In our August, 2010 issue, I went out on an automotive limb and predicted that the aggregate total of the sales from the 2010 Monterey weekend would rebound from last year’s paltry $120m and reach the lofty, record-breaking plateau of $140m. The reaction on the web was immediate, with various chat rooms and blogs using that number as a way of pointing out just how out of touch I was with the market. Further, there was a certain delight evident in comments that decried SCM as just “being a cheerleader for the auction companies.” In our weekly newsletter survey of June […]
In our August, 2010 issue, I went out on an automotive limb and predicted that the aggregate total of the sales from the 2010 Monterey weekend would rebound from last year’s paltry $120m and reach the lofty, record-breaking plateau of $140m. The reaction on the web was immediate, with various chat rooms and blogs using that number as a way of pointing out just how out of touch I was with the market. Further, there was a certain delight evident in comments that decried SCM as just “being a cheerleader for the auction companies.”
In our weekly newsletter survey of June 29th, 2010 (in the odd world of magazine scheduling, this poll came out after the August SCM was shipped to the printer), we asked our readers what they thought the overall totals would be for Monterey. The highest total we offered as a choice was $160m, which 29% of the readers chose, making it the winner. However, 28% thought that $120m was likely to be the amount, and 21% voted for $140m. In other words, the results were more or less evenly divided in a range from $120m to $160m.
The last tent was down months ago, and the final car hauler carrying newly-acquired, four-wheeled booty has shown its taillights to Monterey, Carmel and Pebble Beach. And by now it’s no secret that the total for this year’s five sales was an astounding $172m. That’s a 43% increase from the previous year’s total of $120m, and a thumping $34m gain from the previous high, which was $138m in 2008. This issue is devoted to the Monterey results, and you’ll find the play-by-play dissection of the sales in the pages that follow.
Big Money for Big Cars
It’s also no secret that the overall shape of the global economy is shaky at best. So why—when companies continue to downsize, when the stock market is flat and real estate is still taking it in the chops—are buyers acting like every top-notch car that crosses the block is a blue-light special?
After conversations with buyers, sellers and employees and principals at auction companies, the following picture has emerged:
There are several currents in this collector car ocean, all complimentary and all leading to higher prices for certain segments. First, it is the very best and most-expensive cars that are seeing the most explosive growth in values. For instance, last year there were 14 cars that sold for over $1m in Monterey, but this year there were 33.
I believe that wealthy investors, who have good cash flow and enviable liquidity, are looking for someplace to put their money where they have some chance of getting more than a paltry return. Always keep in mind that someone buying million-dollar cars isn’t using food stamps as partial payment. For a high-net-worth individual, buying a $6.7m Alfa Monza is like a salary man buying a new Ford Taurus.
If returns from stocks, bonds, real estate and the like are miniscule, why not put a few million into collector cars? They’ve been climbing the past few years, they are a hard asset that isn’t going to vaporize like stock in the old GM, and they even offer a little entertainment on the side.
And entertainment is the second current. As I’ve remarked in this column before, “soft adventures” have been the rage the past few years, with aging baby boomers riding elephants across Botswana or hiking up Mount Kilimanjaro—with a Ritz-Carlton or Four Seasons as their base of operations.
Buying a Ticket to the Ride
The Mille Miglia, the Colorado Grand, the California Mille and the Copperstate 1000 are all examples of collector-car soft adventures. A group of wealthy enthusiasts truck their cars to a location festooned with attractive two-lane roads, and then pay a hefty chunk of change (which often goes to charity) to drive their own cars on public highways. The longer and more grueling the drive, the more grand the stories told over the evening’s dinner.
It’s even better when there is a malfunction or two, so that the owner gets to smear some grease on his vintage-correct coveralls, or, more likely, hovers over his mechanic during the on-the-fly repairs. The regular application of grease stops premature wearing of moving parts and is a vital component for every onsite maintenance team.
But not all cars are eligible for the best events, so the only way to be able to buy your ticket is to buy the right car first. That brings us to the third current in the market: the admission ticket.
When David Gooding started the bidding for the Alfa Monza he offered, he began by saying, “The new owner of this car is guaranteed acceptance in this fall’s Alfa 8C tour,” a prestigious event that runs at high speed through some of the most spectacular scenery in the west. However, if you don’t have an Alfa 8C, you’re simply not welcome. A Ferrari Testa Rossa won’t cut it, nor will a McLaren F1, and pity the poor billionaire who tries to crash the party in a Veyron.
So the right vintage cars (read that as generally very expensive) become the only way in to the right vintage events. How does a Ferrari GTO tour throughout Europe sponsored by Moet & Chandon sound? Don’t have a GTO? Sorry, please park outside and press your nose against the fence.
The final factor involves the demographics of the baby boomers. By every statistical measurement, the baby boomers will go down in history as the wealthiest generation of all time, and even today, they have accumulated an astounding amount of money. Defined by the U.S. Census Bureau as having been born between 1946 and 1964, the youngest boomer is now 46, and the oldest is 64.
Increasingly aware of the inexorable forces of mortality, boomers are making the decision to fulfill their fantasies while they are still in good health. If those fantasies happen to include buying a Jaguar D-type and joining the D-type caravan to Le Mans, up goes the bidding paddle, and for just $2.3m, they are now part of the gang.
How Long Will The Party Last?
So there you have it: First-rate old cars have become attractive as alternative investments, they provide access to a variety of exclusive clubs and soft adventures, and they are being acquired partly as yet another way that baby boomers are going to get what they want, while they still can.
I believe we are going to see soaring increases in value for top cars for the next five years, barring a global economic collapse, in which case all bets are off and selling apples on the street corner might look attractive.
The number of true, first-rate collectible cars is fixed, and the number of wealthy individuals who have decided they want a Ferrari SWB or Bentley Speed Six or even a mid-year Corvette L88 in their garage seems to be increasing. Frankly, if you’ve got a few million to spare right now, I can think of worse places to put it than into blue-chip, no-story, superb-provenance collectible cars. Let’s start the SCM blue-chip collection with Bruce McCaw’s Le Mans-winning 1952 W194 300SL Prototype. After all, you’ve got to begin somewhere.