Brian Joss – The 2019 Value in the Classic Car Market (VCCM) Conference was a resounding success, held in early May at the Villa Castollini Conference Centre overlooking the Knysna Lagoon.
Attended by classic car experts and enthusiasts from all over South Africa, and by delegates from Knight Frank of London, which launched its Wealth Report 2019 at the conference, organiser Tommy Roes assembled a diverse number of speakers with topics that covered wide-ranging subjects within the classic car field, as well as in associated fields, such as finance, insurance, and other prominent appreciating collectables such as art and whiskey.
“It’s all about passion”, was Roes’s chief message in his introduction to the 2019 event.
The keynote speaker at the 2019 VCCM was Jimmy Price, managing director and founder of Hi-Tech Automotive, the world-famous small-volume sports car manufacturer based in Port Elizabeth.
In a moving address to conference delegates, Price charted the history of his company which started with just nine employees in 1989 and grew to comprise a staff complement of over 600 employees, building low-volume sports cars for export that are globally renowned for their build-quality and exacting attention to detail.
Hi-Tech has built close to 4 000 Cobra replicas (marketed under the name Superformance in America), and they are the only replica company that is licensed to use the Shelby name. Another hugely successful project was the construction of over 700 mid-engined Noble sports cars, as well as the Ford GT40 continuation series cars, the Daytona Coupe sports car, and later the 378 GT Zagato. More recently Hi-Tech has begun building exclusive limited number continuation cars.
After the company’s production peak in the early 2000s, export-orientated Hi-Tech Automotive was hit first by the strengthening of the rand and then the global recession of 2008 and this double-whammy led to the business going into Business Rescue.
After a long battle Hi-Tech managed to rehabilitate itself from Business Rescue, but Price also realised he had to redefine his business.
“What was also happening to our business was that the biggest competition to our Cobra cars were our own customers who were now selling their cars on the used market, as they became older, and perhaps less impassioned by a legend that was spawned in the 1960s.”
“To survive, we needed to come up with some different ideas. One of the ideas that we came up with were low-volume, limited-edition continuation cars. “
Hi-Tech thus re-invented itself as the builder of much more exacting, limited edition continuation cars, selling at much higher prices, to discerning collectors of famous editions of the Cobra, the Chevrolet Corvette Grand Sport and the extremely limited Ford GT40 known as the famous 1075 car (it’s race number) that won both the 1968 and 1969 Le Mans 24 Hour. To replicate the details of this car, Hi-Tech managed to convince the owners of this priceless famous car to release it from its vault where it is stored under high security in the United States, to extract the myriad details that are so important to high-end continuation cars produced in limited numbers.
“We have also looked to the future and realised that modern enthusiasts want a classic that looks cool, but drives like the latest BMW or Mercedes. So we are now building, under license, continuation cars of the 1965 to 1967 Ford Shelby Mustang, using new original-spec body panels and interiors, but with modern engine and drivetrain and modern suspension and brakes.”
In attempting to define whether his career in sports car building has been a success or failure, Price admits that as a business venture Hi-Tech has seen many successes and some spectacular failures. Now well out of Business Recue and re-established as a limited edition continuation series manufacturer, Price and Hi-Tech Automotive (assisted by his sons Justin and Nicholas) are looking to the future of the “cool car business.”
Price summed up his journey in the automotive business as “much success, much disappointment, much pain, but no failure.”
Knysna-based Brian Bruce sees himself as “the custodian” of his collection of classic and vintage cars as well as automotive artefacts, housed under the name of the Parnell Bruce Collection
Bruce has assembled a small team of car restorers sourced from the Knysna area and works closely with small businesses in the Garden Route community to encourage skills development. At the 2019 VCCM Conference, Bruce explored the concept of “value being greater than just a monetary definition.”
“We have to ask ourselves whether we want a classic car because we are passionate about the car, or whether because it is a great investment,” says Bruce. “There is nothing wrong with buying a car as an investment, but the minute that the monetary value becomes an obsession, then we lose the integrity that should be present in the whole process. And because of the increasing focus on investment values, I have seen a lot of the passion leak out of our old car movement. ”
Bruce also pointed out that while he is all for creating modern driving renditions of classics in the way Jimmy Price is doing with the new Hi-Tech Mustang project, he feels that there is a place for original cars to co-exist with modernised classics. That the ideal would be to have both the modernised version and a reliable original car that can also be driven regularly.
