Ferraris tend to keep their value through economic downturns.
Courtesy of Drift
Drift Capital, a New York-based company launched in September, is offering “fractional investments” in a portfolio of collectible automobiles with a track record of increasing in value.
“This is an enormous opportunity for enthusiasts and investors,” says Eden Cooper, Drift Capital’s managing partner.
Drift plans to raise US$50 million to US$75 million to fund its automotive acquisitions. “There is a US$50 billion market in cars worth more than US$1 million,” Cooper tells Penta. “It’s hard for most people to get exposure to even one such car, let alone a fleet of them. What excites us is that there’s more than one potential upside to this investment.”
Collector car sales brought in US$4.3 billion internationally in 2022, according to Classic.com, which helps buyers find collectible and exotic automobiles from vendors worldwide.
Becoming a classic-car investor rather than an actual collector could reduce stress. After all, caring for classic cars you own can be an expensive business. Once the car is purchased, it may require a long restoration, followed by appropriate storage (climate control is preferred), insurance, and regular maintenance, even if the car is rarely driven.
Collector cars have done well compared to such investment competition as real estate, paintings, and fine jewelry and even the S&P, Cooper says. “Cars such as Ferraris that are seen as investment grade have not experienced major and lasting dips,” he says.
Cars that could be part of the portfolio, Cooper says, include the Mercedes-Benz 300SL “Gullwing” and Roadster, the Porsche Carrera GT, the Aston Martin One-77 (just 77 made), the Ferrari F40 and F50, the Maserati 3500 GT and the Duesenberg Model J.
The Mercedes-Benz 300SL Roadster is a blue-chip collectible.
Courtesy of Drift
But, of course, the market value of collector cars fluctuates, sometimes for unforeseen reasons—such as the pandemic or inflation. The latest Hagerty Market Rating—which uses a weighted algorithm to calculate the strength of the North American collector car market—showed its sixth straight monthly decline in its October report, but this is from what was widely perceived to be a fairly overheated market.
Brian Rabold, vice president of automotive intelligence at Michigan-based Hagerty, tells Penta that he’s seen some classic car investment funds, but the US$50 million goal “is a new level so far. We’ve also had some art funds like this, for passion investments.”
Rabold characterizes the collector market as “tapping the brakes a little bit now. But it’s a calming rather than a big pullback.” He adds that he expects to see a return to pre-Covid levels of enthusiasm relatively soon, and Hagerty has said that optimism among industry experts is steady.
Drift says it will be assembling its portfolio via what it calls the Drift Automotive Returns Composite (DARC), which is designed to identify models with a 20-year track record of “outperformance” across multiple economic cycles, thus providing stability in capital preservation.
Drift is launching amid a dramatic explosion in classic car enthusiasm, including clubhouses that combine storage of a collector’s vehicles with meeting places, bars, and restaurants. Hagerty has Garage + Social, which is rapidly expanding. The Hangar Group, catering to some collectors who’ve outgrown their home storage capacity, is working on its second set of “premier garage condominiums” in Florida. Autostrada is a 10,000-square-foot “boutique automotive club and showroom” with a bar located in a former Steinway piano store in Westport, Conn.
Rarity is a factor in collectability, and this Bizzarrini 5300 GT Strada is very rare—only 133 were built.
Courtesy of Drift
Gioel Molinari, the former president of Butterfly Network, a medical device company, and before that a senior technologist at Bridgewater Associates, opened Autostrada in early 2022 with his wife, Ronni. “We perceived a lack of available high-quality storage for collectible cars,” Gioel Molinari tells Penta. Autostrada currently houses 28 cars whose owners pay US$400 a month, plus a $1,000 initiation fee. The facility is almost fully subscribed, he says.
Cooper says that Drift will be adding and subtracting cars as the market dictates, and storing them in several geographically spaced locations.
“What we won’t be doing is flipping cars for short-term profit,” he says. “Our goal is to provide the opportunity to participate in benefiting from the long-term equity in these incredible automobiles.”
One of the perks of investing in Drift, Cooper says, would be getting to occasionally drive a selected number of the “assets” without holding title to them.