Whether in hyperinflationary times or not,i whether in Venezuela or not, car salesmen will readily fill your earholes with peanut butter and jam about how “cars are the second biggest investment that a person makes.”
Leaving aside the fact that the salesman himself isn’t a person in the strict sense of the term – nor has he ever been, nor will he ever be, and is he therefore qualified to opine on such matters anymore than your average porcupine on the comparative merits of various ovipositors – investments aren’t supposed to lose money, not even if they’re fun, yet this is precisely what every car you’ve ever owned has done, just like 99.9% of the cars of everyone you’ve ever known has ever done. And yet, the salesmen persist.
Obviously salesmen aren’t the only ones with such pretenses to knowledge, because there are also vast uncountable scores of wannabe daytraders on E-Trade and Argentines who think that they can protect their assets from government seizure with a well-placed tarp.ii Such instrumental rubes, like those truly unfortunate fetal alcohol kidlets, are beyond our help. But just like casino blackjack, if you’re better capitalised and more intelligent than the average country bumpkin, you can make a buck buying and selling cars.
As someone who’s owned a fair few vehicles, has driven plenty more besides, is physically allergic to depreciation, and has made more than his fair share of sound investments in his day, here’s how :
~ Buy limited editions ~
Tally up alliii of the models you think might be “investment grade” that were produced in all the years of that generation combined, and if it’s over 5k, pass over it like there’s lamb’s blood on the door posts.iv The hyperbolic and white-power-poweredv appreciation of vehicles in the air-cooled Porsche space these last few years is already cracking under the weight of frankly absurd expectations. With old 911 prices at auction already down 20% from 2015’s sanity-free peaks, the fact that there are hundreds of thousands of air-cooled Porsches that were manufactured over roughly 25 desirable production years (1973 – 1998) and that repairing and maintaining any one of them in an “investment grade” condition will nullify a large proportion of the capital appreciation for even a skilled DIYer, if it doesn’t outright bankrupt them first, is all too evident.vi The lesson of the air-cooled Porsches, then, which have considerably further in their Bleiballon to fall, is to seek a model with no more than 500 units produced. Can’t afford that ? Then investing in cars isn’t for you any more than the craps table is. If you have fun doing it, then by all means, but any vehicle with more than 500 units produced, and definitely more than 5`000 units, is almost definitely more expense-hole than anything else. It’s what it is. Still, no matter what nation holds they key to your automotive heart, if it’s any single one at all, there are still plenty of choices, whether it’s the Plymouth Superbird, the Toyota 2000GT, the Mercedes 300SL, or an Aston Martin DB6.
~ Buy racey editions ~
The overwrought aero packages, the H-pattern boxes, the screaming race-tuned engines, the stripped interiors, and the painfully stiff suspension are all marks of an investment grade vehicle because they’re all marks of a man : one who will happily give up the creature comforts of modernity for a Spartan’s battle sword. Think GT3 RS 4.0, Viper ACR, M3 CSL, or Vanquish GT12. Even if these cars make for less than ideal daily drivers, at least in more Northern climates, that’s entirely the point. Investment grade cars aren’t your firstonlylast car, they’re going to be your 4th, 5th, 11th, etc. in your garage.vii Keeping the street miles down on these will also keep costs on maintenance and repairs down while maintaining more museum-like cachet as objets de désir.
~ Forget both of the above and start stealing and chopping ~
Well, what did you expect number three to be ? Besides, what could be more accessible than chopping mainstream cars for parts or stealing and reselling luxury cars on the DL ?viii If you were looking for something easier, I hate to break it to you, but this is investing we’re talking about here, which is a professional activity, which in turns means that it’s exclusive, hard work, and that explaining anything other than the painfully obvious points about scarcity,ix racery, and choppery to weekend warriors is like having your dentist explain how to perform a root canal to you (eg. step one : open mouth, step two : pay me to do the rest for you.) Not really sure what else you were expecting, but that about does it.
