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Welcome to Alts Sunday Edition

Hope you enjoyed last week’s issue on investing in fine cigars.

Here at Alts, we pride ourselves on highlighting esoteric markets you never knew existed. Man, do we have a cool issue for you today.

You may recall a few weeks ago we dropped a newsletter on investing in classic cars. While researching that issue, we stumbled across an alternative asset class you wouldn’t believe existed.

But boy, does it ever.

If you thought luxury cars were a status symbol, wait until you hear about the market for heritage license plates.

These are handmade, low-digit numeric license plates. They're increasing in popularity around the world, but especially here in Australia. Over the past six years, the market has gone into overdrive. People are now paying millions. For a license plate.

How on earth did this asset class get so hot? And why are they worth so much?

Let's go for a ride 👇

Note: While researching this article, we interviewed three of the biggest active players in the space: Hamish, Chris, and "Victor" (not his real name.) Most of our market research comes from Down Under, so all dollar figures quoted in this article are in AUD unless otherwise specified.

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How license plates became a status symbol

The vintage license plate market exists all over the world. But Victoria, Australia (where I live) may be the most prestigious of all.

The original 285,000 number plates, now known as Heritage plates, were handcrafted from steel and vitreous enamel; a durable, reflective, corrosion-resistant alternative material.

When the Victorian government created the first license plates, the single-digit plates (numbers 1 through 9) were reserved exclusively for government officials. But there was a problem.

The story goes that the Governor, Premier and Police Commissioner of Victoria couldn’t decide which of them deserved to get #1. And like petulant children, they said, "If I can’t have it, no one can!" So they locked the plates up in a safe instead.

This safe would later be opened, and the plates would eventually be released into the wild. But we'll get to that later.

Why the hell are these license plates so valuable?

Okay, so what's the big deal about these plates in the first place?

First you have to understand that the value isn’t so much in the plate itself (though the craftsmanship is terrific). It’s in the right to publicly display the plate.

Imagine turning up to a party with the #5 license plate on your car. Are you kidding? What a cool flex!

Keep in mind these are different from "vanity plates." Those can be cool (or totally cringeworthy). But ultimately, they're just not that valuable. You can order one for $125 and a few minutes of paperwork.

Heritage plates, on the other hand, are an instant ticket to semi-fame. Nobody else has them, and getting one is extremely difficult. Even billionaires can't just buy one.

It's a "cherry on top" for wealthy car collectors (usually worth far more than the cars themselves) and the ultimate show-off for anyone else lucky to have one.

Single-digit plates are worth millions (And they never get sold)

There are only 285,000 heritage plates in existence. For a state with a population of 6m, it doesn’t sound too impressive, right?

But valuing license plates follows a very simple principle: "The lower the number, the higher the value."

There are only nine single-digit Victorian heritage plates, and they’re basically impossible to get. Nobody is selling. They don't move. Families view them as a "holy grail." They get passed down from generation to generation.

The lowest-number VIC plate to be sold in the past decade was #14, which sold in 2022 for an astonishing $2.27m. This means there are 13 more valuable plates out there that have never hit the market, and probably never will.

But the madness doesn't end at single-digits. Oh no.

Allow me put this in simple terms:

1. Single-digit plates are worth $3 - 10m
2. Two-digit plates: $900k - 3m
3. Three-digit plates: $500k
4. Four-digit plates: $200k
5. Five-digit plates: $100k
6. Six-digit plates: $40k

Double and triple-digit plates

Since single-digits are impossible to get, your next best bet is to find a plate in the double-digits, of which there are only 90.

Lower is better. 16 is more valuable than 56, which is more valuable than 86, etc. But higher numbers that repeat (55, 99, etc) can be worth more than lower numbers.

Plates containing the number 8 are also valuable (we’ll explain why in a bit). And then of course you’ve got the fun/childish stuff like #69, #420, #666, etc. All of these would be worth at least half a million dollars.

The market has grown like crazy. "Victor," who we interviewed for this piece, was a former plate collector. Ten years ago, Victor bought a 2-digit plate at auction. The value grew 10x over a decade. He then sold the plate, and is now completely out of the game.

Doubles are fetching what singles used to fetch. Triples now sell for what doubles used to.

And on and on we go.

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It's important to remember heritage plates are a local phenomenon. The #55 license plate here in Victoria is worth millions, but the #55 in Massachusetts might not be valued nearly as high.

The same goes for real estate. All real estate investment is local.

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The Victorian heritage plate boom

After our chat, Victor introduced us to a man named Hamish Opray.