“In this sense I am all for upgrading original classics so that they can be reliably driven and enjoyed regularly. A typical example would be replacing unreliable ignition or electrical systems with reliable modern ones, which doesn’t hurt he value, as long as the original parts are retained and stored away for possible later replacement.”
Turning to the investment side of the collectable asset question was Leon Strümpher, a portfolio manager at Sanlam Private Wealth, who is heading up a classic car investment initiative within the company, and is a classic car owner himself.
“When thinking about investing in a classic car, my advice would be to buy one that you love and enjoy, because this is an investment that doesn’t pay an annual dividend,” says Strümpher. “And I would advise my clients from an investment point of view that one needs to be patient. In many cases you would need to hold onto a car for four-to five years to realise a significant return on your investment”
Strümpher predicts that the more expensive cars out there will continue to increase in value at a significant rate, more so than the so-called affordable classics.
The investment adviser cited the example of rock music drummer Nick Mason who bought a 1962 Ferrari 250 GTO for 35 000 pounds in 1978. Today that car is worth in the region of 30-million pounds, and working that figure back to 1978 values, Strümpher told the conference that 2019 prices for one of the 39 GTOs built would equate to a figure of 1.5-million pounds some 41 years ago. So Nick Mason did indeed make an excellent investment decision with his proceeds from the best-selling album “Dark Side of the Moon”.
Bryan Webb, Managing Director of Webb & Sons, the Cape-Town classic car restoration specialists, stressed the importance of research before embarking on a restoration, especially with an expensive classic car. Webb is an avowed Aston Martin fan, having grown up near Newport Pagnell, the traditional home of Aston Martin, and he took delegates through a number of restoration case studies on these fantastic rare motorcars. Some of the cars suffered from alarmingly poor quality so-called restorations. One case study revealed a DB4 that had extensive amount of metal damage covered by body filler, to the point where, when Bryan and his team took the car down to bare metal, they were left with some 45 kg of body filler that had been chipped off the car.
“I was very encouraged to hear Brian Bruce’s plans to introduce a skills development programme in our field because there is a shortage of specialised metal forming and welding skills in this country. My advice would be (in restoring a rare valuable car like a classic Aston Martin) to send the parts that need specialised work to reputable firms overseas that have the skills resources. Then ship the parts back and do the assembly here in South Africa where we can take advantage of our cheaper labour rates, for tasks that don’t require such specialised skills.”
One of the features of Webb’s address to VCCM was the fact that despite extensive corrective restoration sometimes needed for a car, with something as valuable as an Aston Martin restoration is nearly always viable, in terms of return on investment.
James Xulu is the Business Development Manager for Transglobal Cargo, a Durban-based company specialising in the import and export of collectable and valuable assets. In his presentation, Xulu took delegates briefly through many of the process required to legally import classic or collectable cars to South Africa. He stressed the different customs duties, luxury tax and import tax structures applicable to cars of different ages. For instance, if a car is younger than 20 years it is liable for import duty of 25 percent. But if a car is 40 years old or more, it is not liable for import tax, but a substantial luxury goods duty is payable, as well as VAT.
Left-hand drive cars built before 2000 can be imported, and cars intended for road use here (not to simply sit in a private collection or a museum) need to have a valid roadworthy certificate.
Xulu strongly advises people wanting to import a classic car to get all the documentation in place and lodged with the authorities before shipping the car to South Africa.
“I understand collectors are passionate and often the car is bought and shipped to South Africa and only then does the buyer start applying for the various documentation. We advise people to keep the car in its country of origin and let a specialist company get all the documentation in place before shipping it to South Africa. There is no sense in paying storage here in South Africa before it is cleared by customs.”
There were a number of speakers that related their experiences in the classic car hobby as well as classic car events and endeavours at VCCM this year. The speakers here included:
Ian Shrosbree, the organiser of the Jaguar Simola Hill Climb in Knysna, gave delegates a fascinating behind-the-scenes glimpse of the evolution of this event which has become one of the premier motorsport events in the country since its inception a decade ago.
Brian Noik is an avid classic car collector and a well-known trader in classic and vintage machinery. His CV lists the fact that he has sold cars from Beetles to Bugattis, and everything in between. Brian gave a highly amusing talk on what can sometimes go wrong when it comes to buying and selling classic cars, detailing some of the ingenious scams that he has come across during his time in the old car hobby that dates back to childhood.
The DJ Run is a commemorative event for vintage motorcycles that date back prior to 1936. Ian Holmes, Chairman of the Vintage and Veteran Club in Johannesburg, gave a fascinating talk backed up by priceless historic photography on this event which has been running since 1970. His relaxed and anecdotal style of presentation, detailing the trials and tribulations and extreme heroism of the original event riders, was a highlight of the 2019 VCCM Conference.
