Have you sold a car recently? Can you imagine receiving ‘lottery-winning’ returns from your ‘Passion Asset’? The latest record breaking classic car sale on record was the auction of an extremely rare 1963 Ferrari 250 GTO sold in June this year for a cool £52million! Was this down to the foresight of an extremely astute owner with significant sums at their disposal? Or a passion for Ferraris which led, after years, to an incomparable windfall? Either way a happy former owner and one would hope the new owner will enjoy comparative growth over the coming decades. But at some point the Ferrari would have traded at the general market price and been in financial reach of a number, not the very, very few super wealthy. Growing rarity over time, with excellent maintenance, has seen the GTO now enjoy stratospheric price performance.
The same principles can also be applied to fellow Passion Asset, fine wine but the entry price point is in greater reach of many more investors who enjoy perhaps a broader understanding of the market involved. The fine wine investment market has benefited greatly from the internet and the advent of organisations such as Liv-ex, which have provided greater price transparency, relevant information and growing investor confidence. Record-breaking sales are still achieved, but they tend to be in the hundreds of thousands rather than the millions!
The exciting dynamic of an auction sale can certainly inflate the purchase price of the moment and classic examples of this include the famous Napa Valley Auction of 2000 where a 6-litre bottle of Screaming Eagle 1992 (the inaugural vintage) sold for US$500,000 and a 10 year vertical of Harlan Estate magnums went for US$700,000. A more recent example was the London Christie’s sale of a very rare case of Domaine de la Romanée-Conti, Romanée Conti 1988 (12 x 75cl) sold by Christies in March 2018 for £264,000. A case of the same vintage had sold for £198,000 in 2017, representing a significant growth in only a matter of months.
Fine wine as a norm, like classic cars, tends to be a long term investment, with performance generally delivering stronger growth than financial markets and gold. However, there are occasions where rare wine with significant demand can deliver marked returns over the shorter term.
General acquisitions of rare fine wine, not driven by auction hysteria can also deliver significant returns for owners. The top Burgundies, Bordeaux and Californian wines with extremely low production often achieve six figure sums at sale in the market. However, more ‘normal’ investment-grade wine purchases of Bordeaux First Growths and similar are priced at a level where portfolios include a number of wines with average unit prices of around £5,000 and to an overall size in line with the owners’ financial goals. Fine wine portfolios diversified by region and vintage, held over time can deliver strong long term growth and returns on investment to their owners.
CAPITAL GAINS TAX EXEMPTION Both classic cars and fine wine are classified by HMRC as ‘Wasting Assets’ and as a consequence any profits made on sales do not generally attract Capital Gains Tax. An individual’s personal circumstances must be reviewed by a qualified tax advisor to confirm their personal details but when applicable this benefit is enjoyed by both of these top performing ‘Passion Assets’.
VIN-X SPONSORSHIP OF THE CHATEAU IMPNEY HILL CLIMB We are proud to be sponsors of the annual Chateau Impney Hill Climb bringing together fine wine and classic cars at one of the most exciting events in the automotive calendar. The 2018 Hill Climb saw rare classic cars competing and super car showcases in the spectacular Worcestershire-based Chateau grounds with 16,000 car enthusiasts and owners in attendance. SEE THE 2018 EVENT VIDEO