GTOs and Cobras: Investments or Insanity?

Here at SCM, we like to maintain two simultaneous views of the collector world, with one seen through a long-range spotting scope, and the other viewed through close-range binoculars.

For example, in the short-term viewfinder, the sale of a 250 GTO for $35m is a breathtaking escalation of the value of these most-watched Ferraris. Long term, isn’t it a sign that GTOs are finally being valued correctly?

And with Carroll Shelby’s death, our inbox is already full of “mourning fans” who are offering up 289 and 427 Cobras at twice current retail.

It’s all how you measure it

In 1989, at the peak of the last boom cycle, the top price paid for a GTO was $13m. (All of these numbers are courtesy of our resident Prancing Horse guru, Mike Sheehan — who expounds on this subject from his perspective in his column on p. 50.) That’s a compounded rate of return over a 23-year period of just 4.4%.

However, a headline that reads “Ferrari GTO Appreciates Over 4%!” is hardly as attractive as “World-Record Price!”

The current valuation of GTOs has a sound basis. GTOs have a unique position in the collector car world, as they were built in small numbers — just 39 — represent the last front-engined Ferrari race car, were successful in their era, have instantly recognizable and pleasing styling — and can still be driven on the street. Further, a whole host of tours, concours and other events have grown up around the 250 GTO mystique, and the only key to enter this Magic Kingdom happens to be ownership of one of these exotics. Accordingly, the huge price collectors assigned to these cars has an underlying logic to it.
Using our long-view scope, the top end of the collector-car market is finally emerging from the doldrums of the 1990–2008 period. While the new prices of great cars may shock when they appear as daily news, from a broader perspective they are completely correct and almost predictable. There’s no reason to think this escalation of values will subside — in fact, I believe we may be on the ground floor of the next great upsurge (didn’t want to use the word “bubble” there).

Cobras are different

I would suggest that the two most important figures in the collector car world to die in the past 24 years have been Enzo Ferrari and Carroll Shelby. Will Shelby’s passing engender the same logic-be-damned escalation of values that Enzo Ferrari’s death did in 1988?

At the time, I was selling Ferraris at Ron Tonkin’s Gran Turismo in Portland, OR, and as soon as Enzo Ferrari’s death was announced, the rush was on. But it wasn’t a rush for vintage 250s, 275s, 330s and 365s. No, it was buyers lining up for freshly-minted 328 GTS and Testarossas — and sometimes paying nearly double sticker for them, over $150k for 328s and $250k for TRs.

That seemed ridiculous to me at the time, and the market has borne me out. Both models were produced in relatively large numbers, 6,068 for the 328 GTS and 7,200 for the TR, neither had racing heritage and in the case of the TR, had styling that aged quickly and poorly. About $45k will put a very nice 328 in your garage these days, and a TR will set you back just a little more, perhaps $55k. The “Enzo-Death” bump was emotionally — not logically — driven, and prices fell when rationality returned.

Cobras are a different matter. We all know that Shelby had his name on a vast array of cars, from the seminal AC Cobra to the completely inconsequential 1986 Dodge Omni GLH-S.

His most important cars are his earliest: the 260/289/427 Cobras, and to a lesser degree, the 1965–66 GT350s. Cobras have lived in the top tier of collectibles for decades, and their prices remain strong. Like the GTO, the Cobra was successful on the race track in its era, has an aggressive handsomeness and can be driven on the street. Also, like the GTO, a variety of events exist where having a Cobra (do I need to say a “real” Cobra?) is your only ticket to entry.

The fundamental difference between the GTO and the Cobra is in numbers produced. With 1,069 roadsters built, more than 27 times more Cobras exist than GTOs. In practical terms, think of it this way: Each time you see a GTO at a concours, imagine seeing 27 of them instead of one. There were 22 GTOs on the field at Pebble last year, an impressive sight. If there had been 27 times than many, or 594, would it have been nearly so impressive? I think not.
Will Shelby’s death cause the price of everything Shelby-related to skyrocket? There are two arenas to consider. In the memorabilia market, the chances are that we will see an immediate bump in Shelby-related trash and trinkets, from signed hats to paintings. Most of this stuff is not expensive, and a Shelby-autographed poster doubling from $500 to $1,000 is a harmless event.

The real question is what will happen to 260/289/427 Cobra prices? My prediction is: not much. Cobras have been “market-priced” for some time now, with 260/289s selling in the $500k–$750k range, and 427s in the $750k– $1m range depending on provenance and condition. Verified, successful competition models can bring much more.

With so many Cobras made, there will never be a shortage of them for sale. Unlike GTOs, where finding someone willing to sell is always harder than finding someone ready to buy, chances are if you had $800k in your pocket and wanted a Cobra, you could get one rather quickly.

I have always liked Cobras both as cars and as collectibles, and if one fits in your budget, I would encourage you to have it. But I wouldn’t pay a significant amount above last month’s prices because Shelby is no longer with us, and I wouldn’t buy one now believing that it will go up 50% in the months ahead.
I believe they are strong, wise investments at current market prices and that they will appreciate at the front of the market. They just don’t have the same underlying collectability elements as the GTO, and they will not appreciate as much or as quickly.