Driving an "Exceptional" classic car rather than storing it as an investment - what are the costs?

RV8 Pricewatch
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Price Guide
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Posted: 180111

See this chart in our Price Guide review in November 2017. More

The 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" condition cars?

"Exceptional" condition MGV8s
Typically 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.
What are the costs of using an "Exceptional" condition classic MGV8?
The 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 (guide price 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 costs.

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.