The passion for vintage cars, which has swept many countries around the world, is beginning to reach Russia. Is it possible to make money by restoring and reselling classic cars? Models, facts, cases of entrepreneurs and specific amounts - let's figure it out together.
The craze for vintage cars, which has long swept countries on both sides of the Atlantic, is gradually beginning to reach Russia. Moreover, if in the same States there are a large number of specialized studios and private hobbyists specializing in the restoration and resale of old cars, then in the territory of the former Union such a business is still in its infancy.
The same can be said about sales channels for vintage cars - until recently, rare examples mostly migrated quietly from one private collection of connoisseurs to another, occasionally appearing on bulletin boards like Auto.ru. The first vintage car auction appeared in our country just a year ago, in 2018, and demonstrated considerable demand for classic vehicles of all stripes. Numerous lots were sold under the hammer - for example, a perfectly restored Horch 901, abandoned by fascist troops during the retreat near Moscow, found a new owner for 15,000,000 rubles. Even the classic Vespa scooter, a kind of example of Italian style and the Renaissance of post-war Europe, caused serious excitement.
Therefore, in this wave, it is quite reasonable to ask the question: is it possible to make money on the restoration and resale of old classic cars? Models, facts and specific amounts - let's figure it out together.
The essence of the business idea
A brief overview of how the business of vintage cars (or oldtimers, as they are also called) works can be seen on numerous entertainment shows on the Discovery or BBC channels. On camera, everything looks colorful and a little pretentious - enterprising authors buy a rare wreck in the garage of a gray-haired owner and, after numerous searches for spare parts in local landfills and suffering in a custom studio, they roll out to the public a brilliant masterpiece with polished sides, which is then sold under the hammer for a tidy sum.
How are things going with Russian entrepreneurs? We were able to talk with several representatives of the auto business, each of whom shared personal experience - from the resale of a “time capsule” VAZ 2103 with minimal mileage, to the complex logistics of muscle cars from the Old and New Worlds. In today’s review, we will deviate a little from the usual format with financial indicators and give as examples several cases of entrepreneurs already successfully working in this area. The fact is that investments, the efforts made, and the final income can very much depend on many different factors - from the car model to the experience of the entrepreneur.
Tire restoration: technology
Our main goal is a complete tread and sidewall repair. The first step is to check the rubber using ultrasound, which will detect hidden damage. Next, on a special stand, the tire is checked for the presence of unrepairable areas in its frame, which are subsequently processed using a pneumatic tool.
The next, also the most important stage, is roughening. The main task is to give the tire the correct shape, which is achieved by removing the old frame. Next, the rubber is sent to the vulcanizer. After this, the recovery process is completed, and we have completed the task.
As you can see, the technology is relatively simple. Moreover, the main advantage over hot retreading is that we can repair both truck and passenger tires, which is more economical.
Case 1: 250% margin under a layer of dust
“Everyone has a different attitude towards the Soviet automobile industry, but the demand for VAZ classics has been steadily growing recently,” says Rostov businessman Alexander. For several years in a row, he has been looking for well-preserved cars, and after some simple manipulations he sells them to connoisseurs.
“Unfortunately, there is no recipe for a 100% result - in particular, the condition of a copy put up for sale is often difficult to assess from photographs from the ad (this is also the case if they exist). Just last week I had to travel 500 kilometers to the Voronezh region to inspect the classic Moskvich, which turned out to be not in the best condition - it had been in the garage for too long and its restoration would cost a lot of money.”
But a few months earlier, fortune smiled on the entrepreneur - he discovered a perfectly preserved VAZ 2103 in the garage of an elderly grandfather in the Rostov region, which had not been used for the last 25 years due to the health of the owner. Investments amounted to 80 thousand in the direct purchase of the Zhiguli, another 20,000 rubles were spent on dry cleaning, replacement of all rubber parts and working fluids. As a result, after a couple of weeks, the car went to a private collection in the North Caucasus for 250,000 rubles. Thus, the profit was 250% in just a month!
According to Alexander, in recent years, even those who had not previously thought about purchasing a vintage car have begun to think about buying a perfectly preserved Soviet car like the VAZ classic or the “twenty-first” Volga. The attitude towards such rarities is also changing - people have become more conscious and reverent about the “oldies”.
Case 2: How to make money on the Germans’ love for “muscles”
The second business idea was shared by entrepreneur Nikita, who has been involved in the vintage car business for several years now, but is rather wary of the Russian market. According to him, the greatest income comes from the resale of vintage cars in Europe - demand there is significantly higher.
A typical “classic” that a businessman makes money on is the so-called muscle car from the States, which is mainly a Ford Mustang or Chevrolet Camaro. The cars received this nickname for their “muscular” body design, which is characterized by relief transitions, and powerful engines on the units of mass-produced cars. So, first of all, the Mustang is in a state of “restoration.” For a general understanding of the business process, we will operate with amounts in euros. A relatively “live” (but at the same time requiring attention to the body and investments on the technical side) Mustang costs about 19-20,000 euros. Cars are selected on local bulletin boards and auctions.
After acquisition, the “iron horse” is transported to Eastern Europe, where its restoration is carried out by Lithuanian craftsmen. Why Lithuania? Cheap by European standards and cheerful (those who have previously transported cars from old Europe know that it is Lithuanian car masters who “trick” cars before entering Russia). Restoration costs approximately 10-15 thousand, as a result of which the cost of investing in a Ford Mustang rises to approximately 35,000 euros. At the same time, the average price tag for such a car in Germany, where there are many fans of American classics, is 60,000 euros. The whole process, from buying a muscle car in the States to selling it in Germany, takes about six months. According to rough estimates, this is about four thousand euros per month, or 300,000 rubles of monthly income.
There is safety in numbers?
