Many of us have dreamed of owning a classic car, and while we tell ourselves that the fun is in driving, an explosion in value in recent years has made vehicles sought after both for their appreciation and for their acceleration.
But, unless you have a six or seven figure sum that burns a hole in your pocket, it is difficult for ordinary people to get started on investing in a classic car. This is where TheCarCrowd hopes to come up with a solution.
UK-based TheCarCrowd is an online investment platform that buys classic cars, registers them as a limited liability company, and then sells up to 1,000 shares of that company. Customers can then buy between one and 100 shares, securing partial ownership of the limited company representing the car of their choice.
Owning shares does not create the opportunity to drive one of the vehicles managed by TheCarCrowd, but investors are welcome to view the cars at shows. The shareholders vote on whether to sell the car or not, and once it is sold, any profit is distributed among the shareholders.
Of course, readers should be reminded that a client’s capital is at risk and the value of their investment can go up as well as down. The vintage car market is particularly buoyant at the moment, but past performance does not guarantee future success. In an effort to reassure users, TheCarCrowd is an appointed representative of Kession Capital Ltd, which is regulated by the Financial Conduct Authority of the United Kingdom.
David Spickett, co-founder and CEO of TheCarCrowd, explained how the platform is designed to “let oil companies around the world own a share of their dream car and earn real financial returns if the car grows in value. . This is very similar to the normal configuration of buying shares in any limited liability company.
Prices for a single action vary depending on how much TheCarCrowd paid to acquire each vehicle. A Renault Clio V6 bought for £ 30,000 allowed investors to buy a share for £ 30, while a Peugeot 205 GTI was bought for £ 18,900 (and now worth £ 21,000, according to Spickett).
The platform currently offers £ 77 stock in a Ferrari 360 Modena (red with a manual transmission, naturally), £ 59 for a Ford Sierra Cosworth stock and £ 220 for the company’s flagship, a Spyker C8. out of eight. . Vehicles owned by TheCarCrowd are appraised twice a year, with their insurance valuation adjusted accordingly and shareholders informed.
Spickett continues, “You have the right to vote as a shareholder and can vote on when to sell the car. We perform maintenance, storage and insurance, but do not decide on your behalf when to sell the vehicle. This power is in the hands of the shareholders.
The way vehicles are chosen for the platform follows strict criteria. Spickett explains, “Low mileage, low ownership, impeccable history, numbered vehicles; things like the Clio V6 are a given. This is a numbered vehicle, never to be repeated, with a V6 engine in the rear. Something that makes the car original and unique; this is a great recipe for cars to gain value. It’s about looking for that top-of-the-line model that everyone wanted when they were 15 or 16, but couldn’t afford the insurance.
Another source of income for investors, according to TheCarCrowd, will come from vehicles loaned out for media and advertising work. This will be helped in part by the relationships of corporate funders Natalie Pinkham, presenter of Sky Sports F1 television channel, and her brother Sam Pinkham, DJ for Virgin Radio.
Spickett, who runs the business with his wife Kirsty, chief marketing officer, hopes to attract younger clients who have yet to make further investments. “We are looking for like-minded people who might be a little frustrated with the current investment opportunities. Between 25 and 40, there is no great opportunity unless you want to buy stocks and stocks … It gives you the opportunity to invest in your passion, and to do so in a regulated and protected manner.
The CEO added: “We estimate that around eight million UK millennials hold no form of investment and hope that an affordable passion asset investment platform will open up the world of investing for a generation that has been neglected. ”
TheCarCrowd also operates a vehicle storage facility, where it plans to grow from 6,500 to 10,000 square feet by the end of 2021, creating space for around 40 cars. Some of these will be owned by TheCarCrowd, while other vehicles will be stored by their owners, giving the company another source of income and potentially a supply chain of cars to buy and for investors.
The vintage car market has exploded in recent years, so it’s no surprise that investment platforms want to take advantage of the publicity generated by soaring car prices. Indeed, the Coutts Passion Index declared in 2019, the value of classic cars had increased by 245.8% since the index started in 2005.
But values can go down as well as up, and while TheCarCrowd makes a strong case for itself, investors should not be distracted by classic multi-million dollar Ferraris auctioned off at Pebble Beach. It is, for now, a platform to invest smaller amounts in something of a passion project. But with plans for bigger investment opportunities to come later in 2021, along with the possibility of investing in vehicles that can actually be driven, the company – and its business model as a whole – is one to watch. .