A new venture allows anyone to own a piece of their dream car, but there's a catch; you won't be able to drive it.
Luxury and exotic car marketplace duPont REGISTRY has partnered with Rally, an investment startup backed by entrepreneur Alexis Ohanian, Kevin Durant’s Thirty Five Ventures and Jimmy Kimmel's Wheelhouse, to offer fractional ownership in collectible assets. Like a luxury car.
The platform allows enthusiasts and investors to own shares in high-end collector cars curated by duPont REGISTRY, in addition to modern classics on offer by Rally, such as the Jaguar XJ220. But being a shareholder doesn't give you the right to drive it — you'll just own a piece of a luxury car.
Here's everything you need to know about fractional investing in vehicles.
How does investing in fractional ownership of a car work?
Let’s say you want to invest in a share of one of your dream cars through Rally. First, a model in the best condition possible would be sourced and bought by Rally. They create a new entity through an LLC, which holds the title of the car they want to offer via shares to its members. Shares are then offered through a public offering, where investors can see details about the car and purchase said shares.
Shares of the car can be bought, sold and traded until the car is eventually sold by Rally. After the sale occurs, investors receive a payout based on the amount of shares they own and its sale price.
Where are these luxury cars stored? Will I be able to see them?
According to Rally, their cars are kept in “state-of-the-art, climate controlled facilities.” However, shareholders who own shares in vehicles through Rally do have an opportunity to see cars at the Rally Museum in New York City, which showcases a few of the assets on offer by the platform.
If I can't drive the car, then why invest?
Although driving is one of the joys of owning a car, it's impossible to ignore that they hold monetary value that can be incredibly speculative. Platforms like Rally give an opportunity for enthusiasts to own a piece of their dream cars without the frills and headaches associated with collector car ownership, such as maintenance, while also building out an investment portfolio based on their interests.
What are the risks?
Several. Like all investments, the values of collector cars can fluctuate rapidly and investors face similar risks for loss as with any stock or cryptocurrency.
Is all this legal? Is this safe?
Rally states that all of their investments are reviewed and vetted by a FINRA registered broker-dealer and are regulated by the Securities and Exchange Commission. Additionally, they state that all the information on a specific asset is available to all of its members, even to those that do not purchase shares.
The takeaway: The opportunity to get closer to owning a so-called dream car is clearly enticing to car enthusiasts. However, owning a fractional share in one may not be as exciting as actually owning them outright. For investors, owning fractional shares in cars can be a way to diversify their portfolio, but they share the same risks as those with other investment products like stocks.
