Investment and ‘labor of love,’ here’s why vintage cars reap more than $1 billion in sales

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Investment and 'labor of love,' here's why vintage cars reap more than  billion in sales insurance

There’s an unusual market in the throes of a raging bull run — one that’s not afraid of Federal Reserve rate hikes.

Autumn normally sees a rush of new cars sales, as dealers look to shed current inventory to make room for next year’s models. With that in mind, vintage automobiles have emerged as a highly profitable asset class, yielding 8 percent on an annualized basis in the second quarter of this year, according to the Knight Frank Luxury Investment Index, which closely tracks so-called "passion" investments.

It’s a hot market indeed: Data from the Historic Automobile Group International show rare collectible cars have actually outperformed the S&P 500 Index by nearly eight times from 2005 to 2015. Last year, total classic car sales in North America topped $1.45 billion, according to the Hagerty Group, which sells classic car insurance.

Experts have mixed feelings about whether cars are a legitimate investment. Yet judging by the enthusiastic buying at vintage auctions like Barrett-Jackson — which moved more than $32 million in collectibles last week amid a record number of bidders — and Russo and Steele, the payoff can be sizable for some investors, many of which are baby boomers.

Tom Rossiter, owner of The Stable, a vintage car dealership in New Jersey, described the market for vintage cars as either feast or famine, and sometimes contingent on economic conditions.

"When the stock market crashed in 1987, the collectible car market went up, and were really busy for the next three years. But after the 2008 [financial crisis], our phones were quiet for almost two years," Rossiter told CNBC in a recent interview. "It got so bad that we asked the phone company to check our lines. After two years, it went up again, and it’s been fairly steady ever since."