What does the new world record for a Japanese classic motorcycle mean for prices? On 4th March 2018 H and H sold a 1968 prototype Honda CB750 K0 “Sandcast” for £161,000, a new world record for a Japanese motorcycle sold at auction, but by no means a world record for a Japanese motorcycle sold privately. Whether or not the price includes fees is not yet clear, but this example clearly requires a full restoration which will take the cost of this classic motorcycle way over the £200,000 mark, even if the price included fees. So how does this sale affect future classic motorcycle investment?
Firstly, why would someone pay this much for such a motorcycle? I suspect that the new owner knows full well that such a motorcycle will increase in value to well in excess of £1,000,000 within ten years at a conservative estimate. That doesn’t include China having just entered the market. Put another way, people don’t ride prototype “Sandcasts” of which only two exist in the world, of the four originally built. Yes, such people are passionate about motorcycles and love to own something unique, but they are also immensely financially astute and fully understand what to buy and when. How else did they become wealthy enough to buy such a motorcycle in the first place?
What does this mean for prices of “Sandcasts”? I believe that within five to ten years Honda CB750 “Sandcasts” will be selling for well in excess of £100,000, probably two and a half times that figure, but only the investment grade examples. And only examples that do not suffer catastrophic crankcase failure, or those that have been repaired correctly and honestly. You can read more about this here. There is an awful lot to understand about these classic motorcycles and, if you are looking at investing in such a machine, you need to either know what you are buying or employ someone who does. This is not a purchase you can make after reading up in a few books, looking at articles on the internet, or being secure in the knowledge that it came from someone well placed in the owners’ club. The “Sandcast” was a deeply flawed motorcycle to start with and those flaws do not age well.
What does this sale mean for the prices, and investment potential, of other Japanese classic motorcycles? This will lift prices substantially for all of the Honda CB750K series, especially die cast K0s. It will significantly raise the prices for Kawasaki Z1 900s, as the 1972 model is rarer than a “Sandcast” and used to be priced higher than the Honda, so there’s a lot of ground to be made up on these machines. This will significantly raise the price of investment grade “Sandcasts” too. It will also lift prices of all the desirable Japanese classic motorcycles, as more people enter the market. This world record will not go unnoticed.
The prices of Japanese classic motorcycles are beginning to start to take off and will be unrecognisable within five years. But, as prices rise, due diligence will count for everything and investors will be extremely cautious about which examples they pay top dollar for. Only the investment grade machines will make the money and the rest will be condemned to an unsold life on eBay as an affordable ride. The Motorcycle Broker only buys 8% of what is offered, meaning that 92% of what is offered in the market is not investment grade. You may build motorcycles, you may have read up about each model and you may be determined to get a bargain. But Picassos don’t get sold on eBay and looking there will only end in disappointment and a purchase that will never mature.
The market has already divided into the top 8% of investment grade examples and everything else. This is why there is so much disparity between prices of classic motorcycles which are the same model and seem to look very pretty. There are also a lot of similar looking machines which profess to be investment grade, wear the price tag boldly, but they are certainly not. Genuine investment grade examples already fetch far higher prices than auction site specials. This means that those who are passionate about riding their Japanese classic motorcycles, but not worried about them being investment grade, can still enjoy such classic motorcycles at very affordable prices.
But if originality really counts, and being correct in every way, then you will just have to pay. If you bought great examples at the right time and filled containers, or large garages full of them, then you have got a phenomenal tax-free investment or pension. We are still at the bottom of the investment curve for these machines and the demographics are in play to force prices to unrecognisable levels over the next ten years. Now is a great time to invest in classic motorcycles. To find an investment grade classic motorcycle backed up by decades of market knowledge and data, then call The Motorcycle Broker. Helping others to invest safely in classic motorcycles.
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