Horsepower Investments: Muscle-car Collecting Builds Stable of Assets

Sandy Brannan bought his first Corvette in 1982 out of a barn in Sallisaw, Okla. It was a 1964 model with no working headlights or taillights, and only one wheel was braking properly.

He drove it back to Rogers up U.S. Highway 59 with a friend following close behind.

“There was a lot of down-shifting,” he said. “It was a good thing we got back before dark.”

Brannan, a director with ANB Financial of Bentonville, has been buying, restoring and selling variations of Chevrolet’s flagship sports car ever since. He reckons he’s owned 50 Corvettes over the years.

“It’s a very sincere habit,” he said.

Brannan is just one of a number of area business professionals who collect classic autos as a hobby, and as an investment.

Charles Lumpkin, owner of C&S Classic Cars of Springdale, buys and sells cars nationwide. He’s even sold a car to movie and TV star Ashton Kutcher, who recently married actress Demi Moore.

Lumpkin said on average, muscle cars — early ’60s to mid-’70s models built for high horsepower — have appreciated about 7 percent a year for the last 10 years or so, depending on the quality and condition of the auto.

That beats the typical bank CD by a mile, and it’s an investment someone can go out and touch, Lumpkin said.

But ask any collector about his favorite ride, and the first thing he’ll say is that he loves it — looking at it, working on it, and in some cases, driving it. The investment angle, and any hopes of recouping costs from purchase, insurance, title transfers, maintenance and storage, are usually a secondary consideration.

There’s money to be made. Brannan said he can usually break even or make a small profit. He actually has a business called Brannan Investments to handle his buying and selling. But it’s not for the faint of heart.

“You’re not going to get rich dealing in classic cars,” agrees Lumpkin, who co-owns a 1967 Corvette worth about $150,000 with Brannan. “You’ve got to love the car.”

Muscle Mania

There are European car aficionados, but most area collectors get excited about American muscle cars. And in Northwest Arkansas, apparently the Corvette is king. Most collectors contacted for this article own at least one, regardless of what else they own.

Lumpkin has a 1976 Pontiac Trans Am in his showroom, a yellow version of the one Burt Reynolds drove in the movie “Smokey and the Bandit.” It’s all original with just under 10,000 miles. The dealer’s sticker price was about $5,400. Today the car will bring about $45,000, Lumpkin said.

The Trans Am is on the tail end of the muscle-car market. Most muscle cars are in the 1962 to 1972 era, and area collectors said auction prices for that market have accelerated in the last five years.

The Barrett-Jackson Auction Co. of Scottsdale, Ariz., holds two events each year and is probably most recognizable name in auto actions worldwide. The company said the January 2005 event auctioned off 878 cars and brought in $61.68 million in sales, up 60 percent from $38.52 at the same event in 2004. Both years were revenue records, the company said, so clearly there is a fascination for fun cars.

Dan Shewmaker is a gentleman rancher and partner with his father, Jack Shewmaker, who retired in 1988 as president and vice chairman of Wal-Mart Stores Inc. The family has an extensive collection of American cars that date from 1909 to 1980. Some of the cars include a 1969 Boss 429 Ford Mustang, an art deco-styled 1938 Studebaker Coupe Express pickup and a rare 1970 LS-6 Chevy Chevelle (rare because the engine option cost as much as the rest of the car did at the time).

In addition to cars, the Shewmakers have an inventory of old pickup trucks, a niche in itself. The family has been buying and selling cars through its company, Jac’s Classic Cars, since about 1997.

Dan Shewmaker declined to say how many cars the family has, or give an estimated value on the inventory. All are originals or restorations. But he said a ’64 Pontiac GTO convertible the company bought in 2001 has tripled, if not quadrupled, in value to date.

The mania has been fueled by baby boomers and their disposable income, Dan Shewmaker said. Many boomers who couldn’t afford a muscle car when they were in high school are paying a premium to own one — or two — now.

Dan Shewmaker thinks the muscle-car mania is at its peak and that most of the money to be made in the market has been made. But Kevin Parker, a full-time employee of Jac’s Classic Cars, said the desire for quality muscle machines will continue to grow, though at a slower rate than it has the last five years.

Bill Watkins, a Rogers lawyer and British car collector, said the classic car market follows the economy fairly closely. Back in 1987 when the stock market crashed on Black Monday, the classic car market tanked as well, he said. It’s just now getting back to those super-high numbers.

Rare Roadsters

There are fewer of the famed cars than there were 40 years ago, and even fewer to match specific boomer tastes and exotic desires. All-original cars with low miles, or survivor cars, fetch the most money on the market and in auctions.

Survivor cars like Brannan’s 550-horsepower ’69 Corvette L88, worth about $200,000, bring even more because of their rarity. Brannan said there were only 116 L88s (a racecar with special heavy-duty suspension, breaks and transmission) built that year. And his is only lightly touched, with a mere 19,900 original miles.

