Driven by Desire Turning Cars into Portfolio Value

Excellencies, distinguished guests, ladies and gentlemen, thank you very much for the opportunity to speak to such a high-profile audience about a topic which is of course much lighter than the change of the world order uh that we heard from Ray Delio. It's great to hear such a legend live. Um, but that's maybe the reason why I was put into this place between two very heavy topics to make it a bit lighter to give you a kind of uh capuccino break about it. But nevertheless, I think it's a topic that is uh underestimated from a lot of um investors uh talking about classic and collectors cars as an alternative investment class. What does myself qualify to talk to you?

First, I have never been a car dealer. I never worked for an auction house. I never run a workshop. I am an enthusiast. That's true.

But my background is real estate development. I'm running my real estate development companies uh in Europe and now here in UAE. Um since 40 years. Um and I developed next to my job as um a CEO and owner of my companies um a concept focused on classic car enthusiasts centers for classic car enthusiasts but as a real estate investment project um I did this as a professor for real estate development at European Business School around the 2,000 years and we developed then after the numbers were looking very great on the scientific ific side, we moved it to the company and we realized some of these centers. These are still up today uh the largest classic car centers in the world and out of this experience having 200 tenants in this classic car business.

I got very deep insights in the market without being myself really being part of this market. So I'm in a privileged position and maybe I'm one of very few ones here at uh uh the finance week. I don't have to sell you anything. I just can give you my honest opinion about this opportunities. The opportunities but the risks as well.

Um having said this um there are actually two opportunities to present such a topic. I could do it as an enthusiast showing fantastic pictures of glassy cars. Uh entertain you with his pictures. You will go out in a good mood. Maybe you would not have learned anything but you will would have great 10 minutes.

Or I could do it as a consultant and hammer you with 25 slides in 10 minutes looking very impressive, very scientific, but in the end um there is probably not much more value for you in it. So let me try to find a way somewhere in between to give you a very few insights in 10 minutes. Seven are left. Uh even if I would have 10 hours, it would not be enough to give you a deep insight. But I can hopefully give you a glimpse of it.

First let's have a look at the market is if the market is relevant. Globally we have more than one trillion classical collectors cars in assets. So that's a significant number to think about it. When you think about uh the revenue pool of 90 billion US dollars per year then you and you compare it for example with the art market there we talk about the numbers are varying 30 to 50 billion US dollars per year. So it's two times the art market.

Talking about alternative investments and a very interesting point from an investment standpoint, there is a very low correlation to other assets. That means to a certain extent you can hedge your portfolio with uh such an investment. And what is even more and this is going to be a bit more um important later on in the presentation. We have annually more than 5,000 deals uh of cars beyond $500,000 US value. When we talk about family offices, we talk about high net worth and ultra high netw worth individuals.

For them, this is a common topic. Around 35% of the um ultra high net worth individuals have classic cars in their portfolio. This is just a normal thing to have from a certain wealth. You buy a classic car, maybe you don't drive it, but you have one. And interestingly, even if we talk about autonomous driving, electric cars and whatever, people are going on investing in this market.

Not to mentioning that new markets are coming up now in a moment. I will talk about this in a minute. The good thing is these automotive investments are highly liquid globally. You can sell them on auctions wherever in the world. We had a fantastic auction of RM Sabis just a few day here in Abu Dhabi, one of our partners.

They sold 84 million US dollars cars uh within a few hours. Great success. And you can do this all over the world. You can take the car wherever you want. There are some taxes now even higher in the US.

But besides this, it is uh really a funible asset and it offers inflation protection. That's a bit more like real estate. You have really an asset uh tangible asset and this is not in um directly connected to any inflationary developments. And last but not least, of course you have a lot of joy with these products. And this is I think a very important point.

If you don't feel what the PE people drives who love classic and collectors cars, if you don't have any sense for that, maybe it's best to stay away from it. The passion element is a very important element, not only for your own excitement, but to understand what drives the market. Now, let's have a look at the value pool of this classic car topic. We have first trading and brokerage which equals about 40 to 45 billion US dollars annually. Then we have vehicle manufacturing.

I'm not really sure if this should be in it because these are actually in my understanding copies um of cars. U but we leave it there. Very important especially for the future logistics and storage but even more uh kind of service for the collectors. Then we have uh the administration, financing and insurance. This is going in the same direction like logistics and storage.

