10 months ago
From an ‘85 Ferrari Testarossa to a ‘55 Porsche 356 Speedster to an ‘88 Lamborghini Jalpa, the list of classic sports cars you’ll probably never to be able to afford is a lengthy one.
On the other hand, the list of classic sports cars you’ll now be able to afford a piece of (which includes the trio of models mentioned above) is still short, but it exists – and it’s growing.
A New York-based startup that lets investors buy a stake in a specially selected vehicle that’s likely to appreciate in value, Rally Road is basically the stock market for classic cars.
The way it works is fairly simple. Using an 18-point checklist, Rally Road’s automotive advisors identify an investment-grade car that fits the profile they’re looking for and the company buys it. Then, using the same process that allows the Securities and Exchange Commission to approve stocks, the cars is turned into 2,000 equity shares. (Share price is determined by the value of the car divided by 2,000.)
The shares in the car – which is stored in a purpose-built Delaware warehouse where it’s under 24/7 surveillance – are sold during an IPO during which no fees or commissions are charged. Once the offering is finished, there’s a three-month holding period following by a month-long trading window that lets new users place bids and current car owners sell their shares for profit.
When the perception of a car changes, so can the price. For example, the Lamborghini Countach that Leonardo DiCaprio’s Jordan Belfort has a little trouble getting himself into in “The Wolf of Wall Street” doubled in value after it was featured in the film, according to platform cofounder Rob Petrozzo.
Thanks to Rally Road, the marketplace only people like Belfort had access to is open to all.
“Classic cars are a pretty closed-off marketplace,” Petrozzo told RealClearLife. “It’s sort of a secret-handshake society where there’s a small group of people who have access to the good stuff and they just sell amongst each other. What we wanted to do is open that marketplace up by turning classic cars into stock to let people of all income levels invest and add in a democratic element that’s been missing from this marketplace for a long time.”
Accessible via an app, Rally Road has thousands of investors spread across the country and even more potential investors just waiting for the right the right car to hit the virtual trade floor.
With the trading window for its first offering, a 1997 Lotus Esprit S1 with $38.80 shares, set to open in Many, Rally Road is planning to open a brick-and-mortar retail location in New York City this summer.
“It works like an Apple Store where you can come in and be around the product, have conversations with like-minded people about it and then leave with a piece of it if you want to,” Petrozzo said.
And, while the assets aren’t available to drive, Rally Road does eventually plan to host track days for investors where they’ll be able to drive classic cars from a similar period with equivalent qualities.
Following on the wheels of the Lotus, Ferrari, Porsche and Lamborghini, Rally Road plans to introduce a silver 1992 Jaguar XJ220 as the platform’s next investment opportunity.
“When I was younger, I had the scale model of the exact one we acquired for the platform,” Petrozzo said. “That car to me was always a supercar that I’d never, ever have. Seeing it and being around it, it’s even easier to appreciate it. Put that car on the road right now and it’ll attract the same amount of attention it did when it was released. It’s like the Holy Grail.
If all goes to plan, Rally Road’s IPO for the XJ220 will take place in June.
Gentlemen, start your engines.