Appreciating automotive assets: the PaddlUp guide to supercar investing
The appreciating automotive asset (AAA) isn't an overly new concept, auto auctions have been in existence almost as long as the car itself. However, it is only since the turn of the century that things have really started to take off for supercar investing and, in recent years it has seen a surge in popularity as values for rare and unique cars increase exponentially.
It's what we do
Supercar investment is PaddlUp's forte, having carved out a niche in an oversaturated car auction market. As a company, we have benefited from Co-Founder Joe Priday's background in wealth management, dovetailed with his passion for collecting and investing in supercars, we now use these principles as the foundations on which PaddlUp stands.
Examples
Our expertise isn't just skin deep either. The Lexus LFA and the Ferrari F40 are testaments to this knowledge and are worthy examples of AAAs in their own right. Meanwhile, many of the consignments to come through The Gallery's doors serve as lucrative investment opportunities, each with its own unique story and grounds for appreciation in the market.
The Ferrari Testarossa serves as a perfect example of classic car investing. A true icon of the eighties, pop culture appearances have helped propel the Testarossa to legendary status. Appearances in Miami Vice from 1984 to 1990 – and more recently in Martin Scorsese's The Wolf of Wall Street – have ensured a consistent demand throughout the years and a positive, upward trend for auction values in recent years.
The benefits of owning one of these extraordinary vehicles are multifaceted. Be it the unparalleled remunerative advantages, the tangible, usable asset in your possession as well as the lavish lifestyle that comes as part and parcel of supercar ownership.
The benefits
The main draw to AAAs for potential investors is, first and foremost, the potential return on investment (ROI) on offer. As explained in our F40 auction values deep dive, if you time the purchase and sale of, for example, an F40 to perfection, you can enjoy annual returns of up to 22.67 per cent.
Similarly, the classic car market is also booming, having outperformed property, shares and jewellery from 2006 to 2016, delivering a whopping 450 per cent return during that time or an average of 45 per cent each year. The car market comfortably outperforms long-established investment veins on a regular basis and as a result, word is beginning to spread.
Crucially for the serious supercar investor, the HMRC deems cars to be depreciating assets due to the vast majority of cars on the road losing value over time. Therefore, an AAA venture, unlike other traditional forms of investing like stocks and shares, is exempt from capital gains tax on any profit. Some cars also qualify as ‘heritage property’ and so, will be exempt from inheritance tax.
The financial advantages of supercar investing are, of course, what makes it such a desirable medium for high-net-worth individuals. Still, there's also the ability to use your asset whenever you see fit, something that isn't possible with any other kind of investing, and with that, comes a thriving car show calendar, bustling social scene and absorbing lifestyle.
Since its inception, PaddlUp has built a comprehensive knowledge base, covering all aspects of collectable supercars and automotive investment. The examples that fall into this category, more often than not, do so as a result of the brand, rarity, specification, mileage, condition or provenance. As with any investible asset, the process involves buying, waiting for the value to increase and then selling, but PaddlUp goes the extra mile, implementing a number of extra steps to ensure you get the best ROI possible as well as an enjoyable, stress-free experience.
The stages of investing
Buy: the entry point of any supercar investment. PaddlUp helps to identify the asset with the highest possible returns through a combination of extensive auction data and known future events e.g. the 40th anniversary of the Ferrari F40. We can then facilitate the purchase itself through our innovative online platform or in person at our idyllic showroom.
Wait: at this point, it's difficult not to get restless but remember that you now own a supercar, it's time to enjoy it! If you choose to enter your car into an event or have it featured in magazines, that may enhance its value, whilst you can also take it on driving holidays or to other automotive events, adding personal enjoyment which is absent from the likes of stocks and shares. PaddlUp can house your AAA when it's not in use at our secure, on-site storage facility.
Sell: now it's time to reap the rewards. The selling process through PaddlUp provides anonymity and privacy whilst we handle all of the documentation on your behalf. Our escrow account, meanwhile, assists with a secure, stress-free transaction. Should they need them, bespoke financial performance reports are also created for our clients to give an overview of their investment over time.
If you would like to learn more about supercar investing, talk to one of our dedicated and knowledgeable team.