These are services to the collectors because it's just a bit of work to manage a collection of cars. Uh then we have maintenance, restoration and spares. This is around 30 billion US dollars annually. I would stay away from this business. That's a very complicated business very often driven by the owner of the workshop.

still a cottage industry investing in this topic. I think it's difficult to take it over from a entrepreneur who has run the business for 30 years now um needs a succession change um and um this is actually quite difficult. I would stay away from this. And then very strong and very strongly growing from a small basis is the community and experience elements because it's about sharing your passion with other people. Um there are fantastic events like Goodwood Goodwood revival as one of of the examples.

We have the Concord Eleance in Vadesta. We have the Millimillian Italy. We just um concluded with my company a millimeia event here in the UAE uh fully sold out people from all over the world from 36 countries. They are not here because they have no other opportunities to drive their cars. They want to they want to get in touch with the community.

They want to spend great time together and enjoy this. This will have in my opinion a massive growth in the future. Now about the market, you want to know can you make money with it? Yes. You see all these charts here.

This is the K500 index. It's from Simon Kitson, one of the leading figures in the classic car world. He analyzed all the auction results. They are transparent from 1994 till 2025. And you see there is a significant um increase of value of the cars.

But and that's the reason why I showed it like this. You see the yellow chart. This is the K500 average of the 500 most important uh motor cars in the world. The types of motor cars this is quite solid solid growing and interestingly you don't see any huge peaks at COVID times. That's what I meant when I say it's not correlated to other assets.

There was not very much happening in the co times. Even the market was going up because the people had the opportunity to drive their cars um while they have nothing else to do. But you see the other curves, the green one and especially the blue one. These are Ferraris. Ferrari pre-1958 and Ferrari post 1973.

You see they are not really correlated. Even in one brand there is a completely different uh um um development in values. when you look at different uh years of the cars and this is very important to know it's a highly complex market and this is actually a warning don't believe anybody who tells you put your money on the table I will get back with you with revenues of 10 to 15% per year for sure don't believe them very important and I go through a bit faster because I'm running out of time already I blame it to my weak voice. Um the second point is the most important one. The total ownership cost.

You cannot just put the car somewhere and do nothing with it. You have to pay for storage. You have to pay for some maintenance even if you don't drive the car. All of this costs money. And I would say a good guess for a high value car is minimum $20,000 US per year.

So, it makes no sense to invest in a car with a value lower than $250,000 if you pay every year just for maintenance $20,000. You have to go higher and that's what I call the investment market. The rest is absolutely fine, but this is personal joy. I have to come to an end, but I want to stress the point I mentioned before. It is about passion and investment and community building and that's maybe interesting for you.

We saw it at our millimeia event uh um in the UAE last week. We had tremendous success because the people wanted to come together. They want to join. They want to share their passion. And for companies it was by the way very interesting because it was not the 10th golf event or the 15th tennis event.

It was something completely unique. And this was very interesting for companies especially from the financial sector just to mention this to be part of this and I hope I can play the video. This is a high netw worth individual from the UK Steve Brooks driving a Bugatti 37 worth3 million US. Ah I think the video is not working. Can we play the video?

Only 50 seconds.

Yes. No. No we can't. But you find it on the homepage of my company Millia Experience UAE and on Instagram. There you see what really passion means.

He completely rebuilt the water uh pump of his car just to join the rally again. Spend a whole night with another gentleman together to be back on track. I have only 10 minutes. This was only a small glimpse in this topic. It is a highly complex topic.

You can make very good money with it. But please don't believe a lot of companies. They are out there in the moment. They say we buy just 15 20 cars. We will raise the value.

They take of course their share as well and they make money. Don't invest without any passion in it. Enjoy the car. If you make what is the average 7% per year, fantastic. If you don't make it, you have an emotional revenue with the whole topic.

Um and please don't make any decisions without experts. I'm in this business now since 25 years. I had I never counted them 80 90 classic cars all the time uh in my collection. Um and the more I know about the classic cars, the more I trust real experts and the less I I I'm courageous enough to make my own decisions. Um only 10 minutes, a short glimpse in an investment topic.

I hope it was a nice insight for you in a maybe completely new topic. Thank you very much for your kind attention and sorry for being two minutes longer than originally expected. Thank you very much.