By Nico Hines and Arion McNicoll

The world’s oldest surviving Rolls-Royce became the most expensive veteran car on record today when it fetched more than £3.5 million at a London auction.

The 1904 Rolls-Royce 10hp Two-Seater was the fourth car ever produced by Charles Stewart Rolls and Frederick Henry Royce. One hundred and three years after it was first driven from a small factory in Manchester it became the most valuable Rolls-Royce ever bought.

The car was initially estimated at around £1 million but frenzied bidding left the value at £3,521,500, the highest ever paid for a car in the veteran class, which means it was produced before 1905. A private British collector tabled the winning offer to ensure that the car will remain in the UK.

‘Oldest’ Rolls-Royce may fetch £2m

The world’s oldest Rolls-Royce has gone on display before an auction at which it may fetch more than £2 million

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Stewart Skilbeck, senior motoring specialist at Bonhams, explained that global enquiries helped push the value so high.

“We’ve had very strong interest from across the world, generally from major collectors who already hold significant Rolls-Royce motorcars and this would be a trophy in any collection,” he said, but this car need not be confined to a museum.

“It’s a very driveable car. It still tootles along beautifully and almost silently, as you’d expect a Rolls-Royce to do. It has a top speed of 40 miles per hour.”

The same car was first displayed at the Kensington Olympia Motor Exhibition in 1905 – it returned to the same venue today for the auction held by Bonhams.

More than 100 other cars and motorcycles were also sold today, generating almost £10 million, although not every sale went as well as the 1904 Rolls.

Sir Alan Sugar, celebrity entrepreneur and former owner of Amstrad computers, made a considerable loss on a Bentley S1 Continental Sports Saloon, which he bought from Sir Elton John for £200,000 at an auction in 2001 and sold today for £144,500.

When the model was first released in 1956, a review in The Autocar magazine concluded: “The Bentley is a modern magic carpet which annihilates great distances and delivers the occupants well-nigh as fresh as when they started.”

Sir Elton described it as “the most beautiful car that’s ever been designed”, but Sir Alan only managed to clock up 600 miles on the road before selling it on at a loss of more than £50,000.

Buying a car with previous owners, no matter how well celebrated, was of no interest to King Edward VIII. While he was still the Prince of Wales in 1935 he designed his own personalised Buick.

The 1936 Buick Limited Series Limousine, due to be sold later today, was built to the prince’s own particular tastes. He demanded “luxury and privacy, specifications to include drinks cabinets, vanity mirrors, reading lights, correspondence facilities, radio, smoker’s cabinet, jewellery cabinet, compartments for canteen and luncheon trays, and a drawer to accommodate London telephone directories”.

The decadent vehicle was soon dubbed the “most romantic car in the world” after the new king ended his short reign by driving to Downing Street to announce his abdication after he was refused the right to marry Wallis Simpson. He then raced towards the south of France in the Buick for a rendezvous with his bride-to-be.

Other cars sold today included the Brunei Royal Family's Bugatti Super Sport Coupe and a Panther De Ville Saloon once owned by the actor Oliver Reed.