For some of them, that day has arrived. The covetous teenagers of the muscle car era are now middle-aged men with considerably more money to pursue their passion for the Chevy Camaros, Ford Mustangs and Plymouth Barracudas of their youth. The savviest of these collectors can indulge their vintage car enthusiasms not only as satisfying hobbies, but for the possibility of financial gains. Indeed, the limited-edition 1969 Chevy Camaro in good condition can fetch well into six figures.

“I can buy a car and play with it, and if I do it right, it is a free ride, or even something I can make money on,” says David Fluke, a venture capitalist in Washington state, whose vintage automobile collection includes one of the fabled 1969 Camaros—now worth an estimated $210,000. 

A study of the vintage vehicle market by Barrett-Jackson, a leading classic automobile auction and consignment house based in Scottsdale, Ariz., indicates that certain models can, over a period of time, offer substantial returns. Stephen Drake, a financial consultant associated with Barrett-Jackson, examined the sale prices over 5- and 10-year periods of seven frequently traded, midshelf vintage models in different categories (see box). “Our goal in putting together this ‘mini-index’ was to give vintage car collectors a feeling of where the classic car market is in relation to the stock market,” says Drake.

According to Drake’s calculations, the Barrett-Jackson index was up an average annual rate of 14.87 percent in the five-year period ending January 1, 2003. For the same period, the Dow Jones Industrial Average showed an average annual return of 1.73 percent, while  the Standard & Poor’s 500 index declined an average 1.85 percent. While this comparison is striking, it is only half the story. Barrett-Jackson did not provide a measure of the risk of its index (technically, its volatility), so it is difficult to say if an investment in classic cars is more like a low-risk investment in government bonds or a higher risk investment in the stock market. If the former, its performance would be truly outstanding; if the latter, then the comparison with the stock indices is more valid. Unfortunately, it is impossible to tell from Barrett-Jackson’s index.

On a rudimentary returns-versus-returns basis, the Barrett-Jackson index performs admirably, though it lags the equity indices. During the 10 years to January 1, 2003, the Dow’s average annual return was 12.15 percent and the S&P 500’s 9.33 percent. The Barrett-Jackson index held its own at 9.1 percent. Over 20 years, the Dow delivered an average annual return of 12.05 percent, the S&P returned 12.67 percent, and the Barrett-Jackson index trailed at 10.36 percent.

According to Craig Jackson, president of Barrett-Jackson, the numbers would have been more impressive were it not for a period during which many investors got into the market for the wrong reasons. “After the stock market crash of 1987, a lot of people jumped into collecting, thinking of vintage cars purely as an investment, and not as a hobby. They didn’t look at it long term, and eventually our market crashed when it wasn’t the flavor of the month anymore,” he explains. “Unless you know collector cars and really love them, I wouldn’t suggest you buy one.”

Young at Heart
Fluke, who is now 56, says he is recreating his childhood with the 15 classic Chevy muscle cars he keeps in a large barn near his home. “I was a little too young to have a new car in that era. I couldn’t afford them at the time, but now I can,” he explains.

Unlike the casual collectors who wreaked havoc upon vintage car prices after 1987, Fluke typifies the investor who drives the vintage car market today: male, upper income and middle-aged, with a very strong sentimental attachment to the cars of his youth. Certainly not all collectors fit this profile; Drake recalls a woman in her 60s who, at a recent Barrett-Jackson auction, aggressively outbid every man in the room to pay $106,000 for a 1956 baby blue Corvette. However, many do fit that likeness, and with their passion for driving muscle cars, hot rods and custom autos, they account for more than half the vintage car market. “These cars are like an old bathrobe you don’t want to throw away,” Fluke says. “They are from a time when you didn’t have many worries or when you didn’t have many worries or concerns, and my desire to collect them ties in with that.”

For the would-be collector and investor, understanding a passion like Fluke’s is the key to realizing a return on a vintage car investment. Collectors may differ by taste, age and financial profile, but more times than not, their choice of car has its roots in sentimentality. “With classic, prewar cars, collectors in their 70s and 80s have the connection, and they account for much of that market.” Drake says. “People in their 40s and 50s remember the muscle cars. Youngsters today will probably not be so enamored of muscle cars, and it will be important to know what they will like, because they are the future buying audience.” 

It may be hard to believe that anyone could ever be sentimental about the automobiles being built today. Dull, rounded edges, soporific wind-tunnel designs, and interchangeable parts make much of the current fleet look, from a distance, like the sad product of automotive inbreeding—a Benz is a Dodge is a Daewoo. Car dealers hope that the current crop of 19-year-olds obsessively poring over Car and Driver and Motor Trend magazines will be able to find a measure of gold amidst this dross. On some level, these car fanatics already know where the vintage auto market is going and what the hot collector cars will be in 30 years. They can explain in mechanical and aesthetic detail why a Dodge will never be a Daewoo, and why any comparison of a Benz to a Dodge is sacrilegious lunacy.

It is in this detail that collector cars find value. For collectors to be successful, they must master each model’s most esoteric details. Consider the subculture devoted to certain production models of the Plymouth Barracuda (“Cuda” to the cognoscenti). In 1964, Chrysler introduced the Barracuda, a small, somewhat sporty offering by Plymouth, Chrysler’s  utilitarian brand that targeted budget-conscious drivers. In an effort to capture part of the increasingly competitive muscle car market then dominated by the Ford Mustang and the Chevy Camaro, each model year Chrysler added more beef to the Barracuda through larger engines and more aggressive styling. By 1970, the Barracuda morphed into what was basically a large Hemi engine on wheels, a rude, rolling predator that looked much like a stock racer.

Today, 30 years after environmental laws and gasoline shortages compelled Chrysler to discontinue the Barracuda, Cuda collector clubs, Cuda auto shows and Cuda Web sites abound. In a uniquely automotive vernacular, Cuda collectors discuss their prized possession with the same level of detail that art historians might apply to Michelangelo’s David. This esteem warrants the vehicle’s inclusion in the Barrett-Jackson index and is reflected at auctions across the country. At a recent Barrett-Jackson auction in Scottsdale, several sold in the $40,000 to $50,000 range, with one Cuda commanding $148,500.

Cuda collectors know which models are limited editions, which are rare from a mechanical or design perspective, and which are considered, by a very objective set of criteria, valuable.  “The key to collecting is knowing what you are buying, and being an educated consumer,” says Jackson.

No Cash Cuda
While the Barrett-Jackson index does indicate a sustained interest in vintage cars, no sure bets exist in a market driven largely by nostalgia. “In this market, long term doesn’t necessarily mean hanging on to one car for years,” Jackson says. “It can mean buying a car, enjoying it, and then trading up as the market shifts and trends change.” 

Trends do change. Collectors of 20 years ago, who had an emotional connection to the prewar cars of their youth, are now growing old. Their classic Packards and Cadillacs are no longer the hot items; they have been replaced by the muscle cars of the ’60s and ’70s. This does not necessarily mean that classic collector cars will lose their value; they still account for a large segment of the vintage car market. However, the caprices of taste and fashion will affect a car’s value over the long term.

“Ultimately,” Jackson counsels, “vintage cars are a hobby, not an investment. You should first buy a car you like, and one that you will enjoy. If you are just looking at it solely as an investment, you’re doing it for the wrong reasons.” Fluke agrees. When asked if he would consider putting his mint condition 1969 Camaro on the block to collect an undoubtedly formidable return on his investment, without hesitation he replies, “Not a chance.” 

Photos Courtesy General Motors (Camaro and Corvette) & Ford Motor Company (Thunderbird)