What is an investment grade automobile?
It isn’t something that an artist, someone with a passion for his craft, cares to talk about. Mark Passarelli is an artist, someone at the pinnacle of his career and recognized in his field for excellence in craftsmanship. Lately, though, Mark has been asked more and more about the current and future values of the automobiles he restores, repairs and conserves.
At the recent Pebble Beach Concours d’Elegance, the premier vintage automobile showcase in North America, the prestigious RM Auction was held. RM, both an auction company and an automobile restoration firm based in London, sold 14 cars for over $1 million. Of these, six were Ferrari and six were Mercedes Benz. The Ferrari’s totaled just over $17 million and the Mercedes passed $25 million.
In January of 2011, the first non-alloy bodied Mercedes Benz 300SL “Gullwing” to surpass the million dollar threshold was sold by RM at their Scottsdale auction. It was a car that had been restored to perfection by Mark Passarelli. The sale price of $1.375 million so exceeded expectations that it eclipsed another Passarelli restored Gullwing that sold for more than $800,000 that same weekend. Why are these automobiles, especially Mercedes Benz, increasing so dramatically in value, far exceeding more traditional investments, leading to the use of the term “Investment Grade Automobile.”
When it comes specifically to the Mercedes brand, Mark Passarelli has a very firm opinion. “Mercedes Benz has the first patent for an automobile,” said Mark. “They literally set the standard for automotive industrial design. And people recognize that their standards have not really slipped for over 100 years. Mercedes has been at the forefront of so many automotive innovations, and has perfected so many design and performance elements that a collector knows that they are investing in an icon. And icons hold their value. This, to me, is the definition of an investment grade automobile. In general, a collector automobile is moveable, useable and somewhat liquid in that it has a truly world wide appeal in any currency.”
When asked if he was surprised at the price his Gullwing brought at auction, Mark had a few thoughts about that as well. “A number of people have said that the price was an anomaly and didn’t reflect the true nature of the market. But an equal number of people, sophisticated collectors, have told me this is where the market is going and my car just took it there sooner than many expected. You need to look at the fact that there is a very finite number of the Gullwings out there, only 1,400. Ten years ago there were still hundreds of unrestored cars available. Today, that number has dwindled to just a handful. Ten years ago, you could get a drivable 300SL for $250,000. Today, it is at least double that for an unrestored car – if you can find one. So, do I think the car sold for too much? Not really, it just sold a couple years sooner than most people expected. I think 2012 may see more of these cars surpass $1 million.”
Several other factors are creating an atmosphere of investing for the automobile collector. Perhaps the most significant factor is that, unlike financial markets, classic automobiles, particularly Mercedes, have steadily increased in value, unaffected by the economic downturn. This is in part driven by the increase in foreign collectors, such as Chinese and Indian aficionados. Second is the tangible nature of automobile investment. You can touch and experience your car in a way that shares of Berkshire Hathaway can’t offer. And third, like art, more and more people are appreciating the design and style of classic automobiles. With modern cars becoming more indistinguishable from each other, the individuality and sculptural quality of a fine automobile is more apparent.
All of this adds up to the emergence of the investment grade automobile, as secure in the minds of most collectors as the gold in their vaults or the land under their feet.
One of our clients at Passarelli Restorations recently reminded us that, over the last ten years, he had netted nearly $1 million from his Passarelli restored cars. We did a survey of all the cars that came from our shop and realized that, with no exceptions, virtually every client we have ever had the pleasure to have served has seen a significant profit or increase in equity in their Passarelli cars!
At the recent Pebble Beach Concours d’Elegance, the premier vintage automobile showcase in North America, the prestigious RM Auction was held. RM, both an auction company and an automobile restoration firm based in London, sold 14 cars for over $1 million. Of these, six were Ferrari and six were Mercedes Benz. The Ferrari’s totaled just over $17 million and the Mercedes passed $25 million.
In January of 2011, the first non-alloy bodied Mercedes Benz 300SL “Gullwing” to surpass the million dollar threshold was sold by RM at their Scottsdale auction. It was a car that had been restored to perfection by Mark Passarelli. The sale price of $1.375 million so exceeded expectations that it eclipsed another Passarelli restored Gullwing that sold for more than $800,000 that same weekend. Why are these automobiles, especially Mercedes Benz, increasing so dramatically in value, far exceeding more traditional investments, leading to the use of the term “Investment Grade Automobile.”
When it comes specifically to the Mercedes brand, Mark Passarelli has a very firm opinion. “Mercedes Benz has the first patent for an automobile,” said Mark. “They literally set the standard for automotive industrial design. And people recognize that their standards have not really slipped for over 100 years. Mercedes has been at the forefront of so many automotive innovations, and has perfected so many design and performance elements that a collector knows that they are investing in an icon. And icons hold their value. This, to me, is the definition of an investment grade automobile. In general, a collector automobile is moveable, useable and somewhat liquid in that it has a truly world wide appeal in any currency.”
When asked if he was surprised at the price his Gullwing brought at auction, Mark had a few thoughts about that as well. “A number of people have said that the price was an anomaly and didn’t reflect the true nature of the market. But an equal number of people, sophisticated collectors, have told me this is where the market is going and my car just took it there sooner than many expected. You need to look at the fact that there is a very finite number of the Gullwings out there, only 1,400. Ten years ago there were still hundreds of unrestored cars available. Today, that number has dwindled to just a handful. Ten years ago, you could get a drivable 300SL for $250,000. Today, it is at least double that for an unrestored car – if you can find one. So, do I think the car sold for too much? Not really, it just sold a couple years sooner than most people expected. I think 2012 may see more of these cars surpass $1 million.”
Several other factors are creating an atmosphere of investing for the automobile collector. Perhaps the most significant factor is that, unlike financial markets, classic automobiles, particularly Mercedes, have steadily increased in value, unaffected by the economic downturn. This is in part driven by the increase in foreign collectors, such as Chinese and Indian aficionados. Second is the tangible nature of automobile investment. You can touch and experience your car in a way that shares of Berkshire Hathaway can’t offer. And third, like art, more and more people are appreciating the design and style of classic automobiles. With modern cars becoming more indistinguishable from each other, the individuality and sculptural quality of a fine automobile is more apparent.
All of this adds up to the emergence of the investment grade automobile, as secure in the minds of most collectors as the gold in their vaults or the land under their feet.
One of our clients at Passarelli Restorations recently reminded us that, over the last ten years, he had netted nearly $1 million from his Passarelli restored cars. We did a survey of all the cars that came from our shop and realized that, with no exceptions, virtually every client we have ever had the pleasure to have served has seen a significant profit or increase in equity in their Passarelli cars!