Canada

For film scholars, Steve McQueen's film Bullitt is remarkable for its innovative car chase scenes. Filmed in 1968, it was one of the first productions to shoot racing scenes live on city streets instead of on a movie set.1 For car collectors, the film is famous for the Highland Green 1968 Ford Mustang GT 390 fastback driven throughout the film — and the curious disappearance of the car after production wrapped. Assumed to be lost or destroyed — and with constant rumors of its underground existence — it became a sort of Holy Grail for Mustang collectors.

Then, in January of 2018, the Bullitt Mustang finally resurfaced.2 Ford executives had teamed with Sean Kiernan, the Mustang's current owner, to unveil the car at Ford's North American International Auto Show in Detroit in a way that authenticated the car's story while honoring Mr. Kiernan's late father, who had owned the car for more than 40 years. Used daily for years and then partially disassembled and stored in the hopes of restoring it in the future, the Mustang's post-Hollywood life is not all that different from that of most collectible cars. Purchased for $6,000 in 1974 and now estimated to be worth $3 to $5 million,3 the Bullitt Mustang is a car collector's dream, with a verified provenance and an enormously impressive investment return.

The Art of Automobiles

When compared to other collectible markets like wine, art or coins, car collecting is relatively new. Car collecting didn't really begin until the World War II generation began saving and restoring the Waltham-Orients, Buicks and Oldsmobiles they grew up with.4 What started as a hobby of preservation turned into an investment opportunity when collector car auctions began in the 1970s.5 Today, the practice has evolved to where car collections can command the respect and value of esteemed art; Ralph Lauren's car collection — estimated in 2016 to be worth at least $300 million dollars6 has been exhibited in museums like the Museum of Fine Arts in Boston and the Musée des Arts Décoratifs in Paris.

In terms of investment, the collectible car market has been one of the strongest performing categories of collectibles, with prices increasing 457% for the 10-year period between 2006 and 2016.7 However, it's important to recognize that collectibles markets tend to be volatile, and anticipating what will be considered valuable in the future is exceedingly difficult. Lately, the market appears to be leveling out, providing an opportunity for more serious collectors who are looking for more than just financial returns.8

Millennials Are Beginning to Drive the Market

As the generation with the highest levels of disposable income on hand, baby boomers have long driven the market for collectible cars; however, we may be starting to see a shift. Millennials have noticeably become more active in car collecting lately, with 2017 being their strongest year ever.9 They tend to shun the fast, flashy cars preferred by their baby boomer parents in favor of vehicles with more character and utility. Hagerty Insurance, the global leader for collector car and boat insurance, noted a 21% increase in insurance quotes requested by millennials in 2016, compared to a 7.4% increase from Boomers and 2% decline from "pre-Boomers."10 Hagerty also noted that in 2018, vintage trucks and affordable performance cars are topping the market.11 The vintage and performance vehicle popularity seems to reflect the recent millennial and Gen-X preference for vintage pickup trucks and SUVs, with Land Rover Defenders, Ford F-series pickups, and Chevy Monte Carlos as noted up-and-comers.12 Nevertheless, Hagerty's blue-chip index still remains at a historic high.13 Top blue-chip cars like vintage Ferraris, Lamborghinis and Porsches14 will almost always maintain their value due to their scarcity, cross-generational popularity and sought-after design.15

When Collecting, Proceed With Caution

Talk to any car collector about getting into the market and you'll likely get the same advice: do it for the love of the cars, not the money. When the Bullitt Mustang last exchanged hands in 1974, the man who purchased the car didn't do it because he expected to cash in 40 years later; he simply loved and appreciated the style and performance of the Ford Mustang. Along with a love of cars, it's smart to set goals and expectations correctly. If you're interested in collecting cars, be sure to remember the following before you buy:

  • Do your research. Authenticity, originality, history and provenance bring value to a car. 1968 Mustangs aren't particularly rare — the current value of the Bullitt Mustang has a lot to do with the story associated with it. But scarcity can be a huge factor in the value of many other collectible cars. Talk to experts and attend events or join car clubs to research specific types of vehicles and get a better sense of the current collector's market. Events like the Goodwood Revival and the Pebble Beach Concours d'Elegance® or showrooms like Morris and Welford in Newport Beach, California are excellent places to meet experts and see what may be out there.
  • Know your budget. Not only will you spend money on the purchase of a car, but any repairs, upkeep, storage and insurance will require additional investment. Many serious collectors build elaborate temperature-controlled garages to store their collections or hire caretakers specifically to care for their investment. Not all collections will require this level of attention, but you should evaluate and understand the needs specific to your acquisitions. Maintaining a collectible car's function and condition is essential to retaining its value.
  • Plan for the future. It is important to determine what will happen to your collection in the future. Are your children ready to take on the care, maintenance and tax costs of your collection? Or are there opportunities to donate your collection to charities or museums, making it possible to share your collection with future generations while alleviating the potential estate tax burden? It's important to think through these questions and plan accordingly to ensure your collection is taken care of well into the future
  • Footnotes

    1 "The Return of Steve Mcqueen's Bullet Mustang," CBS News, April 22, 2018

    2 "How the Original Bullet Movie Mustang Was Rediscovered," Car and Driver, March 2018

