On September 15, 2008, Lehman Brothers filed for Chapter 11.
A direct consequence of that was the collapse of the collector car market. For instance, Daytonas, the poster children of the Ferrari market, fell almost overnight from their August 2008 heights in Monterey of $350k, to a more earthly $225k. Alfa TZ-1s stopped changing hands at $750k and became $600k cars. Even Austin-Healey 3000s, once the king of second-tier collectibles, dropped from $125k to $75k.
Buyers and sellers wondered, how far could things go? Would brokers once again be wearing "Will Sell Cars for Food" signs, as made famous by SCMer Randy Simon in 1991?
Of course, things weren't helped by the implosion of the stock market, and a continued unlinking of income and spending by our government. In short, no one was sure where the bottom would be.
Buddy, can you spare a Bugatti?
How times have changed. Now, it seems hardly a week goes by without a Bugatti selling for a purported $30m, or a GTO (or two) changing hands for more than $25m. Once again, we're in the "can you get me one" mode of collecting, rather than the "what should I pay"-at least for top-tier cars.
We're all gearing up for Monterey, and I'm sure Rick Cole will see his slogan bandied about again, the famous: "You can never pay too much, you can only buy too soon." In fact, given the stellar 2010 results for top-flight cars coming in from RM, Gooding, Mecum, Bonhams, and others, sellers and auction companies have reason to be licking their collector car chops in anticipation.
However, while we predict that overall sale results will be up again this year, we also believe the gap between the truly great, the near-great, the never-will-be-great, and the fake-great will continue to grow.
For instance, Daytonas, now recovered to the $350k range, have yet to hit the $500k mark they reached easily in 1990. Even without factoring in inflation, they simply aren't worth as much now as they were 20 years ago.
Why? With 1,284 of them built, they will never be "rare" or "top tier." Also, due to their build years, 1968-73, they are not eligible for the premier vintage events, unlike Mercedes Gullwings, worth twice as much. Finally, even when in perfect condition, they can be a pain to live with, having a built-in finicky nature that simply isn't present in their German counterparts. Consequently, their values are unlikely to skyrocket.
The A-list gang
But when it comes to blue-chip collectibles, cars like Mercedes SSKs, Ferrari GTOs, and Bugatti Atlantics, the race for "collector car swagger" trumps all. There are more billionaires minted every day, and the number of GTOs is fixed at 39. Of Atlantics, two.
As they are all currently owned by wealthy collectors, to whom they represent a mere fraction of their net worth, there is no reason save death, taxes, or adjusting a collection for any of them ever to come to market. So when they do, a feeding frenzy erupts and prices are driven ever higher. This phenomenon will continue.
Our pre-Monterey advice will sound familiar. If you are selling, be sure your car is presented in a visually mouth-watering fashion, with every inch, including the underside and the engine bay, detailed to beyond perfection. Buyers are looking for sizzle. Set your reserves realistically based on the current market, not on what you think the car will be worth in a year. If future value is what you are shooting for, just keep the car for another twelve months and see if you were right or not; don't make the auction company waste its time being your crystal ball.
For buyers, it's a little more complicated. Those of you buying cars in the million-dollar range don't need advice from these pages, as you have already made the calculations about what you want and what you want to spend. It's the $50,000 to $250,000 range that confounds at the moment.
Little cars, like Healeys, MGs, and Triumphs, have gotten softer recently. Conversely, Lamborghinis with difficult-to-pronounce names-Islero, Jarama, Urraco-have inexplicably doubled in value during the past three years, but now seem to have stabilized.
Is this the time to buy a Boxer at $125k? Are they about to zoom to $200k, or will they be stuck at the current value for another couple of years? Worse, will they fall back to the $85k range in which they lived for so long?
We don't have any answers for those questions. If you're a dealer, you're buying low and selling high, so you really don't care what the twelve-month play is.
If you're an enthusiast collector, and you've always wanted a Boxer, we suggest you hold your nose, jump in at current pricing, and drive the car. The only way you can go truly wrong is if you buy a bad car that needs a tremendous amount of work. As we have said before, you can't pay too little for a project car today; the costs of restoration and parts, and the time and agony involved with any project, will only continue to rise.
The Ferndale Loop and Keels & Wheels
It's not all hard work and numbers-crunching in SCM world. May is when our collector cars come out from their winter hibernation, and we had a chance to drive in the 20th running of the California Mille a couple of weeks ago. We've been going on Martin Swig's event for years, and each run is a renewed celebration of old cars and great people.
The weather was glorious on days one and four, and typically miserable with rain and even snow on days two and three. SCMer Stan Bauer has been on nearly every one of the Milles, and he drove his newly acquired Allard J2X on this one. His story will be in the next issue.
As we did last year, we left the Mille and flew directly to Houston to emcee the ever-growing Keels & Wheels Concours d'Elegance. The brainchild of Bob Fuller and Paul Merryman, it provides a perfect location for the Worldwide Auctioneers event that takes place alongside. Author (and longtime SCMer) Clive Cussler was the Grand Marshal, and he waxed enthusiastic about his car collection during the weekend.
Our own Carl Bomstead was there, and his report on the concours and on the auction will appear in next month's issue.
You've probably got your hotel reservations made for Monterey by now; if not, get on the web and take care of them today. Sign up for our annual seminar at the Gooding Auction as well (see p. 131), and buy your tickets for Concorso Italiano. Once again, it will be the definitive weekend of the collector car world.