Client looking for an alternative investment? How about a Ferrari?

Client looking for an alternative investment? How about a Ferrari?

Client looking for an alternative investment? How about a Ferrari? by Jeremy Kahn

Goodwood Revival is a nostalgia- drenched festival held every September on the Earl of March’s estate outside Chichester, England. The event, which memorializes the heyday of Goodwood’s motor circuit, where races were held from 1948 to 1966, draws thousands of classic auto enthusiasts, dressed in period costume, who come to gawk at old race cars and watch them thunder once more around the speedway.

For classic car broker and consultant Simon Kidston, the nostalgia is often personal, even though, at 48, he’s too young to have seen these cars in their prime. Strolling through Goodwood’s paddocks, where cars are displayed and prepped for the track, Kidston gazes at a row of 1960s-era Ferraris with the wistful look of a man who has spied an ex-lover in a crowd. He points to a canary yellow 1965 Ferrari 250 LM. “That was the first valuable car I sold,” he says. “I drove all over London in that car when I was 24.”

Of course, “valuable” back then—in 1992—meant the car was worth $1.8 million. Today, that Ferrari is worth $15 million. And while Ferrari prices have been especially turbocharged, the entire classic auto market has been hotter than the exhaust pipes of a Shelby Daytona after a run on the Bonneville Salt Flats. This year, vintage cars were the best-performing alternative asset class tracked by Bloomberg, returning 13 percent through June 30 and an average of more than 25 percent a year for the past three years, according to London-based Historic Automobile Group International(HAGI). It’s pretty much been that way since the 2008 financial crisis, as investors have piled into the market looking for hard assets with reliable returns. Indexes that track classic car values have recorded double-digit returns every year for seven years.

Kidston has had a pit-row seat for this race toward ever- higher valuations. “He is a key figure in the industry,” says Mick Walsh, editor-in-chief of Classic & Sports Car magazine. “His contacts among collectors with the best cars in the world and his knowledge of the subject are really second to none.”

Now, Kidston says he’s on a mission to bring greater transparency to a market rife with misinformation and shady practices—including dealers who trade the same car among themselves to inflate its value or who try to pass cars off as similar, more valuable models. In November 2014, to give collectors what he says is a better gauge of value than a dealer’s word, Kidston launched the K500, an index compiled from public auction sales data for 500 valuable vintage models. His K500 website also offers a “collectibility rating” and price guidelines. The project is not without its detractors—competing indexes use different methodologies—but Kidston sees the K500 becoming a tool for collectors in much the same way wine critic Robert Parker’s ratings have become essential for oenophiles.

Geneva-based Kidston headed the motoring department at auction house Brooks and then at Bonhams, which Brooks acquired, for almost a decade before striking out on his own in 2006. He frequently judges and serves as compère at two of the world’s premier classic car shows, the Pebble Beach Concours d’Elegance in Carmel, California, and the Concorso d’Eleganza Villa d’Este on the shores of Lake Como in Cernobbio, Italy. And over the past decade, he has brokered sales of some of the most expensive vintage cars, including two 1963 Ferrari 250 GTOs(worth $40 million to $50 million each), a 1937 Mercedes-Benz W125 Grand Prix car ($30 million), three 1964 Ferrari 250 LMs ($16 million apiece), three 1961 Aston Martin DB4GT Zagatos ($12 million each), and three early-1960s Ferrari 250 GT SWB California Spyders ($17 million apiece).

At Goodwood, Kidston—wearing a vintage orange tweed sport coat with brown checkered shirt, matching tie, and Ivy-style driving cap—shows off an encyclopedic knowledge of cars and motor history: Here’s the Ferrari 246 Dino in which Phil Hill won the 1960 Italian Grand Prix; there’s a 1930s Grand Prix Alfa Romeo designed by Enzo Ferrari. He pauses in the paddocks and inhales deeply in an inadvertent homage to Robert Duvall’s character in Apocalypse Now, Lt. Col. Bill Kilgore. “You smell that?” he says. “It’s Castrol motor oil. It is the smell of classic car racing. It may sound weird, but it is quite evocative and quite distinctive.”

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