CLASSIC CAR COLLECTION MANAGEMENT

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Grace McDonald
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1 CLASSIC CAR COLLECTION MANAGEMENT

2 INTRODUCTION With classic cars becoming an alternative asset investment class in their own right, the collection of these historic vehicles has become increasingly popular. Traditionally, car collectors have been car enthusiasts by default. Modern collectors, on the other hand, are as likely to be investors as enthusiasts, although they can be both. Regardless of the collector s motivations, they should seek an independent, non-commissioned/incentivised specialist when acquiring, maintaining and disposing of classic cars or when determining whether to hold these valuable assets in a structure (dependent on appropriate tax advice) or in their own names. Classic cars have increased in value by an impressive 334% over the past 10 years; exhibiting by far the best performance of all the luxury asset classes during this period. KNIGHT FRANK 2018 WEALTH REPORT DISCERNING COLLECTORS LOOK FOR CARS THAT STAND OUT AND ARE WORTHY OF THE CLASSIC TITLE.

3 KEY FACTS Make Model Did you know? 1955 Lancia Aurelia B24S Spider America One of 240 built

4 7 TOP TIPS OUR SERVICES PURCHASES / Negotiating the purchase of vehicles, in accordance with agreed strategy, either directly from other collectors or indirectly from brokers or auction houses / Working with advisers to ensure purchase contract terms are appropriate / Researching the history and provenance of cars in conjunction with appropriate experts to establish bona fides / Working with specialists to locate specific cars or types of cars / Ensuring that appropriate third party tax advice has been sought with regard to the payment and mitigation of any appropriate VAT, capital gains or inheritance tax STORAGE/MUSEUM DISPLAY / Co-ordinating storage arrangements / Assisting with strategy to consolidate long-term storage facilities for example, a purpose built facility, residential home, warehouse as required / Ensuring appropriate storage terms, particularly for insurance requirements / Assisting with strategy to establish a car museum / display facilities / Working with specialists to ensure that the museum facility is appropriate for the collector s purpose and objectives 1. DO THE DUE DILIGENCE As per all asset classes, there is a need to be vigilant within the car world to ensure that an unsuspecting and keen new collector is not taken advantage of. To ensure the collector is getting what they re paying for, the car s provenance and history must be thoroughly researched by an expert. Incorrect credentials can mean the difference between hundreds of thousands of dollars or even millions in future value. 2. BUY THE BEST FOR YOU Broadly speaking, the key factors to help determine a car s future success are provenance, originality, usability, rarity and desirability. However, future classics are becoming increasingly difficult to predict. So to prospective investors I say: buy the best you can afford (making sure its mechanical condition and history are checked). But more importantly, buy the car that you love and will suit your needs rather than one you think will appreciate. If you want to use it to take your children to school, for example, then don t buy a fire breathing two-seater! 3. CONSIDER OWNERSHIP STRUCTURES High-value assets may be held directly in the name of the individual, but often, as with art and real estate, they are held using a structure such as a trust, company or foundation. Structuring is particularly beneficial from an estate planning perspective, as it allows collectors to assess their overall wealth position by seeing the value of their cars alongside other assets such as quoted investment portfolios, real estate and bank account balances. Offshore domiciles are popular locations for structuring or restructuring ownership of luxury assets, and well-regulated offshore locations such as Jersey and Guernsey have long been jurisdictions of choice for these structures.

