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Little Classics Feature: 4 October 2014

The Economics of Restoration Vs. The Market

Jensen Interceptor

Rob Sass from Hagerty Insurance investigates how rising classic valuations are making restoration commercially viable and how some models are seeing a resurgence in popularity as a result.

The dramatic increase in market value of cars that had long been undervalued has changed the calculus involved in deciding whether a restoration is economically feasible or not. Here are a few examples from recent years: Alfa Romeo Montreal, Alfa Romeo Sprint Speciale, Lamborghini Islero, Jensen Interceptor, Aston Martin DBS, Maserati Mistral coupé, Mercedes-Benz 190SL and Ferrari 330 GT 2+2.

All of these cars until recently were deemed to be “hopeless” by punters as potentially valuable collectibles. Consequently, it was mostly miserably downtrodden or badly bodged examples that were seen at auction leaving observers with the impression that only miserable examples of the above cars existed. That of course was not the case. Nicely preserved examples of all of the above were around as were “labour-of-love” restorations that cost more than the car’s market value, they just tended to trade quietly among club members (or not at all).

 

Jensen Interceptor

All of the cars mentioned above have recently seen significant price increases in the last decade with cars going from in some cases the mid-teens to well over £100,000. Even at the new price points, it doesn’t make fiscal sense to start with a terrible car, but it does mean that it’s now possible in many cases to take a car from good to great and not lose one’s shirt.

I have some recent experience in this area. A few years ago, I purchased a very sound Jensen Interceptor for the equivalent of about £6,000. It was a rust-free ex-California car with a well-preserved original interior and mechanicals that had been freshened in the 1990s but had seen little actual use since then. It required a fairly straightforward respray and some minor re-commissioning. I probably have about £13,000 in it now and it’s probably worth over £20,000.

Just a few years ago, with decent Interceptors often struggling to break £10,000, it wouldn’t have been economically feasible to do even this minor work. But with prices for nice Interceptors now starting at around £22,000, it opens up more possibilities in terms of making investments in these cars. Going further than a respray and brakes is also no longer fiscal suicide, as Jensen specialist Rejen’s sale of a beautifully restored Interceptor III for £75,000 a year ago showed.

The same goes for cars like the Alfa Montreal and Aston Martin DBS. A look at Classic Cars’ price guide from the year 2000 shows a 2 condition example of each to be £8,000 and £16,000 respectively. Not surprisingly, there were in those days many more bad examples than good of each to be found. The fact that cracking examples of each now appear on the market with regularity is simply a function of their increased value and stature in the collector car world. While restoration costs are certainly not going down, at present, the market in many cases is handily outpacing increasing costs of restoration.



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