SCMP Special Report - These are the cars that will always rule the roads - Featuring Classic Insider
Originally published in a Special Report on Luxury Collectables in South China Morning Post on January 14, 2019. Kenneth Wong at Classic Insider was interviewed by Chris Rae.
The long boom in the classic-car market has dipped after reaching its peak, but for many, nothing outweighs the sheer joy they can bring. Enthusiasts say ownership of vehicles from bygone eras go far beyond that of financial gain, writes Chris Rae
In December, the Hong Kong Automobile Association(HKAA)marked 100 years of motoring in the territory. That century has seen countless advancements in automotive technology, to the point that cars can now drive themselves. For some however, the saying ” they don’t make ‘em like they used to ” still holds true. ”
Cars came to Hong Kong long before China or Japan. There’s a lot of motoring culture that’s trickled down through the generations, ” said Carl Yuen, vice-chairman of The Classic Car Club of Hong Kong. Established in 1979 as an offshoot of the HKAA, the club has been independent since 1989.
Yuen estimates that the club’s 700 or so members own about 2,000 classic automobiles between them, accounting for a fraction of Hong Kong’s 750,000 plus licensed vehicles. To be considered a classic car in Hong Kong, a vehicle must be at least 20 years old. The most coveted examples are those that have retained their original condition through the years.
“A teacher once told me a car can only be original once. No matter how perfect a restoration, a car that is preserved is always worth more,” said Yuen. Everything has to be there, right down to the jack and spare tyre. If any of that is missing ,it’s simply not as valuable.”
Like any asset, the market for classic cars has its cycles.
Globally, 2018 was not a year to write home about,” said Dietrich Hatlapa, founder and CEO of the Historic Auto Group International(HAGI). The company’s HAGI Top Index tracks the overall value of transactions for “exceptional historic automobiles” across the world market.
For 2018, the index is tracking down by about 1 percent. This is in sharp contrast to recent years, which saw double-digit growth. Excess liquidity in the global markets following the 2008 financial crisis fuelled a prolonged boom in the classic car market, which has now plateaued, said Hatlapa. ”The strongest was in 2013, when the Top Index had growth of over 45 percent.”
Having said that, classic cars are still deemed as a growing asset class. The Knight Frank Luxury Index 2017 has identified classic cars as one of the fastest growing alternative asset classes, appreciating in price by more than 330 percent in the past decade since 2007, with a growth of two percent in the 12 leading up to 2017, outpacing coloured diamonds(zero percent growth), Chinese ceramics(a five percent drop, and furniture, which experienced a one percent drop during the same time period.
“Although classic car owners do have some options for avoiding it, Hong Kong’s vehicle registration tax can have an influence on prices, noted Hatlapa.”
Once a car is brought in and the tax has been paid, then it may be as much as 80 percent more expensive than an equivalent car in the free part of the global market.
For ultra wealthy Hong Kong investors-the kind who may keep tens or hundreds of classic autos in a climate controlled-facility, this can be motivation enough to keep their collections offshore.
“Values in Hong Kong have followed global trends,”observed Kenneth Wong, founder of classic car brokerage Classic Insider. We saw the market peak in about 2015, with a lot of spectators entering and pushing up prices,” he said. ”Since then we’ve seen a soft landing, not a crash as some had predicted.The values have come back down to Earth.”
As values ebb and flow, so too does the popularity of different makes and models. ”The big Japanese brands always reserved the best variants for their home market,” said Wong. ”We’re seeing a lot of people bring these Japanese domestic market cars(JDMs) into Hong Kong as investments and collectables.
”We see a lot of transactions in Porsche 964s and 993s, which people view as great investments, ”said Conrad Bankowski, director of online marketplace HK Car Trader. ”Older Ferraris, like the 355s, are getting popular as they’re still available for less than HK$1 million. Manual transmissions are also very rare in Hong Kong, and can sometimes sell for up to 30 percent more than an equivalent car with an automatic.”
Wong, who identifies himself as an enthusiast, says classic-car ownership goes beyond being a simple financial proposition. ”Even if there is an appreciation in value, it would not outweigh the cost I have to spend in upkeep,”he said. ”For enthusiasts, if we can buy a car, have fun with it for a couple of years, and get back everything we spend, we’re already ahead.”
Link to the article on SCMP website: https://www.scmp.com/magazines/style/news-trends/article/2182357/these-are-cars-will-always-rule-roads-petrol-heads