5 KEY FACTS Make Model Did you know? Jaguar Jaguar SS100 This car is named after its top speed

6 7 TOP TIPS OUR SERVICES MAINTENANCE AND UPKEEP / Overseeing servicing with appropriate specialists / Overseeing racing preparation with appropriate specialists / Liaising with insurance companies to ensure all vehicles have appropriate cover / Ensuring registrations are correct / Ensuring MOTs, where appropriate, are undertaken and up to date VEHICLE PROVENANCE/ HISTORY COLLATION / Researching vehicle histories with marque experts, clubs and factories, among others / Collating and maintaining the history file for the vehicles provenance and holding this in hard and soft copy / Overseeing special projects; for example, photography, books, calendars RESTORATION / Overseeing agreed restoration of cars, with appropriate marque specialists, once appropriate quotes have been obtained VEHICLE INVENTORIES / Upkeep of inventories for cars, parts and automobilia / Overseeing the cataloguing and storage of vehicle-related parts / Arranging valuations as necessary SALES / Negotiating the sale of vehicles in accordance with agreed strategy / Working with advisers to ensure sale contract terms are appropriate / Working with specialists, including brokers, auction houses and other collectors, to ensure that the vehicle is marketed in the most suitable jurisdiction for the right audience by an appropriate agent 4. PRIORITISE MAINTENANCE Once purchased, the car s upkeep takes priority whether that means basic ongoing maintenance or full restoration. To maintain the integrity of the car, it s important to engage with the correct marque specialists and other experts. Storage (whether in purposebuilt facilities or a warehouse) and storage coordination (if the car travels between shows and museums, for example) are key to maintaining the vehicle. Moreover, storage conditions often form part of an insurer s requirements. 5. RAISE THE CAR S PROFILE This includes documenting its racing history, appearances at concours events and inclusion in museum displays all of which add to a car s profile and may result in an increase in value. 6. DON T RUSH INTO A SALE After a decision has been made to liquidate a car, or car collection, it s important to ensure that each vehicle being sold is presented in the most appropriate physical condition, has all the relevant history collated, and is shown at the best events. Further, each car must be properly valued and sold by a suitable broker in a controlled and appropriate way; ideally into a market that has a particular interest in the specific type of car wherever in the world that may be. Taking this approach will attract a much higher price than selling the collection at a general auction.

7 KEY FACTS Make Model Did you know? 1953 Alfa Romeo 6C 2500 Super Sport Perfect for the Mille Miglia or Pebble Beach

8 7 TOP TIPS OUR SERVICES VEHICLE DISPLAY/ VALUE ENHANCEMENT / Liaising with specialists for certification of vehicles where appropriate; for example, Ferraris / Attending agreed specialist events such as the Tour Auto or Mille Miglia to ensure vehicles are campaigned at appropriate venues / Attending and overseeing vehicles at appropriate concours events such as Amelia Island, Villa D Este, Salon Privé to enhance value and profile / Attending agreed racing events such as Goodwood and Monaco to ensure the most appropriate vehicles are in place and appropriately displayed / Arranging national and international transportation ESTATE MANAGEMENT Assisting families in the event of a collector s demise so that: / Important and best-suited vehicles are retained by the family / Vehicles are properly valued through researching their history and presentation / Any vehicles are sold in a controlled and appropriate way (via a broker or auction house or directly to another collector) and in the most relevant jurisdiction 7. LEAVE IT TO THE PROFESSIONALS When it comes to classic car collection, there is a lot to know. From initial due diligence through insurance, transportation, storage and beyond, it s fair to say collectors will most likely need an expert hand to hold. By appointing an independent, non-commissioned specialist, every step can be taken care of. You wouldn t buy a house without engaging your lawyer and surveyor to provide guidance on the contract and title, and the same goes for classic cars. After all, these days the cars may be worth more than the house!

9 KEY FACTS Make Model Did you know? Mercedes 300SL Gullwing Signalled the birth of the modern supercar

KEY CONTACT If you d like to know more about our classic car collection management services, why not give James a call.

1932 Alfa Romeo 8C 2300 Touring The pre-war GTO and sounds like thunder JAMES Client Services Director T / +44 1534 714570 james.

com First Names Group does not provide legal, tax or investment advice and the information in this document should not be

10 KEY CONTACT If you d like to know more about our classic car collection management services, why not give James a call. KEY FACTS Make Model Did you know? 1932 Alfa Romeo 8C 2300 Touring The pre-war GTO and sounds like thunder JAMES Client Services Director T / james.haithwaite@firstnames.com First Names Group does not provide legal, tax or investment advice and the information in this document should not be regarded as such. For information on the legal and regulatory status of our companies please visit firstnames.com/legal. All automobile images Mathieu Heurtault and are used for illustration purposes only. First Names Group has no relationship with any manufacturer of the vehicles displayed nor owner of any trademark depicted. TSL180_ _3_E/APO

11 THE FIRST NAME IN CLASSIC CAR COLLECTION MANAGEMENT firstnames.com/classic-cars

PRODUCER S GUIDE

PRODUCER S GUIDE WWW.HEACOCKCLASSIC.COM 800.678.5173 Option 5 Dear Fellow Agent, Thank you for selecting Heacock Classic for your collector car insurance market. More and more people are getting involved