an "Exceptional" classic car rather than storing it as an investment
- what are the costs?|
See our webpage with reports of RV8s seen advertised for sale
and listed for auction by our Pricewatch volunteers, Andy Goves and Keith Belcher.
MGV8 Price Guide updated in November 2017. More
this chart in our Price Guide review in November 2017. More
market for classic cars has been very active over the last five to six years with
increasing investment activity from people seeking a better return than has been
available with bank deposits or the stockmarket. Those "alternative investors"
have sought the "cherries" like Jaguars and Astons so prices have taken
off into six figure sums. Some investors have moved into more modestly priced
classics like MGV8s where another group of buyers has been increasingly active
- enthusiasts, typically "baby boomers" reaching a stage of life
when they feel it's time for getting a classic car they once owned, or wished
they had. With the combined effect of that buying interest we have seen Condition
1 prices of MGBGTV8s and RV8s rise by 110% and 34% respectively since 2010.
But what has been going on in the relatively smaller market for "Exceptional"
they have low mileages as they have been little used by their owners and stored
so the mechanical, bodywork and trim condition is usually very good - indeed exceptionally
good in most cases! Many have been stored in dry and warm garages or in professional
classic car storage facilities. Some have been kept in airchamber
or carcoon units (typically costing around
£475) together dehumidifiers
(around £250 plus running costs) to remove dampness and hopefully control
the hidden effects of rusting.
Many "Exceptional" condition MGV8s
have been seen for sale in trader's impressive showrooms with their advertising
describing the cars with what appears knowledge and authority and often offering
them at eye-watering prices. But their target customers are people with deep pockets
and flexible chequebooks, attracted by a combination of the investment value and
prospects together with the pleasure of owning an attractive classic car.
are the costs of using an "Exceptional" condition classic MGV8?|
costs of holding an "Exceptional" condition MGV8 in store will involve
either a good quality dry and warm garage or commercial classic car storage facilities
with associated services, together with an outlay for a good quality car cover
or even an airchamber coupled with a dehumidifier. But if the owner wishes to
drive the car for pleasure, then even if the annual mileage is relatively modest
, say 4,000 miles pa, a factor which will become increasingly significant as the
total mileage begins to grow is how the value of an exceptional car can begin
to fall. So an additional cost is then the loss of value of the car per mile or
100 miles clocked up.
In the example we have run in our analysis below
we have assumed an RV8 in Oxford Blue was purchased for £29,000 with
only 13,000 miles recorded on the odometer and then it was driven for only
4,000 miles pa. After five years the mileage would then be around 33,000
when it would be seen as a Condition 1 Plus car. Typically a Condition 1 RV8 would
have between 20,000 and 30,000 miles today so in five years time it might have
40,000 to 50,000 miles. Assuming the "Exceptional" RV8 with around 33,000
miles is seen as a Condition 1 car in five years time with a value of £20,405
in our Price Guide update released
in November 2017), our analysis below shows the loss of value per 100 miles in
each of the years and overall. The overall cost from the loss of value and clocking
up 20,000 miles over the 5 years (loss of £8,595), servicing (assuming £250pa)
and the cost of fuel (calculated at £1.18 per litre and 29mpg) would
be an average of £68 per 100 miles. So in broad terms the loss of
capital value of £8,595 over the five years (£43 per 100 miles) would
increase the cost of running the "Exceptional" condition car compared
with running a Condition 1 car (typically an average of £25 per 100 miles)
by around a surprising 174%. Our analysis does not include road tax or insurance
On this analysis driving an "Exceptional" condition classic
car purchased at a high price would be an expensive activity at even a modest
4,000 miles a year. That high cost would tend to encourage an owner to store it
as an investment or trophy car and use it very little or even not at all.