Economics 101

Entering the collector car market: a guide for Gen Z

by Andrew Dzierwa
12 April 2022 4 min read
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Anthony Metz's 1965 Chevrolet C10. Photo by Anthony Metz

Anthony Metz has always loved his father’s Chevrolet 1978 C10. “I remember riding in it with him when I was a little guy and I knew I wanted it then. He passed it on to me and helped me get it running and driving.” Since then, Metz, now 30, has built on his love of the model and purchased back into the family his great-grandfather’s 1965 C10 as well. These aren’t just the projects of a younger enthusiast, though: they’re assets, too.

Metz is part of a growing number of young enthusiasts who have successfully melded their passion with an appreciating investment. Done right, this strategy is hard to beat. You can’t take your stocks out for a weekend drive, and you can’t wrench on a painting with your buddies. You can make memories and money at the same time by picking up a car you’ve been lusting after, but as with any potential investment, it takes a bit of forethought and planning.

Over the last four years, Millennials and Gen Z insurance quotes have increased to nearly 25% of Hagerty's total.

Hopping into the collector car market for the first time can be a bit daunting, and with variables from COVID’s economic impact on cars to trouble finding parts for ‘90s classics, it’s easy to get caught up in over-analysis. Start with this: cars are about passion. Pursue what excites you. Next, well, it’s time for a few fundamentals.

Of course, this is Hagerty Insider and not a source of financial advice—be sure to perform your own due diligence. Nevertheless, before making a significant investment in a collector car, make sure you’ve got the financial literacy building blocks in place. Asset purchases should come after you’re comfortable squirreling away portions of your paycheck and are fully aware of impact of debt on your personal balance sheet. Then you can start building up resources for your purchase.

When you have an objective, it helps to label your accounts, according to Tori Dunlap, founder of Her First 100k and successful financial education guru. “You're so much less likely to take money out of an account called ‘’65 Mustang’ psychologically, because if you take money out, you're one step further away from being able to buy that ’65 Mustang.”

Next, consider that you aren’t just purchasing regular transportation—you are purchasing something you can use that will also (hopefully) appreciate over time. Take a moment to put that car you’re passionate about under the microscope: research market trends and understand how the car is valued. Traditional asset classes like equities, fixed-income securities, and real estate, can all be assessed with these criteria, and a drivable asset isn’t any different.

Viewing a collector car purchase through the lens of value investing can help focus what vehicles to consider. What’s value investing? To use a market analogy, think Coca-Cola and not Bitcoin. “Stock pickers tend to run into trouble timing the market in the short run with brand new, highly-levered companies. On the contrary, well-established companies have produced quality investment returns for their shareholders over a long period of time due to proven business models and healthy financial statements”, said Cole McCardel CFP, Financial Advisor of Motoring Wealth Advisors of Raymond James (motoringwealth.com), who specializes in financial planning and investment management for auto enthusiasts, collectors, auto-related nonprofits and motorsport organizations.

Dunlap agrees, adding, "Every single 20-year period in the last 125 years of the stock market has made money. I really encourage Gen Z and younger Millennials to focus on long-term investing. The sexy investing— cryptocurrency and day trading— they’re like buying Jordans. These investments are very sexy, but they're not very stable or consistent.” In other words, as it relates to collector cars, the safe bet is to go with a car likely to hold or gain in value based on a consistent history of desirability. 

How do you figure out collector car market trends, or whether that car you have your eye on has investment potential? Check out tools like Hagerty’s Market Rating, an index similar to the DJIA or NASDAQ Composite, or Market Trends, which measure the strength of the North American collector car markets. Hagerty’s Valuation Tool helps potential buyers know if they’re paying the right price for the vehicle in question. Taken together, these tools can help paint a picture of a potential investment’s history and standing in the marketplace.

Take Metz’s Chevrolet C10 pickups, for example—do they fit the model of collectible classic that doubles as an investment? Among policies issued by Hagerty in the past four years, the Chevrolet C10 has been one of the most popular vehicles among people between the ages of 18 and 29. That makes sense—older trucks are a great way to maintain some utility while still driving a classic. Given that they were made in large quantities and parts are still available for both of Metz’s Chevies, maintenance and restoration is more affordable. Their values have risen in recent years, too. Sure, they won’t have the appreciation trajectory of an air-cooled 911, but their depreciation curve has long since found its trough, and with proper care they’re likely to hold or increase in value. That, coupled with vehicles steeped in family history, and likely many memories to come, these investments were a sure bet. "My mindset has never changed about these trucks being an asset to me," said Metz.

Finally, always remember that you’re deriving value in two ways: financially and through personal enjoyment. “I'm 27, and say I want to buy a classic car,” said Dunlap. “I hope it goes up in value. But honestly, my motivation for buying a classic car is I get to enjoy it right now. It should not be my retirement fund.” A classic car purchase while you’re young may not pay the bills when you’re retired, but if you plan correctly and pay attention to the fundamentals, you’ll enjoy the ride on the way and hopefully come out a little ahead in the end.

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Comments

  • RedRyderSFZ says:

    Yes, they’ll be able to afford a “classic”. Their “classics” though, aren’t what we older guys consider classics. From what I see at car shows and know of gen-Z(ers) is that they’re more interested in cars of the 90s and JDMs. They can afford them because at the moment they’re used cars.
    As for our classics, we’ll hand them down to our kids. My boy won’t be able to afford a ‘67 Fastback but he’ll get one when I’m gone.
    As far as folks “investment” purposes are in purchasing a classic. This always puzzles me. I purchase and drive them for the experience of driving something completely different and having fun doing it. Sure the value of it will go up but for me they’ll always be worth more when I’m behind the wheel than when I’m in a pine box.

  • jane don says:

    It’s the same as always- Young folks get to Dream & work towards what they want–Every Generation says Things are too expensive for the next generation- (Sticker shock)–

  • Alexander Soultanis says:

    I get it and agree. Though I can’t help thinking that when we were kids the value of investment idea of this was far less of a thought. The fun we had with cars was where it was at for us.

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