Editor’s note: Publisher Keith Martin is making steady, strong progress on his stroke rehab. In fact, he’s back to writing his weekly blog for the SCM Email Newsletter. That said, we’ve invited a few friends to fill in for Publisher Martin’s “Shifting Gears” column until he’s ready to return. This month, Donald Osborne is here to share his thoughts.
On January 17, I moderated SCM’s Sixth Annual Scottsdale Insider’s Seminar at Gooding & Company. Panelists Carl Bomstead; Mark Hyman, owner of Hyman Ltd. of St. Louis, MO; and Bruce Trenery, racer, founder and owner of collector car showroom Fantasy Junction in Emeryville, CA, joined me to talk cars and value.
Our theme was a “Market Conversation.” Everyone connected to the classic-car world has been observing the wild ride in the equities and bond markets during the past four months. So we’ve all wondered what this would do to the collector-car market going into the 2019 Arizona Auction Week.
Would buyers be looking to move money into more tangible assets, as has often been the case in times of uncertainty in stocks? Would consignors take a chance on offering their cars in a shifting market environment? What effect might the increasing presence of Internet sales markets have on the traditional live auction sales of Arizona?
Before the panel engaged in conversation with our audience, I asked our host, David Gooding, about his thoughts on the emotional state of the market as he prepared to hold two days of selling. Gooding’s attitude was fundamentally optimistic. He said he sensed and experienced a good deal of interest from potential buyers — and realistic sellers allowed Gooding to set estimates and reserve prices that would enable their cars to sell.
Different levels of value
The first topic of discussion for the panel was the increasing specificity of the market as it relates to value.
Showing a series of slides titled “What Does One of These Sell For?” we saw three works by artist David Hockney. The first was his painting “Portrait of an Artist (Pool with Two Figures)” which recently set a world record for a painting by a living artist at $90 million.
Next was another painting, of another pool, which had sold for $10.2 million, and finally, an original signed print, “Picture of Melrose Avenue,” which sold for $8k.
So what does “a Hockney” sell for? The answer, of course, is “it depends.” So has the automotive market continued to move in the direction of the fine-art market? Maybe it has, but our panel expressed various reasons for the shift.
A market of many parts
First and foremost, Hyman and Trenery saw the market as strong overall — and stressed the need to look at the entire market, not just auction results. Both reported that 2018 had seen lots of activity in their showrooms, mostly in cars that haven’t been popular at auctions.
Competition cars and little-known, rare or very unusual vehicles have been high on their lists, as many auction lineups seem to be featuring readily understandable and accessible production cars.
Hyman, Trenery and Bomstead observed that online auctions made it easier for collectors to buy more accessible cars — even though many, if not most, were bought sight unseen and without inspection. It is simply easier to move these cars along if they don’t turn out to be the right examples.
The end of the 1031 Exchange
One of the things we work hard to do is to involve the audience in the conversation. An audience member asked about the elimination of the 1031 Exchange tax provision for vehicles.
Hyman and Trenery agreed that the necessity for sellers to complete the exchange within the 180-day limit resulted in periodic flurries of great market activity. Without the imperative of the “ticking clock” or the benefit of the tax deferment, many long-term owners are choosing to wait it out, reducing the number of transactions.
Trenery found this especially true in the over-$3 million segment of the market. Regardless of the price range, all the panelists shared the opinion that for a seller, choosing the most appropriate market channel is a very important decision in what is clearly a buyer’s market.
All the panelists agreed that today’s car buyers are true enthusiasts — more than ever before. These collectors are driven by passion for what they want to own and use.
To end our session, the panelists were asked to identify “The Cars Driving Your Passion This Week” from among the cars on offer across the sales.
As is the SCM tradition, a friendly competition was decided by audience vote based on the picks. The winner was Carl Bomstead, who chose an interesting assortment of cars including a Hispano Suiza H6C and a 1958 Ferrari TdF.
All would be sure to leave a smile on the face of their owner. Hats off to the 2019 Sage of Scottsdale! ♦