Gazing Into the Crystal Piston

The continued buoyancy of the market at the top end is proof that America has the largest number of wealthy people of any nation in the world

The Monterey vintage week takes up about four months of every year. There are two months of preparation for it, which at SCM means poring over each auction catalog as it arrives, and placing our bets in the office pool concerning what the grand total for the weekend will be. Then there is the actual week of activities, with so many things going on that it takes a month of energy to absorb them all.

Finally, there’s the mad dash back to SCM world headquarters in Portland, Oregon, and the inputting and analysis of the data, culminating with this issue.

And all the while the friends of SCM continue to clamor for more information, and everyone wants to know, “What’s it all mean?”

It’s no secret that the collector car market is now in a mature phase. We have seen a tremendous run-up over the past five years, especially with A-grade, blue-chip collectibles, but that appears to be leveling off. Simply put, there were no shocking prices made; the $10m Cal Spyder sale wasn’t replicated, as some thought it might be.

At each auction, the buyers seemed thoughtful, without the “irrational exuberance” that typified 1989 and 1990. Auction houses across the board worked hard to get cars with reasonable reserves, and most everything was sold at reasonable prices. The overall total, $139 million this year versus $134 million last year, represents a modest increase, although it was accomplished without the presence of Christie’s.

The forensics of the future

But really, what everyone wants to know is what’s ahead. This is what we believe:

There continue to be three significant forces driving the market. First, on the selling side, the market is being pushed by collectors who have reached a certain age, realize their families have little interest in their cars or in maintaining their collection, and consequently have decided it’s time to turn machinery into money. We’ll see more of this in the future, either with collections consigned to auctions en masse, or auctions with all of the merchandise coming from a single owner.

Second, we’ll see a rush to market by those who think it’s simply time to cash in their collector car, before the inevitable market correction. If you bought your 4-cam in 1991 for $300,000, and the $1.7 million it could add to your coffers might change your life, then it’s a good time to pull the trigger.

The caveat today is that it might be getting a bit late in the game to anticipate top dollar. As you might expect, it seems like nearly every 4-cam, Daytona Spyder, or Miura SV ever built is suddenly coming up for sale, and having lots of merchandise from which to choose isn’t always helpful in keeping market values high.

Third, for buyers, the continued buoyancy of the market, especially at the top end, is simply proof once again that America has by far the largest number of truly wealthy people of any nation in the world. In fact, as one auction company owner said to me, “The guys buying $5 million cars aren’t worth $50 million, they are worth hundreds of millions of dollars.” Such collectors are often men in their fifties and sixties who have owned very successful businesses for a number of years, have amassed a lot of wealth, and have decided to spend some of it on cars.

Chances are you’ll find the same type of guys buying art and antiques, boats and planes, and maybe a racehorse here and there. And compared to a 200-foot yacht, the cost of most collector cars is chump change.

Most high-end collectors are from the Baby Boomer generation, and along with reading glasses, hair transplants, and Sansabelt pants comes the realization that it will probably be more fun to own a Gullwing when you are 60 than when you are 80-after all, at the latter age, where will you put the walker?

Looking forward to January

The next epicenter of the collector car world is Scottsdale in January, with Bonhams’s pathfinder Gstaad event in December.

Here’s what we will be watching for: By having best-in-weekend results two years in a row in Monterey, Gooding has earned its place next to RM in Scottsdale; even as this is being written, they are duking it out to confirm the most mouth-watering consignments for their Arizona events. RM snagging Corvette Grand Sport s/n 002 is just the opening salvo.

Both companies will present their typically first-rate catalogs (which get better in their attention to detail with every event). It wouldn’t surprise me to see their sales totals about the same this year as last, but the average price per car sold will go up, with perhaps fewer sales. This will be a reflection of the continued strength of the upper end of the market.
Barrett-Jackson will continue as the $80 million gorilla in the desert, and its challenge will be to maintain the quality of the no-reserve consignments that attract the majority of the 4,000 registered bidders, and keep the interest of millions of viewers on Speed Channel.

Unless Barrett-Jackson institutes some type of reserve option for expensive cars-those over $500,000-they could have a difficult time attracting such consignments in this uncertain economy. However, B-J’s numbers should stay solid, as their inventory is likely to be similar this year to what it was last.

Russo and Steele will continue to play an important part in the market, by having a good variety of mid-range high-quality muscle cars and a smattering of sub-$250,000 European exotics. Wisely, Russo has not tried to compete with RM/Gooding as a high-end catalog event, nor has it tried to replicate the gigantic scale of Barrett-Jackson. The company has created its own niche, with its own style of consignments and clientele. Again, we don’t see much change in the overall numbers.

Silver will further its own successful strategy as well. Almost 95% of its Arizona consignments sell for less than $50,000, an attractive market segment for collectors on a budget. This will be the case again.

We hope that Kruse regains its former aggressiveness and returns its week-after-everything-else auction to its former prominence. Monterey could hardly be counted as a success, and we expect we’ll see a broader array of better consignments in Scottsdale.

In the end, this is a very good time to be a seller, although perhaps not as good as it was six months ago. It’s getting to be a better time to be a buyer, so long as you are careful, know exactly what you are buying, and are prepared to be a long-term owner.