The registration of personalised number plates is at a record high, and the trend doesn’t seem to be slowing down. While a large majority of private reg are for social validation, there is a significant number, at least in terms of pounds and pence, which are made for investment purposes. Yes, you read that right.
While private number plates were once seen as nothing more than a status symbol for the wealthy, there has been a slow and perceptible shift away from that. While the bulk of the purchases are now made by Britons in the upper middle class income bracket, the most expensive purchases are made by high net worth individuals. More importantly, however, the individuals are not using the plates and are instead stocking up on them.
In 2017, DVLA documented 374,968 private number plate registrations, a 12% increase compared with 2016. This is in line with growth over the last five years, which has seen the market doubling in size. Further, the huge volume of registration in 2017 accounts for 8.3% of all private registrations ever made. To emphasize the point further, the volume of registrations in the two year period between 2016 and 2017 accounts for 15.6% of all recorded registrations. That’s not a spike – that’s an avalanche.
Considering that the current number plate system will stay in place until 2050, the entire country’s vehicle-owning population is a captive market for the industry. In other words, there is a finite supply of permutations, but a growing customer base. There is a serious market inefficiency here, and the profit potential is off the charts. The risk to reward potential ratio dwarfs practically every form of investment (bar cryptocurrency), and there is no risk of a market bubble forming owing to the finite supply of permutations.
However, as with any other form of investment, investors need a good strategy in place to prevent them from stockpiling low-demand permutations that no one wants. Instead, investors have to analyse current trends to identify potential profit centres.
Obviously, investors have to start with names, common pronouns, locations and seasonal events for a start. If they are starting big, they might want to invest in a software application that will allow them to automatically analyse all possible permutations in DVLA’s database.
Emerging trends is another potential goldmine. Sir Geoff Hurst purchased a few plates to commemorate England’s victory in the 1966 World Cup. Imagine if England had won the recent World Cup in Russia – the demands for related permutations would have been sky high.
A word of caution though – never invest more than what you can afford to lose. While the risks are low, they do exist. Imagine if Tesla sets up shop in UK in a few years’ time and inked an agreement with DVLA for a new number plate format – an unlikely scenario, admittedly, but it illustrates the potential risks.