Creation of a Classic Car Index: investment considerations, opportunities and challenges

This thesis investigates the viability of classic cars as an alternative investment. It is the first study to question the well-known index and reference in the field created by The Historic Automobile Group International. We first review past work on the financial analysis of paintings and fine wines. We then address the classic car World as well as a methodical comparison of the hedonic and repeat sales regression. Based on 46.000 auction sales we built our own Classic Car Index with a hedonic regression method. Through this method, we determined the principle price constituents of historic cars. Our index performed at an average annual real rate of 6.03% for the period between 1980 and 2017. We reported a low beta estimate and low correlations with other asset classes. The thesis includes numerous other financial analyses and ratios which demonstrate the opportunities classic cars could offer. Especially, we show the advantages of the asset in comparison to other alternative investments such as gold, real estate, paintings and fine wines. Finally, we investigate the feasibility and considerations at stake of a hedge fund specialised in classic cars.