It’s been well documented how the government has targeted property investors who rent their properties out, harshly to raise tax revenue. This has now become so acute that they are selling much of their property portfolios and exiting the market. This is leaving them with a financial headache; large amounts of cash sat in the bank, which is being devalued on a daily basis, and is vulnerable to a banking crash. So why are they buying up old motorcycles?
There is an area of the classic motorcycle market which is under-developed and all profits from private collections are tax-free*. The demographics driving the prices of classic motorcycles from the 1970s-1990s are just beginning to force prices to rise. Had anyone invested £27,000 in the correct motorcycles in 2010 would now be in possession of as collection worth around £150,000. So have the profits been made already and is this just a bubble? No. The market has only just started to awaken.
Between 1975 and 1982 we sold between 225,000 and 315,000 new motorcycles every year (figures from MCIA). You can read more about this in my previous article here. This was new motorcycles only and in the UK only. Europe has far greater motorcycle markets, which ignores the massive US and Japanese markets. Add all of these markets together and they are dwarfed by China. The people who bought these machines back then are now in their fifties, their children have left home and they are cash rich. Sounds familiar? But we were selling all of these new motorcycles, so there must be loads of them available, right? Wrong. The collectible machines of that era are extremely rare. Kawasaki built only 4,800 1972 Z1 900s and the first 1,200 were almost prototypes, so worth even more than a 1972 Z1 900. Honda built only 24,000 CBX1000s. It is believed that only about 25% of the machines built back then are available now and are investment grade (you can read more about investment grade classic motorcycles in my previous article here).
So how many people are chasing these machines? I think that in Europe alone there are about 10,000,000 people, who can afford to own such a machine, who either want one or don’t yet know that they want one. Then there are all those in the US and Japan. At the time these machines were built, the US was the biggest market. However, China now sells 20,000,000 new motorcycles a year and in 2000 was selling 10,000,000 new machines a year. Between 1980 and 1997, China was importing Japanese motorcycles up to 250cc, until they banned the importation in 1997 to stimulate home market manufacturers. So the forty somethings in China who started life on two wheels are familiar with the big four Japanese brands. And China are now allowing the importation of classic motorcycles. Even without China, classic motorcycle prices are enormously under-developed, compared to classic car pricest, and have a long way to go before being concerned with froth in the market.
At the moment the market is splitting in two. Due diligence is everything and investment grade classic motorcycles are setting world records for prices, while eBay prices are comparatively stagnant. It’s so rare to find a real Picasso on eBay, that it’s safe to say it’s best avoided for investment grade classic motorcycles.
The Motorcycle Broker only sells investment grade classic motorcycles and the due diligence undertaken far exceeds anything a classic motorcycle shop, auction house or auction site can offer. Of all machines offered, The Motorcycle Broker buys only 8% of what is available in the market. So 92% does not make the grade. So when prices rise further, the due diligence The Motorcycle Broker offers on all their machines will count for a lot in achieving a high resale price. These classic motorcycles are proving to be a great high yield tax-free investment, if the due diligence all checks out. This is a five to ten year simple buy and hold investment, without the hassle of dealing with tenants and without the need to pay any tax on your profits, *if part of a private motorcycle collection at the time of writing this article.
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