Many of us have dreamed of owning a classic car, and while we tell ourselves the joy is all in the driving, an explosion in value in recent years has made sought-after vehicles desirable for their appreciation as much as their acceleration.
But, unless you have a six- or seven-figure sum burning a hole in your pocket, it’s difficult for regular folk to get into classic car investment. This is where TheCarCrowd hopes to offer a solution.
Based in the UK, TheCarCrowd is an online investment platform that buys classic cars, registers them as a limited company, then sells up to 1,000 shares in that company. Customers can then purchase between one and 100 shares, securing partial ownership of the limited company representing their chosen car.
Owning shares doesn’t create an opportunity to drive any of the vehicles managed by TheCarCrowd, but investors are invited to view the cars at shows. Shareholders vote on whether to sell the car or not, and once it is sold any profit is distributed among shareholders.
Naturally, it is worth reminding readers that a customer’s capital is at risk and the value of their investment can go up as well as down. The classic car market is particularly buoyant at the moment, but past performance does not guarantee future success. In a bid to give users peace of mind, TheCarCrowd is an appointed representative of Kession Capital Ltd, which is regulated by the UK’s Financial Conduct Authority.
David Spickett, co-founder and chief executive officer of TheCarCrowd, said how the platform is designed to “let petrolheads everywhere own a share of their dream car and earn real financial returns if the car appreciates in value. It’s very similar to the normal setup of buying shares in any limited company.”
Prices for a single share vary based on how much TheCarCrowd paid to acquire each vehicle. A Renault Clio V6 purchased for £30,000 allowed investors to purchase a share for £30, while a Peugeot 205 GTI was bought for £18,900 (and is now worth £21,000, Spickett says).
The platform is currently offering £77 shares in a Ferrari 360 Modena (red with a manual transmission, naturally), £59 for a share of a Ford Sierra Cosworth, and £220 for the company’s flagship, a one-of-eight Spyker C8. Vehicles owned by TheCarCrowd are valued twice annually, with their insurance valuation adjusted accordingly and shareholders informed.
Spickett continues: “You have voting rights as a shareholder and can vote on when to sell the car. We do the maintenance, storage and insurance, but don’t decide on your behalf when to actually sell the vehicle. That power is in the shareholders’ hands.”
How vehicles are chosen for the platform follows a strict criteria. Spickett explains: “Low mileage, low ownership, immaculate history, numbered vehicles; things like the Clio V6 are a no-brainer. It’s a numbered vehicle, never to be repeated, V6 engine in the back. Something that makes the car quirky and unique; that’s a great recipe for cars going up in value. It’s about looking for that top-end one that everyone wanted when they were 15 or 16, but couldn’t afford the insurance on.”
Another revenue stream for investors will, TheCarCrowd says, come from the vehicles being loaned out for media and publicity work. This will in part be aided by the connections of company backers Natalie Pinkham, a presenter for the Sky Sports F1 television channel, and her brother Sam Pinkham, a DJ for Virgin Radio.
Spickett, who runs the company with his wife Kirsty, the chief marketing officer, hopes to attract younger customers who are yet to make any other investments. “We’re looking for like-minded people who might be a bit frustrated by current investment opportunities. Between the ages of 25 and 40 there’s not a great opportunity unless you want to buy stocks and shares…This gives you the opportunity to invest in your passion, and do it in a regulated and protected way.”
The CEO added: “We estimate that around eight million UK millennials hold no form of investments and hope that an affordable passion asset investment platform will open up the world of investment to a generation that has been overlooked.”
TheCarCrowd also operates a vehicle storage facility, where it plans to expand from 6,500 to 10,000 square feet by the end of 2021, creating space for around 40 cars. Some of these will be TheCarCrowd’s own, while other vehicles will be stored by their owners, giving the company another revenue stream, and potentially a supply chain of cars to purchase and for investors to buy into.
The classic car market has surged in recent years, so it’s no surprise that investment platforms want to take advantage of the publicity soaring car prices has generated. Indeed, the Coutts Passion Index stated in 2019 how classic cars had grown in value by 245.8% since the index started in 2005.
But values can go down as well as up, and while TheCarCrowd sets out a strong case for itself, investors mustn’t become distracted by multi-million-dollar classic Ferraris auctioned at Pebble Beach. This is, for now, a platform for investing smaller sums into something of a passion project. But with plans for larger investment opportunities coming later in 2021, plus the chance to invest in vehicles that can actually be driven, the company – and its business model as a whole – is one to keep an eye on.