U.S. Markets

After boom years, vintage car market cools ahead of Zurich auction

ZURICH (Reuters) - After years of double digit growth, the price of vintage cars has stopped soaring and they may no longer be seen as the smart choice for wealthy investors, some of whom will attend an auction of valuable autos in Zurich this weekend.

A 1973 Ferrari Dino 246 GT (front) is shown with other vintage cars during a preview of an auction by Swiss Oldtimer Galerie International in Zurich, Switzerland June 10, 2016. REUTERS/Arnd Wiegmann

With global interest rates at ultra-low levels and stock markets in the doldrums, classic cars had joined property, paintings, and wine as attractive alternative investments.

As a result, prices of cars like classic Porsches and Jaguars surged around 16 percent in both 2014 and 2015 following a near 47 percent rise in 2013, according to data from Historic Automobile Group International (HAGI), a consultancy.

But the brakes have been applied this year, with average prices rising by around 1 percent, according to HAGI.

“It’s not a bubble and it’s not bursting, but the market is going sideways at the moment,” said HAGI’s Dietrich Hatlapa, adding that supply had caught up with demand.

“The boom times appear to be over, but the market is resilient and high quality cars will continue to be sold at top prices.”

Oldtimer Galerie International, which is organizing the car auction in Zurich this weekend, also expects the market to cool.

Slideshow ( 2 images )

“The market can’t always go up,” said Beat Leu from the company. “It is impossible to rise, rise, rise.”

Vintage Ferraris and Aston Martins with price tags accelerating to 1.4 million Swiss francs ($1.45 million) are due to go under the hammer at an ice rink overlooking Lake Zurich.

Among the people present will be Filippo Pignatti Morano, fund manager of the Swiss-based Classic Car Fund, who has built up a collection of 11 vintage cars with a value of just under 10 million euros.

Over the last three years the fund has managed a net average return of 7 percent per year, he said, although with more assets it is aiming for up to 12 percent in the next few years.

He said classic cars would continue to interest investors.

“There is a big demand for vintage cars because they are tangible assets that are in limited supply,” he said.

Not all the prospective bidders at a preview on Friday were investors.

“For me it’s totally about the joy of the cars,” said Willy Gabrielli. “The cars can go up and down in value, but if they make some money that’s a nice side effect.”

Christophe Apotheloz, another visitor, bought a Ferrari for 60,000 francs and sold it for 430,000 francs 30 years later.

“You can make money,” he said. “But it’s difficult and you have to be lucky.”

($1 = 0.9630 Swiss francs)

Editing by Robin Pomeroy