Opinions about where and how to restore a car usually vary. Now in Russia there is a limited number of specialized studios, however, compared to Europe and the States, this is just a drop in the ocean.
That’s why it’s better for an entrepreneur who decides to get involved in vintage cars to recruit his own team. This solution will make it possible to guarantee high-quality work on the restoration of their cars purchased for sale, and in their free time, employees will do third-party projects for other customers. As a rule, these are 3-4 mechanics, each with their own narrow profile - starting from paintwork and body restoration, ending with a specialist in re-upholstering interiors. Payment is mainly piecework, plus each of them can pay rent for their own workplace on the service when fulfilling personal orders.
It is highly advisable to find partners in the region from which you plan to supply equipment on a regular basis - in particular the States. It is necessary to understand that reality may be very different from what you expect from photographs and it is better to see the car you are choosing once than to bring a “pig in a poke” from overseas.
How to look for good deals on damaged cars?
To search for successful acquisitions, you need to be online almost constantly. As soon as users post ads with the make and model of car you are interested in, you should immediately respond to them and call the seller. It is enough to make an appointment to inspect the car to book transport. After that, you need to pre-evaluate the car using photographs and estimate restoration costs. The next process is as follows:
- you meet with the seller and conduct a more detailed inspection of the vehicle, all its damage, and calculate the costs of restoring the car;
- the next step will be to determine the cost of such a car on the secondary market with quick sale, that is, the estimated price will be lower than the market average for quick sale;
- the amount you deducted for repair work is subtracted from the appraisal amount, as well as your desired profit; you can name this figure as the price of the car that is suitable for you;
- bargaining when buying damaged cars can be very serious; it is often possible to reduce the original price by two or more times, since the owner does not want to restore the car;
- It is also worth paying special attention to the condition of all elements that are not damaged and do not need to be replaced; often they also have to be worked with during repairs.
Some parts of the car cannot be understood until you bring the car to the service station and begin its restoration. This car may not be the most interesting for you due to problems with the engine, while another car may have unknown damage to the transmission or broken body geometry. All aspects of such a sale must be consistent with the future features of the renovation work. If the car is purchased too expensive, it will be very difficult to make a profit.
No additional investment
A separate category of entrepreneurs purposefully does not deal with machines that require restoration. A rare classic car is simply perceived as a medium to long term investment that will more than recoup the investment in a few years.
How can you make money in this industry of selling classic cars? Another of our interlocutors, living in the Krasnodar Territory, admits that just a few years ago the most profitable was the “path of least resistance” - exporting foreign cars from Russia. In particular, somewhere near Rostov a well-preserved German roadster from the late 90s was bought for a nominal 1.5-2 million rubles, after which the car was taken out of the country and registered in Germany. Now the cost of similar models in Europe is about 50-60,000 euros, that is, 2-2.5 times higher.
According to a Sochi collector and entrepreneur who sells retro equipment, the longer a project is considered, the more profitable it can be. For example, just ten years ago, in 2008-2009, there were several offers on the market from collectors for the ZIS-110 - prestigious cars specially developed in the USSR for senior army commanders and party officials. The purchase price of cars on the market at the end of the 2000s was about $10,000, then it was some 300,000 rubles. Even if we do not take into account the significantly changed ruble-dollar exchange rate over the past years, the profitability of such transport today looks colossal - price tags have jumped to $150,000, that is, 15 times!
However, the collector from the Krasnodar region is clearly being modest - such a jump in prices, they say, was predictable. And he gives an example of much more exotic ways of making money on vintage cars - exporting rarities from countries where a political revolution has just occurred or a financial crisis has broken out. Venezuela, Brazil, and more recently Ukraine.
Some useful information
Since one tire can be retreaded 2-3 times, and its mileage is about 50,000-70,000 kilometers, this is primarily beneficial for car owners.
It is impossible not to notice that the vulcanization temperature during cold recovery is only 100-110 degrees Celsius, which significantly extends the service life of the rubber and also improves adhesion to asphalt.
Compared to the hot method, the temperature exceeds 150 degrees, and this negatively affects the frame.
Another distinctive feature is that retreading tires does not reduce the mileage, so your client will travel the same amount, that is, about 50,000 kilometers.
If your service staff works for quality, then at the end of the work the repaired tire will be practically indistinguishable from a new one; your client will definitely notice this, which will leave him very satisfied.
Taking off the rose-colored glasses: the pitfalls of business
However, not everything is so rosy on the oldtimer market. Above we talked about successful examples of making money from retro technology, but there are also plenty of examples of failed projects. I heard about one of them in a conversation with the owner of the wedding salon, Arthur. According to him, the idea to restore the “twenty-first” Volga to perfect condition came about 10 years ago, when he had his own car service. However, the repair and restoration work resulted in a much larger sum than he initially expected.
Even initially, body elements (for example, doors, fenders) for gas vehicles cost quite a lot, and during the restoration process more and more new nuances emerged. As a result, in order to bring the car to perfect condition, we had to invest about 2,000,000 rubles in GAZ. You can sell a well-restored car for that kind of money, but there are too many offers. The circulation of the “twenty-first” was rather large even by the standards of a top-end car by Soviet standards, and you could spend years looking for a buyer willing to pay that amount for it.
Arthur found a solution to the situation - now the car is rented out for wedding events and photo shoots. The cost of renting such a car with a driver per hour is 2,000 rubles, so for 5 hours of driving around the city, the sedan brings the owner an income of 10,000 rubles. Thanks to this unconventional move, the investment has long since been recouped. By the way, we already wrote about this type of business. However, there are plenty of examples in the oldtimer market when a project, after numerous investments of time and effort, does not bring in a cent. However, this circumstance does not stop all enthusiasts - many invest considerable sums in restoration just to keep the car for themselves and their descendants as a souvenir.