~ In summa ~
Investing in cars can be done, but it’s more like a job than you imagined, if one with some appealing perks. If you’re looking for a passive investment, experience shows that not even currencies will fit that bill. So pick your poison.
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- Ahem. [↩]
mircea_popescu: I’ll give you another mindfuck, by explaining the Baez* reference mentioned en passant.
mircea_popescu: So this schmuck is an “entrepreneur”, whatever, typical socialist state constructed leech, like they have in Ro Ru US etc. A Peter Thiel (speaking of which, anyone actually recall the x.com thing ? which is how he became famous in the first place ?) Now, he’s also an Argentine. He was the main man of the ex-President, govt changed, he would have to be thicker than the law permits to not realise they’re coming to steal his shit next. He has had almost half a year, during which he failed to drive the 200 “automoviles de lujo” ie, upmarket consumer crap across the border into Chile. HE COULD HAVE DONE THE DEED HIMSELF. Did not. “Hid them” through the process of throwing a tarp over the shit. Then “el fiscal marijuan” (I kid you not) discovered that there are “a lot more properties than previously known”. ie, looked under the tarp.
asciilifeform: Who the fuck ‘saves’ in … cars ?
mircea_popescu: Argentines. This is not even a joke. they believe cars are “an investment”. They also believe “de lujo” means 60k crap from the US, fucking ford fiestas and whatnit.
asciilifeform: And not museum cars…? But generic?
mircea_popescu: About 1/3 of the country’s trade defficit is rich idiots “investing” and with a country that invests like this, famine should surprise no-one. They readily agree with me when I say “Argentina is horribly managed”. They have not the fucking inklest of an idea wtf they mean, seriously, that woman put a million dollars into cars. And when i say she looks like a used up old whore people go “O how could you say this about La Presidenta”
asciilifeform: Sounds like an Egypt.
mircea_popescu: She’s no fucking Presidenta, she’s an old whore from west Texas. Looks, ~and thinks~ like she did the trucker routes all her life. Supreme accomplishment is a retirement full of cars. “Luxury” cars.
- A recent case study in the reason for drawing the line in the sand at 5`000 units is the 997 GT3, for which Porsche produced 2`378 of the Gen1 and 2`256 of the Gen2. That these were the last of the monster Mezgers goes some way to explaining why their prices are up some 50% in the last 3 years, even though the cars are less than 10 years old, but the faster, more powerful 997 Turbos have continued to depreciate at a predictable rate, whereas the GT3s have suddenly risen from a strangely early base of their depreciation curves almost entirely due to production volumes. [↩]
- Speaking of which, Chag Sameach! [↩]
- How else do you explain the rise of the USG’s Fourth Reich with its citizen’s longing for relics of the Third ? [↩]
- I was actually looking fairly seriously at 993s late last summer as a potential investment but when the owner of one of the vehicles mentioned oh-so-casually that a new (slightly curved at the edges) windshield on his sorta-ratty-but-still-$50k-base-Carrera would be $4k, I quickly realised that there was no free lunch here, nor any shrewd investment opportunity. Even if the better kept cars were appreciating at 10-20% a year, it would cost most of that just to maintain it. And what if the year came when the car didn’t appreciate that much ? Hm ? What then ? [↩]
- Yes, you’ll also need an acreage to store all these things. Condo dwelling urbanites need only apply if they’re also content to pay a few grand a year for parking and storage. Spending $3-4k per year isn’t hard in most cities, but will definitely take a ding out of your capital appreciation prospects if you’re, say, trying to turn a $6k Datsun 240Z into a $20k “collector’s car.” [↩]
- Stolen cars can be “fenced” through commercial outlets such as that sketchy used car lot on the corner with the barbed wire fences (you know the ones), privately sold through eBay et al., or through personal networks. [↩]
- Scarcity, of course, is the mother of all value, the father of which is that rich people appreciate it, lust for it, or have themselves created it for other rich people. [↩]