda MX-5, the BMW 850i or even the Renault Clio!