Spitfire restoration. Ian Grace evoked many memories of reading about World War II exploits in his fascinating address on the South African restoration project of a Spitfire, the aeroplane that many believe was key to Britain surviving the aerial bombardment of the last World War. Ian detailed how many Spitfires came to South Africa after the war, and recounted the current restoration project of one them that had subsequently crashed, Mk IX E 5518, the world’s only survivor of this particular series of Spitfire.
BMWs rule. BMW is not a name that particularly arises (at least in South Africa) when the subject of classic cars come up. But with the advent of the “youngtimer” movement where cars of the past 30 to 40 years are becoming extremely collectible, BMW is at the forefront, with special South African renditions such as the 745i, 333i, 325iS and the delightful imported 2002 enjoying almost fanatical interest. Colin Van Son, Chairman of the BWW Car Club of Gauteng, gave delegates food for thought by detailing many more of the special BMW models that are currently capturing collectors’ hearts.
Estate duty. Stanley Broun, fiduciary and tax specialist at Sanlam Private Wealth, gave a thought-provoking and sobering talk on the effect that Estate Duty can have on a classic car collection, and whether paying estate duty in advance is a viable consideration.
Can South Africa deliver a workable economic plan? Sanlam investment consultant Arthur Kamp confronted the severe socio-economic challenges that face South Africa, and challenged Government to devise a workable solution to the problems caused by current reactionary policies and budgets constrained by the reality of decreasing resources.
Insights on insuring collectables. Gordon Massie is an insurance expert, and Managing Director of Itoo Artinsure. While touching on other aspects of collectable assets, Gordon stressed the value on an agreed value policy when it comes to insuring an appreciating collectable.
“What are the risks facing an investor in collectables? The first one is damage. Damage can have a slight effect or a disastrous effect on the value of a collectable and you as the collector should have the right to decide whether it is a total loss or not. This should be part of your insurance policy agreement. ”
Massie also raised the subject of forgery. He cited the example of a painting by Walter Battiss that was damaged and the owner decided that it was irreparable. Massey’s company paid the agreed value, and thus became the owner of the damaged painting. The company then investigated whether the artwork was repairable, and discovered that it was in fact a forgery.
“The owner, our client, was innocent, and he was in fact covered for forgery. For this reason the claim stood. So, check that you are covered for forgery as well, when it comes to insuring valuable collectables.” As many collectors of classic cars have discovered, forgeries are also rife in the classic car world!
As in past VCCM conferences, Tommy Roes and his team assembled a number of speakers addressing the value of assets other than classic motor vehicles.
In line with this tradition there were some fascinating talks on wide-ranging subjects, but with a common thread relating to the collecting of appreciating assets and the passion they engender.
These talks included the works of Anton van Wouw. New research has recently come to light on the bronze sculptures of famous South African artist Anton van Wouw. A passionate, highly erudite talk was delivered by Dr Alastair Meredith of auctioneers Strauss & Co, and how this new research has caused a re-evaluation of the works of Van Wouw, the sculptor most famous for his statue of President Paul Kruger, which still graces Church Square in Pretoria.
For the second year at VCCM, one of the talks that had delegates smacking their lips was from Marc Pendlebury, founder and co-owner of WhiskyBrother, a company that specialises exclusively in rare whisky.
“Passion is the common denominator between collecting old cars and establishing a serious whisky collection,” noted Pendlebury. “Before you start collecting whisky, you should start drinking whisky,” exhorted Pendlebury.
An interesting fact that Pendlebury offered was that last year the export value of scotch whisky was valued at 4.7-billion pounds. Whisky has a 500-year recorded history, and a probable unrecorded history of 500 years before that.
“It’s a journey. I decided to collect special whisky and passion took over, and I decided to put my money exclusively into fine examples of scotch whisky. The return on investment in the past few years has been in the region of 40 per cent, hence the title of my talk, which is ‘Whisky Makes it Mark.’”
Tommy Roes closed out the 2019 event with a tantalising teaser of his new project. Along with Paul Kennard of Concours South Africa fame, they will be soon launching a market value guide for South African classic cars, something that has not been available until now.
Information supplied by Stuart Johnston Communications
CAPTION: Jimmy Price, managing director and founder of Hi-Tech Automotive. Picture: Motorpress/ Stuart Johnston Communictions