As a Senior Sales Associate at Sotheby's, Hamish has seen the market grow like crazy since he first got into it 20 years ago. He's now created a database of heritage plate auctions so he can understand what's happening in the market (we like his style!)

Hamish also gave us a bit of history on the market. Things kicked into gear in the 1980s in what has become known as "The Great Plate Auctions," where the government sold off thousands of coveted plates in order to raise funds (including those plates 1 through to 9 that were locked up in a safe).

For an asset class that popped up overnight, the results blew people away. (All figures adjusted for inflation.)

• ​VIC #1 sold for $594k to a retired mechanic.
• ​NSW #3 (New South Wales, home of Sydney) sold for $216k
• NSW #160 sold for $36k
• NSW #888888 sold for $50k

So things got off to a hot start. But the fire had only just begun burning.

After the auction, people started to realize the government was sitting on a bunch of these things, and you could just buy unsold heritage plates directly from them.

At first, six-digit plates sold for $10k. But soon that turned into $12k, then $14k, then...yeah. You get the idea. Those days didn't last very long.

Eventually, the government needed help keeping up with demand. So instead of selling plates themselves, they formed a partnership with auto insurer and auctioneer Shannons, who quickly became the biggest fish in the sea.

Alpha plates

The Victorian government was no longer directly selling numerical heritage plates. But in 2010 they sniffed the growing trend and decided to release a new set of heritage plates. However, this time, they were single-digit alphabetical.

Interestingly, only 24 of the 26 letters were released. "I" and "O" were not auctioned as they look too similar to "1" and "0."

Auction results were pretty impressive:

• "A" was the biggest winner, selling for $110k.
• "Q" was half that amount, selling for $50k.

But that’s nothing compared to what they’re worth now.

In 2022 "Q" became Australia’s highest-selling single-letter plater, pulling in a whopping $350k from 11 bids. That’s a 7x return in eleven years.

What caused the market to explode?

Hamish and Victor believe the market really took off alongside crypto.

This probably isn’t a coincidence. Crypto made society start to understand how valuable limited-supply goods can be. Just like with NFTs, it’s the ownership, not the image depiction that’s valuable.

But another factor is the massive amount of Asian money entering the Australian market. Many of the most valuable license plates are owned by Chinese-Australians.

Take Bernard Fung, GM of luxury jewelry brand Monards. He owns the coveted #8, which is most likely the second-most valuable plate after #1.

But hang on, what about #2 - 7?

As it turns out, the number 8 is very lucky in Chinese culture. The word "eight" sounds similar to the Chinese term for prosperity. This is why casinos and slot machines are adorned with 8's.

For example, #363 recently sold for $600k. But #388 sold for $60k more — all because of the number 8.

Finally, Hamish believes that younger generations are starting to wise up to alternative investments like this. $40k isn't enough for a down payment on a home, but it's enough for an entry-level plate (i.e., 5 or 6-digits)

What about fraud?

While researching this piece, I couldn't help but wonder: Why don’t people just create (and sell) replicas?

After all, you can easily order another license plate when yours gets damaged. What's to prevent folks from legally ordering and selling dupes?

But the dynamics of this market are such that creating a replica would be pointless. Remember, when you buy a heritage plate, you're really buying the right to display it publicly. The actual plate itself doesn't really matter.

As a seller, you'd be idiotic to add to the supply. Any small gains you make from ordering and selling dupes would likely be outweighed by a dilution of value for your specific plate in the market.

And as a buyer, if you slap a plate on your car that you don't have the right to display, you're asking for trouble.

Not that it's stopped wannabes from buying fake heritage plates using "I's" for "1's" and "O's" for "0's"

The most expensive plate ever sold

The #1 plate has changed hands many times over the years, but the most interesting story is from the then-CEO of Fosters, Peter Bartels.

When Bartels left the company in 1992, he made a smart decision. Instead of receiving a lump sum severance package, Bartels asked for the #1 plate, which was owned by the brewery.

In 2007, Bartels received a written offer for the “1” plates at $1.5 million. Just four years later, The Age reported the asset was likely worth more than $2 million. (Today, it's more like $10 million.)

But while #1 is the most valuable, it isn’t the most expensive ever sold at auction. That privilege belongs to NSW #4, which in 2017 sold for $2.45 million, the current Australian record.

NSW #4 was sold to a wine and sex toy mogul (for real) named Peter Tseng. At the auction, he put his hand up to bid, and kept it in mid-air until everyone else exhausted their budget.

(Side note: Peter's a fascinating figure. You can find him in the Russell Crowe documentary Red Obsession, which is about the French wine industry struggling to accommodate growing demand in China.)

