Beyond Whim: Classic Bikes as an Investment

Joe Hurley

Older motorcycles from the most iconic manufacturers can become attractive investment opportunities.

In the midst of a deep financial crisis where lower interest rates have affected investments and savings, a number of tangible luxury values become interesting investment opportunities: wine, watches, jewelry and especially classic vehicles.

Classic Motorcycles

The trend began with historic cars, fulfilling the expectations of specialized companies such as the British consultancy firm Knight Frank, which described them as “the most cost-effective value” of those who made their list of luxury investments, even above gold, with yields of up to 430 percent in ten years. Now it seems, it is the turn for the motorcycle world.

This appreciation has been demonstrated by some of the most recent classic bike sales. One such forum, the Annual Motorcycles Auction of Las Vegas, Nevada, organized by the prestigious Bonhams auction firm and devoted exclusively to two-wheeled vehicles, has become one of the largest events of its kind. In its last edition, held in early 2014, the auction raised about $4.1 million, 30 percent more than the previous year, in a competition where record prices were paid for old units, including a 1940 Harley-Davidson sold for $159,000; a 1973 Ducati 750 Super Sport Green Frame that went for $137,000, and a 1954 BMW RS54 Rennsport auctioned at $126,000.

Classic Motorcycles

As with many classic cars, you should also consider the added value when an iconographic component comes into play: a 1923 Indian Big Chief with sidecar, which after being restored in 1969 belonged to Steve McQueen, was sold for $126,000. And in another auction held in February, the Harley-Davidson that the Milwaukee company gave to Pope Francis reached more than $320,000, a sum that was allocated entirely to charity.

These numbers show that there is a factor of appreciation on motorcycles with decades of history. But what criteria should we use to invest in a classic motorcycle? “First of all, the golden rule is always to buy what you like,” recommends Jared Zaugg, a classic bike specialist from Bonhams. “Never buy a bike (or car) that does not attract you. Thus, no matter what happens to the market, you will always be happy.”

That seems to be the dominant criterion among regular attendees at famous motorbike auctions. “Most buyers are just fans, not investors,” says Zaugg. “Any expensive item, be it a motorcycle, a car or a painting, is an investment. But the beautiful thing about a motorcycle is that it is meant to be used,” justifies the expert, appealing to the emotions aroused by these vehicles.

Classic Motorcycles

Zaugg considers them “excellent investment opportunities” in a “healthy market”, precisely because of the increased reliance on tangible products against intangible assets (such as shares) as a result of the financial crisis. But besides following the golden rule you should take into account other criteria: “The age and origin are very important. The story is everything, since it is the life of the machine: Who owned it? For how long? Was it well maintained or abused, used or neglected? ” concludes Zaugg.

On the other hand, in the case of competition models, sporting success is certainly an endorsement of higher prices. “If a bike competed favorably, or even better, won an important race or was driven by a racing legend, then it will be extremely attractive,” emphasizes Zaugg.

Therefore, it is essential that the buyer request from the auctioneer all documentation supporting the vehicle´s history: from photos and press releases to receipts, certificates, and records.

Classic Motorcycles

Classic cars tend to sell for higher amounts than their sister two-wheelers, but despite offering lower yields, bikes present some advantages. “The barrier to enter the classic car market is very high for most people,” says Zaugg, adding that the motorcycle market “has no limits.” This helps people of any purchasing power to think about investing in historic motorcycles, whose prices can range, for example, from $10,000 for an old Triumph Bonneville up to $300,000 for a Crocker Big Tank.

But even within the market limitations, treasured motorcycles don’t reach the exorbitant figures that can be obtained from cars. That is the case of an exclusive board track racer Cyclone 1915, which belongs to what Zaugg qualifies as “the most exciting period in the history of motorcycling: the first half of the 20th century to just after World War II.” The most valuable of the only three original Cyclone that survives barely exceeds $1.5 million. “An incredible deal compared to the 1964 Ferrari 250 GTO Berlinetta that Bonhams recently sold for $38 million,” said the expert.

Classic Motorcycles

In addition to lower barriers, classic bikes offer other investment advantages compared to cars: being more affordable, the risk is less. Furthermore, they don’t need as much storage space as cars, and their maintenance is more economic, lowering costs in the long term. They also tend to depreciate less due to the eventual use.

In any case, when it comes to investing in motorcycles it seems reasonable to follow Zaugg’s enthusiasm. Unlike what happens with other luxury goods, “there are no specialized investment funds for bikes” he concludes. “Speculation is never good in any area and always ruins the passion.” Only a true connoisseur can afford a guaranteed investment.

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