Restored cars that have had current engine work done to them or have a new paint job are runners-up in prices. In many cases, the cars are restored to show quality and the paint is far superior to the factory paint, and the engine is decked with chrome clean enough to serve escargot off of at a cocktail party — as if an owner would allow such blasphemy.

Lumpkin has a restored 1969 Shelby Mustang GT500 sitting in his showroom, it will bring about $135,000, he said.

The third lowest in the muscle car market are “clones” or cars that are restored and made up with special options, badges and engines to mimic a famous limited production car like a Shelby GT or Yenko Chevy Camaro. They are a “knock-off,” so to speak. There’s nothing wrong with a clone as long as a buyer knows what they’re getting into and that’s what they want.

But Dan Shewmaker said there are instances of such cars being passed off fraudulently as the real deal. He, Lumpkin and several others said extensive research into a car’s history is the best way to ascertain its value. Documentation about the car and matching numbers throughout its body increase the value because the buyer knows they’re getting the real thing.

Dan Shewmaker said he’s learned that the better investment is on buying cars that have already been restored. The person who puts the time and money into restoring a car usually takes the financial hit, he said. Convertibles are always more expensive and more sought-after, he said.

During the muscle-car era, individual Fords were documented by their vehicle identification numbers, and there is an extensive database that, for a price, will give a buyer all the details about the car. Chevrolets weren’t tracked nearly as well by that company, so original documents bearing matching numbers are sought-after in that market.

“There’s two kinds of rare,” Parker said about finding quality cars for the Shewmakers. “There’s rare produced, and there’s rare to find.”

And rarity can be a gearhead’s dream. Lumpkin has a black bodied, black interiored 1971 Plymouth Barracuda “‘Cuda” Hemi V-8 — an arguably ugly duckling — that he hopes will bring about $800,000 at Barrett-Jackon’s auction in January. There were only two black-on-black ‘Cudas made that year, Lumpkin claims.

“Hemi” is the truncated term for Chrysler engines with hemispherical-shaped cylinder heads. The shape helps provide a lower surface-to-volume ratio within the cylinder and, theoretically, generates more power.

Convertible ‘Cudas can command prices in the millions, Lumpkin said.

But auctions like Barrett-Jackson’s are more for sellers, according to area collectors in the know.

Dan Shewmaker said he seldom buys cars from an auction. The business he’s engaged in is mostly word-of-mouth, and the people who are buying and selling the level of car he deals with tend to travel in small circles.

The Enjoyment Factor

There are as many opinions about how to enjoy collectable cars as there are owners. Some kids kept their Hot Wheels in display cases; others took ’em to the sandbox.

It’s mostly a business of investment, Dan Shewmaker said about Jac’s Classic Cars. But there’s a definite “from-the-gut” air of wonder and excitement in his voice as he talks about a blue-black Packard or how difficult it is to find older pickups in decent enough condition to purchase or restore.

Though he enjoys the cars immensely, they aren’t run on the open road. Parker keeps them in show or near-show condition at all times, and any defective part, such as a windshield wiper not working, is not tolerated.

Some cars are taken to compete in shows and a good show record can increase the value of an auto, but Dan Shewmaker said the show circuit is best left to those who enjoy showing for a show’s sake.

Don Johnston, a Fayetteville real estate investor, owns four ’60s-era Corvettes, a 1969 Jaguar and a modern Corvette he drives daily. His garage is immaculate. It smells like a new car showroom — a mix of new tires and floor wax.

But he will occasionally drive one of his collectors for the day, or run it down to the grocery store.

“They’re like people,” Johnston said. “They need exercise.”

He estimates his collection is worth about $250,000, considerably less than some of the combined collection of cars that never put rubber to the road.

Mark Brewer, owner of Real Assets Inc. in Fayetteville, likes to take his cars out as well. He owns eight or nine cars, mostly Jaguars, but also the new hard-to-get Z06 Corvette that he spent four months trying to locate. He’s already put more than 1,000 miles on it, he said, and he’s getting ready to put it on eBay for $15,000 more than he paid for it, just to see how it’ll do. t

Watkins, the Rogers lawyer, is a member of the British Iron Touring Club of Northwest Arkansas and has a 1962 Triumph and a 1965 Jaguar.

“If you sit in a Jag, it’s like sitting in a British gentleman’s club,” he said.

He likes to take his cars out of the stable and run them when the weather permits. The British didn’t do much in the way of rust protection in the 1960s, he said.

The cars have nicks in their paint, the seats are well worn and the Triumph is pretty leaky.

“There are people who buy and sell because the hunt is exciting,” he said. “I own them because I enjoy driving them and fiddling on them.”