Recently, NASCAR team owner Rick Hendrick purchased the right to specify and buy the first of the 2011 Corvette Z06 "Carbon" special editions. To get Carbon #1, Hendrick bid $270,000. By the time the auction house added their 10% buyer's premium, Hendrick's out-of-pocket expense on the car totaled $297,000. Hendrick previously bought the first of the new 2010 Camaros at auction, and a set of five 2009 ZR1 Corvettes for his team drivers. It's likely that none of those cars will ever again be worth what Hendrick paid for them when they were new.
Every few months, the Corvette world is abuzz with news of the high prices that rare and well-restored classic corvettes can command at high-end collector car auctions. If you have a barn full of old Corvettes for sale, this kind of news can be very exciting. We'd all like to think that we could make a big profit on our car collection someday, even if we love our 'Vettes more for being great cars than for their cash value.
Some people do make a lot of money by selling their car collection. But the truth is that more than half of collector car buyers actually lose money on the transaction, compared to simply putting the same amount of money in a safe investment such as a Treasury bond. Corvette prices are more stable and have more upside potential than most cars, but the market for collector cars can be turbulent.
Boom and Bust
In the middle of the last decade, there was a huge run-up in the prices of certain muscle cars, and the top examples sold for up to $2,420,000. (1971 Plymouth Hemi Cuda, RM Auctions, Phoenix, January 19, 2007) Those same cars are back in the $100,000 to $200,000 range today. The top comparable sale of 2009 was $440,000. (1970 Plymouth Hemi Cuda, Russo & Steele, Scottsdale, January 15, 2009) The top sale so far in 2010 is just $231,000 for a 1970 Plymouth Cuda 2-door at Barrett-Jackson's Scottsdale auction on January 18.
The most important fact to remember is that just because an NCRS-certified Corvette sold for over $100,000, that's no guarantee that yours will fetch the same price. To continue the comparison with the Plymouth Cudas, there were dozens that sold for $50,000 or less right alongside the big money cars.
The other important lesson is that there's no guarantee that the buyer of any expensive car will get the same or more money back out of it when it comes time to sell.
Buy What You Love
Paul Duchene is the former Executive Editor of Keith Martin's Corvette Market magazine, and I asked him what makes a bad investment in a collector car.
"A bad investment is something you buy because you think you'll make money on it. Something you don't care about particularly, but you think you can't pass it up. Bad idea. Whatever you buy, buy it with the idea that if everything goes down the drain and you're stuck with it, you're OK with that. So only buy what you like," Duchene says.
The bottom line on buying a Corvette as an investment is this: don't spend more than you can afford in the hopes of making a profit. Chances are your Corvette will appreciate for you over time, but it's more important that you appreciate your Corvette.