Pension release effect on the mainstream classic car market

See our earlier NEWS item on investment activity in the classic car market. More

See our MGV8 price guide and update released in August 2015. Update & Guide

Follow Keith Belcher's MGV8 Adwatch series will help follow the trends. More

Posted: 151104
In a report in the Times today "£4.7 billion has been released from pensions in the six months since new freedoms came in earlier this year. Yet savers are now beginning to shun the freedoms, with stock market turmoil encouraging a shift to more traditional forms of retirement income. The proportion of retirees choosing to buy an annuity has jumped over the past three months according to industry figures. Annuity sales rose by almost a fifth between July and September compared with the previous three months. The FTSE 100 fell by almost 10% in the period as global economy worries spooked investors. The Times report adds that "the ABI has said that generally smaller pension pots are being cashed in completely while larger pots are being used to buy an annuity or invest in income drawdown. Of the total more than half (£2.5 billion) has been paid out in 166,700 cash lump sums of £15,000. Some £1.17 billion worth of annuity sales took place between July and September compared with £990 million during the previous three months, the first quarterly increase since 2012."
In our NEWS item in early August 2015 - Investment activity in the classic car market continues to lift prices - we highlighted an article in the Mail on Sunday showing an alternative investments chart which showed that stamps have followed the FTSE All-Share index and wine investors have been losing money. Classic cars rose substantially. Our NEWS item then looked at the HAGI™ Top Index published in the Financial Times. HAGI™ or Historic Automobile Group International is an independent investment research company and think tank with specialised expertise in the rare classic motorcar sector and their website said "the group has created benchmarks which track this alternative asset class accurately for the first time, using rigorous financial methodology usually associated with more traditional investments." Their chart showed the "comparative growth rates of alternative investments with the HAGI Top 50 Index for classic cars showing a 170% growth since 2010. On the HAGI website their Top ex P&F Index (designed to measure the rare collector's automobile market outside the marques Ferrari and Porsche) shows a 7.55% "year to date" growth although a 1.6% fall in the month".

Mainstream classic cars like MGBs, MGBGTV8s and RV8s do not feature in these top end classic car charts but it is clear that a combination of alternative investment activity and an increased interest in buying an affordable classic car by people with a fondness for MGs has been a major factor in the continued increase in MGV8 prices this year. With such poor cash deposit rates and annuity rates, the attraction of an affordable classic car like an MGV8 is clear - you can enjoy driving it, there is a likelihood of an increasing value and any capital gain is not taxed.

In August the continued rise in MGBGTV8 prices was noted in our NEWS item but since then their is anecdotal evidence that there is an increasing interest in RV8s too. In many ways the RV8 is a good bet with far better rustprofing on the bodyshell and key parts plus a relatively modern engine management system. It's also a convertible with the attraction that offers.

How well will MGV8 sales go in the next six months? That will be worth watching. Keith Belcher's MGV8 Adwatch series will help follow the trends. More