    3 "Steve McQueen Bullet Mustang is Unveiled," Vanity Fair, January 14, 2018

    4 "An Introducetion to AACA," Antique Automobile Club, Accessed May 17, 2018

    5 "Baby Boomers Created the Classic Car Market," Car and Driver, February 2018

    6 "Ralph Lauren's Classic Car Collection," Forbes, Noivember 11, 2016

    7 "Wine Overtakes Classic Cars," Knight Frank, April 2017

    8 "April 2018 Market Rating," Hagerty, April 2018

    9 "Millennials Redefine 'Classic'," Detroit Free Press, August 12, 2017

    10 "Millennials growing force at Barrett-Jackson car auction," USA Today, Jan 21, 2017

    11 "Top 25, February," Hagerty, February 2018

    12 "Millenials Redefine 'Classic'," Detroit Free Press, August 12, 2017

    13 "Blue Chips," Hagerty, Accessed May 8, 2018

    14 "Buying a Vintage Car for Fun and Profit," Forbes, October 17, 201718. "How to Buy Classic Cars," March 11, 2017

    15 "How to Buy Classic Cars," March 11, 2017

  • Disclaimer

    This white paper is the property of BNY Mellon and the information contained herein is confidential. This white paper, either in whole or in part, must not be reproduced or disclosed to others or used for purposes other than that for which it has been supplied without the prior written permission of BNY Mellon. This material is provided for illustrative/educational purposes only. This material is not intended to constitute legal, tax, investment or financial advice. Effort has been made to ensure that the material presented herein is accurate at the time of publication. However, this material is not intended to be a full and exhaustive explanation of the law in any area or of all of the tax, investment or financial options available. The information discussed herein may not be applicable to or appropriate for every investor and should be used only after consultation with professionals who have reviewed your specific situation. The Bank of New York Mellon, Hong Kong branch is an authorized institution within the meaning of the Banking Ordinance (Cap.155 of the Laws of Hong Kong) and a registered institution (CE No. AIG365) under the Securities and Futures Ordinance (Cap.571 of the Laws of Hong Kong) carrying on Type 1 (dealing in securities), Type 4 (advising on securities) and Type 9 (asset management) regulated activities. The Bank of New York Mellon, DIFC Branch (the “Authorised Firm") is communicating these materials on behalf of The Bank of New York Mellon. The Bank of New York Mellon is a wholly owned subsidiary of The Bank of New York Mellon Corporation. This material is intended for Professional Clients only and no other person should act upon it. The Authorised Firm is regulated by the Dubai Financial Services Authority and is located at Dubai International Financial Centre, The Exchange Building 5 North, Level 6, Room 601, P.O. Box 506723, Dubai, UAE. The Bank of New York Mellon is supervised and regulated by the New York State Department of Financial Services and the Federal Reserve and authorised by the Prudential Regulation Authority. The Bank of New York Mellon London Branch is subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. The Bank of New York Mellon is incorporated with limited liability in the State of New York, USA. Head Office: 225 Liberty Street, New York, NY 10286, USA. In the U.K. a number of the services associated with BNY Mellon Wealth Management's Family Office Services– International are provided through The Bank of New York Mellon, London Branch, 160 Queen Victoria Street, London, EC4V 4LA. The London Branch is registered in England and Wales with FC No. 005522 and #BR000818. Investment management services are offered through BNY Mellon Investment Management EMEA Limited, BNY Mellon Centre, 160 Queen Victoria Street, London EC4V 4LA, which is registered in England No. 1118580 and is authorised and regulated by the Financial Conduct Authority. Offshore trust and administration services are through BNY Mellon Trust Company (Cayman) Ltd. This document is issued in the U.K. by The Bank of New York Mellon. In the United States the information provided within this document is for use by professional investors. This material is a financial promotion in the UK and EMEA. This material, and the statements contained herein, are not an offer or solicitation to buy or sell any products (including financial products) or services or to participate in any particular strategy mentioned and should not be construed as such. BNY Mellon Fund Services (Ireland) Limited is regulated by the Central Bank of Ireland BNY Mellon Investment Servicing (International) Limited is regulated by the Central Bank of Ireland. BNY Mellon Wealth Management, Advisory Services, Inc. is registered as a portfolio manager and exempt market dealer in each province of Canada, and is registered as an investment fund manager in Ontario, Quebec, and Newfoundland & Labrador. Its principal regulator is the Ontario Securities Commission and is subject to Canadian and provincial laws. BNY Mellon, National Association is not licensed to conduct investment business by the Bermuda Monetary Authority (the “BMA") and the BMA does not accept responsibility for the accuracy or correctness of any of the statements made or advice expressed herein. BNY Mellon is not licensed to conduct investment business by the Bermuda Monetary Authority (the “BMA") and the BMA does not accept any responsibility for the accuracy or correctness of any of the statements made or advice expressed herein. Trademarks and logos belong to their respective owners. BNY Mellon Wealth Management conducts business through various operating subsidiaries of The Bank of New York Mellon Corporation. ©2018 The Bank of New York Mellon Corporation. All rights reserved.