Classic car prices continue to rise, beat S&P 500

LOS ANGELES - Peter Mullin, owner of one of the world’s largest
private collections of classic French automobiles, points to a 1935
Hispano-Suiza J12 Cabriolet sitting among 60 other cars in his museum in Southern California.

“This is the finest car ever made,” Mullin says. “At 100 miles an
hour, you couldn’t even tell the engine was on.”

The collector is just warming up at his Oxnard-based Mullin
Automotive Museum, which was designed to evoke a 1930s art deco auto salon in Paris. He caresses the swooping fender of a red- and-black 1938 Bugatti Type 57C Atalante coupe, designed by the company founder’s son, Jean Bugatti.

“I love all the French cars, but Bugatti is my favorite among
favorites,” Mullin says. “It’s the ultimate car in engineering,
design, performance.”

The museum’s creme de la creme spins on a pedestal in the middle of the 46,800-square-foot building. In May, an anonymous buyer paid more than $30 million for this 1936 Bugatti Type 57SC Atlantic, a silver-blue coupe with a raised spine that runs the length of the car.

Mullin declined to comment on media reports that he was the buyer.
It’s the highest price ever paid for a car, topping the old record
by about $2 million. The same Bugatti sold in 1971 for $59,000.

Mullin belongs to a small club of about 100 collectors worldwide
with the money to buy the most expensive classics, Geneva-based
classic car adviser and broker Simon Kidston says.

SEE PHOTOSIn the Garage: LIers' classic rides

Rich collectors are an eclectic lot, from comedian Jerry Seinfeld,
who collects Porsches and who appeared in a 30-minute cable program extolling the brand; to Jim Glickenhaus, a Wall Street investor who covets Ferraris; to British television and radio host Chris Evans, who paid $10.9 million in 2008 for a 1961 Ferrari 250 GT SWB California Spyder once owned by Hollywood actor James Coburn.

A semi-retired founder of a Los Angeles executive-benefits-
consulting and asset-management firm, Mullin, 69, began buying vintage cars in 1981. He now has 140.

“It starts with an interest, turns to passion, then migrates to
obsession,” says the chairman of Portland, Oregon-based M Financial Group.

Collectors are pumping money into the classic-car market like never before, driving up prices for the world’s most famous models of Bugattis, Ferraris, Mercedes-Benzes and Rolls-Royces.

Enthusiasts are bewitched by their curvaceous bodies; handcrafted leather stitching; racing prowess, with 200-plus- horsepower engines; famous owners; and even their possible investment value.

Today, with the stock market in the doldrums, investors seeking
hard assets are turning to vintage cars — often for more than $1
million, says Keith Martin, publisher of Sports Car Market magazine in Portland.

“At the moment, important cars are making crazy money,” he says.
“Baby boomers still have all the money. Half of them are saying, ’I
always wanted a Ferrari SWB.”’

Bugattis, along with Ferraris and Mercedes-Benzes, are the most
coveted of the collectibles, based on auction prices. The Bugatti 57SC Atlantic at Mullin’s museum is, for the moment, the world’s most valuable car because only three were made, and only two of them are known to still be intact. The other one is owned by fashion designer Ralph Lauren, who displayed some of his Bugattis, Jaguars and Porsches at Boston’s Museum of Fine Arts in2005.

Collectors who buy vintage cars for money, not just for love, face
many risks in making a profit. Inthe opaque and illiquid classics
market, they struggle with everything from determining a fair price
and finding a buyer to ensuring a seller isn’t passing off a heavily
repaired model as an original, says Glickenhaus, general partner at
New York investment firm Glickenhaus Co., which manages $1.3 billion.

Consider the price swings for Ferrari 250 GTE four seaters from the
early 1960s. In 1990, the cars were selling for as much as $250,000, up from $30,000 to $40,000 three years earlier, publisher Martin says. The price swooned to as low as $50,000 before recovering to $100,000 in the past few years.

“There is a huge business in buying and selling classic cars, and
these guys will tell you whatever you want to hear,” says
Glickenhaus, whose collection includes seven Ferraris. “To the
average person, it is not a good investment.”

Collectible cars have outperformed stocks, at least in the past
four years, according to the Hagerty’s Cars That Matter “Blue Chip”
Index, compiled by auto appraiser David Kinney of Great Falls, Va.

The index, which contains the estimated values of 25 of the most popular collectible autos, increased more than 61 percent from September 2006, when it started, to the end of July.

That compares with a 16 percent loss in the Standard Poor’s 500
Index. The 1958 Ferrari 250 GT California Spyder LWB gained 131
percent in that period to an estimated value of $3.3 million,
according to the HCTM index.