Classic cars have been an investment market for some time but now there is more data and information on prices to aid the investor in making a smart choice.

Editor's note: This is part of an ongoing series where we examine the market for collectables or esoteric investments, such as art, fine wine and bloodstock.

Whenever a classic car is sold at auction, there is often plenty of interest if the vehicle was once owned by a film star or, even better, actually driven by one in a movie. A good case in point is the auction this week of the Aston Martin DB5 once used by Sean Connery in Goldfinger and Thunderball (complete with those nifty machine guns and the ejector seat). It fetched £2.6 million (around $4.11 million). And a few years ago, the auction market witnessed the sale in Pebble Beach, California, of Steve McQueen’s Ferrari 250 GT Lusso, which sold for $2.3 million, about double what was expected. And some cars, meanwhile, fetch enormous prices due to their mystique and style: a Bugatti was sold for a record-breaking $30 million earlier this year.

Of course, these are the headline-grabbers. Many other classic cars do not fetch such a high price and the sector has not been totally immune to the recent financial turbulence. Three years ago, Christie's, the auction house, ceased to be involved in selling classic cars as a distinct line of business as part of a restructuring of its operations (a view that mystifies some specialists).

The world of investment in collectables, however, remains vibrant; objects such as classic cars are, like fine wines or art, seen as a potential hedge against economic woes.

As every car differs individually – even mass produced classic vehicles have their quirks – there is not a simple index of all their prices for investors to track. But in the UK, and elsewhere, more efforts are being made to generate credible and consistent benchmarks on the performance of parts of the market.

Step forward Dave Selby, a UK-based analyst who has been working in the international auction market for a quarter of a century. Working with Historic Automobile Group International, a research house set up in 2007 by former banker Dietrich Hatlapa and Hardeep Sohanpal, a publishing expert, he runs a database of more than 100,000 transactions, according to the group’s website. Selby recently told WealthBriefing about his work.

How would he describe the classic car market?

“It is an interesting collectors' niche market that is fragmented and under researched. That's why we feel there is a real need for proper research and transparency. For example, the high-end collectable Ferrari market is certainly far more volatile than other segments and marques and with a far greater amplitude than, say, Porsche,” he said.

“One reason is that Ferraris have always attracted an element of speculation. If you're thinking of entering the market it's important to understand these nuances, particularly as auction house PRs have been promoting what seemingly is a never-ending chain of record prices. The reality is more complex and, in fact, some prices have not yet recovered to their 1989 peak - that's a story you don't hear often,” he said.

A key issue is defining what a classic car actually is, he said. “The parameters to define this market are up to the individual collector. We at HAGI for example have 15 parameters for index inclusion, and an index committee makes the final decisions just like most stock market indices. For example, the car should have turned the 'price corner,' that's a key moment of separation, if you like,  that distinguishes the truly collectable,” he said.

Investors interested in this segment, both due to hard-headed financial reasons, and for love of cars, will want to know whether these cars’ prices are lowly, or even negatively, correlated with those of mainstream assets such as equities. According to HAGI’s website, The HAGI Top Index, which tracks the prices of rare, exceptional cars dating from the earliest years of automobiles to the current era, has risen from its base of 100 in 1980 to around 2,700. The US S&P 500 Index of US stocks rose from the same comparable level before falling sharply. A graph of the two indices can be viewed here.

HAGI produces a variety of indices, such as to track the prices of Porsches and Ferraris as distinct categories of desirable car.

In time, if the indices were to become used very widely, it is possible they could provide a reference benchmark for a fund, although Selby said no investment managers who have contacted HAGI about creating a fund have so far got their ideas off the drawing board.

There have been other moves to track prices besides those of HAGI. The Hagerty’s Cars That Matter “Blue Chip” Index is such a benchmark, put together by the automobile appraiser David Kinney, based in Virginia. According to a report by Bloomberg, that index, which contains the estimated values of 25 of the most popular collectible cars, increased more than 61 per cent from September 2006, when it started, to the end of July this year.

Like the diamond investment market, fine wine or paintings, classic car investments require a good deal of sustained study by investors, as no two vehicles – like precious gems – are exactly alike. The price performance highlighted by HAGI elsewhere is clearly impressive. With the super-rich of emerging market countries jostling to show off their wealth even as more developed countries feel the pinch, the battle to buy famous owners’ cars and class marques looks set to remain intense for quite some time to come.