The collector car hobby has witnessed sweeping changes and staggering growth over the past decade. Once a cottage industry, the collector car market has transitioned into a legitimate global business. Many smaller companies have enjoyed rapid growth and have garnered the attention and admiration of much larger publicly listed and private equity-backed global firms. The most recent example is the acquisition of Gooding & Company by Christie’s.
On September 12, Christie’s announced that it had entered into an agreement to buy Gooding & Company. Husband-and-wife team David Gooding and Dawn Ahrens founded Gooding & Company in 2003. Before starting his eponymous firm, David began his career with Christie’s and spent three years as president of RM Auctions. Gooding & Company has built its reputation as a market leader by stressing quality, transparency and integrity, solidifying its position against auction titans Barrett-Jackson, Mecum Auctions and RM Sotheby’s.
Christie’s is familiar with the collector car industry. The venerable British auction house dates to 1766 but also enjoyed a long history in the collector car auction market. As far back as 1987, Christie’s famously sold Briggs Cunningham’s Bugatti Royale for almost $10 million — a world-record sum at that time. For myriad reasons, Christie’s exited the collector car auction market in 2007. Today the company must view the acquisition of Gooding & Company as an appropriate fit with the culture, standards and quality of its existing auction activities in the luxury and lifestyle segment.
Recent trends
Acquisitions of businesses serving the collector car industry have accelerated since Sotheby’s purchased 25% of RM Auctions in 2015. Five years later, media titan Hearst purchased online-auction vanguard Bring a Trailer. Then Hagerty went public in 2021 with its insurance business via a special purchase acquisition corporation (SPAC), broadening its business by entering the auction market with the launch of Broad Arrow Auctions shortly thereafter. Storied auction house Barrett-Jackson sold to private equity-owned IMG in a landmark transaction in 2022.
In an interview for this article, David Gooding explained that consistency is one of the crucial ingredients of his company’s historical success. To that end, the team at Gooding & Company will stay intact going forward. Its operating model will not change, and, in fact, nothing in the way the firm is managed is planned to change. With the help of Christie’s, Gooding & Company does plan to expand over time, but the growth will be carefully controlled and methodically implemented.
Christie’s is based in London and owned by Groupe Artémis, which is controlled by the billionaire Pinault family. Its financial backing and global industry expertise should enable Gooding & Company to be more competitive in an increasingly complex, technological and sophisticated market. The tie-up could emulate the precedent set by RM, which has benefited from its association with Sotheby’s. Like Sotheby’s, Christie’s brings Gooding & Company a global brand, a deep network, and breadth and scope it did not possess as a standalone niche auction house. The two firms also have shared values, which will likely prove to be an advantage in growing the organization, given how important trust, integrity and transparency are to high-end collector car buyers. Certainly the principles see positive growth potential, global brand development and accelerated financial strength.
Slowing markets
This will not come without challenges. The collector car market has been a cyclical business, and current trends show it softening. Witness the 2024 auction results from Pebble Beach, where total sales slid to $371m, a 21% decline from the record-setting $469m total in 2022. Several significant multimillion-dollar cars did not sell, sell-through rates are down, and many cars were let go well below their estimates.
This is mirrored in the broader auction market. Around the world, higher interest rates, political uncertainty and economic volatility have affected the spending habits of ultra-high-net-worth individuals. Over the past year, financial results at major auction houses reflect a decline. Sotheby’s and Christie’s earnings have been dramatically affected by slowing global economic growth. Last month, Sotheby’s reported an 88% decline in earnings year over year, while auction sales fell by 25% over the same period. Financial headwinds have been severe enough that Sotheby’s consummated a $1 billion lifeline investment from Abu Dhabi’s sovereign wealth fund last year. In July, Christie’s reported an overall sales slowdown of over 20%. Much of the recent downturn at both Sotheby’s and Christie’s can be attributed to the cooling of the high-end art market in Asia.
Time will tell if the acquisition of Gooding & Company will help Christie’s successfully re-enter the highly competitive world of collector car auctions. Given the history between the two and the reputation of Gooding & Company, the odds favor a positive outcome. More importantly, Christie’s acquisition could help the 250-year-old firm increase and diversify its revenue and profits in an uncertain economy. ♦