Other valuable plates include:

• VIC #26 sold for $1.1 million in 2020
• VIC #12 is owned by Janet Calvert-Jones, sister of Rupert Murdoch (owner of the FOX Empire).
• VIC #916 sold for $108k in 2019. Three years later, a similar plate, number #929 sold for >5x more ($570k)

How to buy heritage plates?

Getting your hands on these takes a lot of work.

Low-digit plates almost never go to auction, and are instead passed down through the family. Private sales are also quite rare (though they do happen). It's morbid, but most ultra-valuable plates only become available once their owner dies.

In Australia, only one auctioneer can legally sell these heritage license plates — Shannons.

We spoke with Christophe Boribon, Auctions Manager at Shannons. They are car insurers that now have a monopoly on rare plates. Every major plate auction over the past decade has been run by them.

Christophe follows this market extra carefully. He sees every single auction that happens, and has his finger on the pulse of the market.

There's a big auction happening next week. VIC #52 is on sale, and is expected to bring in between $1.3 - 1.6m. Worth a follow.

The global market is shifting into high gear

Australia may have the world's most-evolved license plate market. But there are lots of expensive plates starting to sell worldwide.

The global market is shifting into high gear.

Consider this:

• Just last month, the world's most expensive license plate was sold in Dubai! The plate, #7, pulled in USD $22.5m.
• Yellow British license plates can always nab a high price. The number plate 25 O was once owned by Eric Clapton, who displayed it on his Ferrari SWB. It sold at a 2014 auction for USD $810k.
• Another yellow British plate reading "F1" is the second most expensive plate, thanks to its connection to the sport F1. It was purchased in 2008 for US $551k, and the owner has rejected an offer to buy it for 12 million pounds.
• A Californian man put up his "MM" plates for an absurd USD $24.5m. Though as far as we can tell, it has yet to be purchased.

Closing thoughts

Before doing this issue, I'd seen these heritage license plates. Occasionally I spotted a three-digit plate in the wild and thought, "Huh, that's pretty cool."

But I didn't realize how developed this market is; how much money is flowing into the space.

This is an incredible alternative asset class that nobody thinks about.

Classic cars get all the attention, but the fact is these license plates are worth even more. Oh, and unlike cars, there's no insurance, maintenance, storage, or depreciation. The returns have been insane!

...At least so far.

All three people we interviewed, Victor, Hamish, and Christophe, aren’t convinced this boom will hold. Single, double, and triple-digits are one thing. But when you can't even buy into the six-digit market with less than 30 grand, the market is likely overheated.

This market reminds me of crypto — specifically the ENS domain gold rush. During the height of the NFT craze, a speculative bubble formed with low-digit domains like 105.eth, 999.eth, etc.

Unlike crypto, this market isn't really global yet. The Aussie market is huge, and Dubai is set to become even bigger. Asian markets seem to be developing as well. But I don't believe these markets are as developed in America or most of Europe, and I'm not quite sure why that is.

I can see it being big in America someday. There are only so many people that ultimately give a damn about non-fungible tokens. But everyone drives a car!

While spending $40k+ on a six-digit plate doesn't make much sense, I think the high-end of the market will hold up just fine.

So if you're looking for a unique, exotic alternative investment, heritage plates should be right up your alley. But good luck snagging a low-digit one.

In the meantime, you can always go platespotting, and hope to find someone who doesn't understand their value and is willing to sell!

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Further reading

• ​Numberplates.com.au is the top resource for tracking history & prices
• The Heritage Plate Spotting Facebook Group has 8,200 followers
• ​Shannons Auctions is the only company allowed to auction off Victoria plates
• Queensland, Australia now allows emojis on license plates​

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That's a wrap. A big thanks to "Victor," Hamish Opray from Sotheby's and Christophe Boribon from Shannons for their terrific info, insights and quotes. If you'd like to contact Hamish or Christophe, please let me know and I can put you in touch.

Also a big thanks to community member Dan Remy who tipped me off to this market in the first place, and inspired this issue.

And finally, to Ben Knight for translating my poorly recorded interviews into a cohesive issue.

What do you think? Have you heard of this stuff before? Do ultra-rare license plate markets exist in the US and Europe? What did we miss?

Let us know, we love hearing from readers.

Until next time,
Stefan

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Disclosures

• This issue was sponsored by our friends at Franshares and Nada.
• This issue does not contain any affiliate links.
• We have no heritage plates in our ALTS 1 Fund. (And we probably couldn't get a single-digit even if we tried.)

💡 Trivia

Trivia will be back next week!