As we’ve reported, a classic car bubble is potentially in the making — something which has got us thinking (over three posts) about what really goes into determining the value of rare objects more generally.
From our vantage point — and it certainly is a lay vantage point when it comes to classic cars — there seem to be three core attributes associated with vintage automobiles.
The first is uniqueness.
Value related to uniqueness is understandable since it relates to how easily an object or item can be sourced, replicated or mass produced. For now, there is little chance that a classic Bentley will be perfectly replicated. Value applied on these grounds seems rational enough. Read more
The classic car market is bubbling, which has got FT Alphaville wondering about what really goes into determining the value of rare objects. More specifically why certain objects, despite their ability to be cheaply reproduced, retain value regardless.
In this post, we consider the roles of narrative and myth in value creation.
We’ll start with the argument that a powerful enough narrative or myth can turn even abundant commodities into stores of value in their own right. Read more
Wonkblog and Reuters draw our attention to a potential bubble arising in classic cars.
Both cite research from Knight Frank’s Q2, 2013, luxury investment index.
As KF’s research noted:
Continued price growth in the classic car sector and an upturn in the performance of investment-grade wines helped to boost the value of KFLII by 7% in the 12 months to the end of June 2013. This matches the increase in the value of residential property in prime central London over the same period and is in stark contrast to the 23% fall in the price of gold since June 2012. The FTSE 100 index of UK listed equities performed slightly better, rising by 12%. Over a 10-year period, however, KFLII (+174%), has significantly outperformed the FTSE 100 (+55%), although gold still remains the top mainstream-asset performer (+273%).