From Mustangs To Trans Ams To GTs, Carroll Shelby's Iconic Designs And Hitler's Parade Car: An Investor's Guide To Classic Autos

In the weeks leading up to the Barrett-Jackson Auction Co.'s collector car auction in Orange County, Calif., a new group of people seems to be joining the typical aging-vehicle aficionados in paying attention to this annual event. Indeed, this year, an increasing number of individual investors are looking at older vehicles as the latest safe havens for their money, a quirky and often fun-to-own alternative investment.

The appreciation can be quite stunning. For example, Adolf Hitler's parade car sold in 1950 for $153,000. Four decades later, it was auctioned for more than $12 million. And if it went to market today, it would probably fetch well over $20 million, a 130-fold increase in value.

A fundamental criterion for an alternative investment is that it be either countercyclical or at least noncorrelated with one's primary market. Ideally, a good alternative investment should rise when the primary market falls, and it should fall when the primary market rises.

That describes classic cars, which usually appreciate more slowly when real-estate and stock markets are doing well. But with U.S. property values still at relative lows and the stock market at the whim of unfolding events in Europe and Asia as much as the slow recovery in the U.S., the prices being paid for old cars at auction are ballooning.

“We’re setting world record after world record, said Craig Jackson, chairman and CEO of Barrett-Jackson, who is prone to a bit of hyperbole. After all, the motto of his company is The World’s Greatest Collector Car Auctions.

But more than the typical investment, classic cars -- which in the Orange County auction could be anything from a 2012 45th anniversary Chevy Camaro to a 1918 Touring Essex limo that U.S. President John F. Kennedy once rode in -- are hard assets that people can show off and even put to good use. In other words, you probably shouldn't purchase a classic car that you wouldn't mind (or even be thrilled) to take out for a spin from time to time, just in case it doesn’t pan out as an investment.

Indeed, classic car collectors frequently buy vehicles as much out of love as out of a consideration of investment potential. A recent report by international market-research firm Ledbury Research found that 53 percent of investors who buy classic cars want to show them off, as opposed to just 24 percent of those who are stamp collectors or only 16 percent of those who purchase precious metals.

One thing to look for in considering the collectability of a car, according to Jackson, is its production number. Cars made among either the very first or the very last batches of a specific model tend to be more valuable than cars made in the middle of a run. Pairs of cars are also popular and attract higher prices when sold together rather than separately. For example, offering the first and last cars made of a particular model is one smart form of pairing, as is selling two cars of different generations, such as a Corvette from 1953 and a Corvette from 2013.

The Legacy Of Carroll Shelby

Cars linked to salient moments in automotive history can also appreciate greatly. Witness Ford GT40 sports cars, which tend to rise in value because of their remarkable racing pedigree. They are the only cars made by an American manufacturer to take the top prize at the vaunted 24 Hours of Le Mans endurance event -- a feat that the GT40 accomplished four years in a row between 1966 and 1969. People remember that it's the car that beat Enzo [Ferrari],” Jackson said.

A pair of GT40s from 1967 and 1968 will be on the auction block in Monterey in August and are expected to individually fetch between $2.3 million and $2.7 million, according to AutoBlog.

The GT40s will probably enjoy a bigger bump in value than in the past because the automobile’s designer, Carroll Shelby, an iconic race-car driver and engineering genius, died recently at the age of 89. Although Shelby’s involvement with the more recent 2005 Ford GT and the Ford Shelby 1000 Mustang was somewhat minimal, the fact that he oversaw the design teams and that these were the last cars he worked on at all should increase the prices they command at auction. In addition, Jackson thinks that 427 Shelby Cobras and 289 Shelby Cobras produced by an Anglo-American manufacturer in the 1960s could be a good investment now.

Besides important cars in automotive history, other collectible cars that tend to gain value are those associated with important cultural or historical figures. Frank Sinatra's Ford Thunderbird has sold in the past for three times as much as similar cars, while one of Howard Hughes' cars, tricked out with a germ box and jumper cables for starting planes, recently sold for $1.62 million. It didn’t hurt that the auction was conducted shortly after the movie “The Aviator,” a film about Hughes’ life, came out in 2004.

More broadly, cars that have become pop-culture icons are also valuable collectibles. Along this line, 1950s-era convertibles are hugely popular, in part because HBO’s hit TV show Entourage featured them prominently. Similarly, 1970s-era Volkswagen Buses are increasingly sought after. One recently sold for $212,000 after a bidding war between two locals who each wanted to own the ultimate surf wagon, Jackson said.

More than anything, though, Jackson said car collectors are looking to buy either their favorite cars from earlier in life or the cars they always wanted but never got. By the way, Jackson owns 30 collector models and drives them all.

You lust for the car you couldn't afford or the car you had to sell, Jackson said. Generations tend to buy cars they wanted but were too expensive to afford.

Consequently, now that many members of the baby-boom generation have reached financial security later in life, 1960s- and '70s-era muscle cars -- Pontiac Trans Ams, Chevy Novas, and Ford Mustangs, among others -- are becoming top sellers at auctions.

Savvy buyers can attempt to guess which cars of the current era will be lusted after 30 or 40 years from now: Maybe it will be high-horsepower supercars such as the Bugatti Veyron, McLaren MP4-12C, or Pagani Zonda F.

Before long, the current golden age of supercars will end, replaced probably by electric-powered aluminum cans (oh, heavens). When that happens, classic car auctions will perhaps be the only place that people can buy rugged, powerful vehicles built at a time when cars were, well, cars.

I have some customers that never get outbid,” said Jackson. “Barrett-Jackson's a lifestyle.

The Barrett-Jackson auction in Orange County will be held June 22-24. The Speed network will cover it live for 16 hours.