Here are two extremes of collector car acquisition. The first is the barn find, where, wearing your "Tom Cotter Taught Me How to Buy Cars" T-shirt, you slog through the backwoods of the (usually southern) countryside, until you see the back of a Ferrari 250 Monza or Split-Window Fuelie inside a falling-down garage.
You find the owner, offer him pennies on the dollar, and scurry home with your kill. You've just saved tens of thousands of dollars, and have a great story to tell as well.
The second way to buy a collector car is somewhat easier, and vastly more costly.
You sit in a crowded room in Monterey, waiting for the car of your dreams to cross the block. Unluckily for you, it is the featured car of the auction, with its glossy photo plastered on the front of the auction catalog and in full-page ads in enthusiast publications around the world.
Every other guy in the world who wants the car is in the room as well, or has his proxy bidding for him as he keeps tabs on the auction from his Gulfstream G650, via his sat phone.
Maybe the barn-find guy is there as well, as it may be his car that is crossing the block. To be victorious, all you have to do is to keep firing $100,000 bullets from your bidder's gun, until you have vanquished all the other bidders and the prey on the stage is yours to take home. For the buyers of the star cars of the Monterey weekend, becoming a new owner is more a war of spending attrition than acumen or stealth.
Old Style in a New Age
In this age of instant Internet access, why do we still have land-based auctions? They seem quaint, and almost archaic. However, they also have proven to be an extremely efficient way to conduct business when it comes to determining the value of one-off artifacts, such as valuable collector cars. Land auctions bring buyers and sellers together in the same arena, and let them determine the marketplace.
In the case of Monterey, five collector-car auction companies have been working all year long to bring the best-of-the-best to these auctions. More than 800 cars will be offered during a five-day period, and last year just under $120m changed hands.
The auction companies know that the greatest collection of collector car wealth in the world will be concentrated in just a few square miles of California, and that the registered bidders in each of their ballrooms are ready to buy.
Money is Cheaper Than Time
There's another reason that land auctions are efficient. For serious collectors, time and access are often more difficult to come by than financial resources. Think how much time and energy it would take one person to look at the following five headline cars from the Monterey auctions: The 1930 Mercedes 38/250 SS (Bonhams), the 1958 Ferrari 250 TR (RM), the 1969 Boss 302 Trans Am (Russo), the 1959 Ferrari 250 TdF (Mecum) and the 1956 Maserati 200Si (Gooding). Rather than locating the cars, making appointments, inspecting and then offering to buy ? all the while with the fear a competitor will learn about the cars and steal your kit ? why not just show up in Monterey and bid?
Further, when a car appears at a cataloged land auction, a bidder has time to do his own research, and even to test-drive a car if necessary. There's no question that the auction companies will work with you; as we have said in SCM many times, it is in the best interest of the auction companies to have satisfied, informed buyers because if a deal unwinds, everyone loses.
We Predict
But so much for logic. What everyone wants to know is: "What's the market going to be like in Monterey?" Will the rebound and recovery continue, or will it run out of steam? Are the staggering Ferrari prices RM seems to achieve with regularity at its European sales going to be the new American prices, or are they an anomaly? Will the thundering Benz's from the '30s continue to break records, or is the group that has to have them going to that great breaking yard in the sky?
Here are our predictions: We saw $120m last year in Monterey, down from $138m in 2008. We predict we're going to see $140m this year. Baby boomers may be headed towards AARP Emeritus standing, but they still have flush asset bases, part of which they are willing to turn into collectible cars.
Further, as banks continue to pay nothing for deposited funds (how does one percent annually sound to you), commercial real estate looks like a desert wasteland and the Dow seems to be in love with 10,000, what's not to like about buying a 250 TR for $12m and seeing it possibly leap to $15m in a year? They only built 34, and if only one or two are for sale at any given time, it only takes three or four billionaires who have the TR red mist to keep driving the price upwards.
Then there's the use factor. Vintage car owners, in ever growing numbers, seek out "soft adventures." These are driving events that let them feel macho as they inflict the pain upon themselves of, for example, driving 1,000 miles in the rain with no top. Piloting a cranky old car across challenging landscapes requires a certain mastery of-and communion with-your machine, something completely lacking in using everyday transportation.
The proliferation of vintage events has become an excuse to buy a car suited for each. California Mille, let's get a Giulietta Spider. Colorado Grand, crank up the Gullwing. New England 1000, find the keys to the 330 GTC. Duesenberg Tour. well, you get the idea. All of which drives desire and prices for select cars upwards.
The auction companies have produced a spread for collectors in Monterey second to none. They assume you have the money to spend, the desire to spend it, and the places to exercise your new toys. We believe they are right, and this year's Monterey will set new records as sellers turn cars into cash, and buyers turn cash into cars.