In my 20 years of writing about the market, I have never seen high-end cars accelerate in value like this





For the first time in two decades, we're considering pulling a tattered banner out of storage and hoisting it above SCM world headquarters. It bears the fabled words of Monterey Sports Car Auction founder Rick Cole: "You can never pay too much; you can only buy too soon."

I never thought I'd write those words in a column again.

It was the sale of a BMW 507, s/n 70015, for nearly $1m that got me thinking about this. RM got $893,104 for the ex-Ecclestone car, profiled on page 58, at their recent blockbuster London sale.
These Goertz-designed V8s are svelte but idiosyncratic; they're not performance cars, they have no race history, and they were not particularly revered when new.

But with their limited production (just 253 built), unusual engine, and striking lines, they are clearly a classic, and collectible.

The last two 507 entries in the SCM Platinum database show RM selling s/n 71101 in 2005 for $347k, while s/n 70221 was a no-sale at $450k at the Geneva Sportscar Auction in Switzerland in 2006. At that time, we wrote: "Strangely, although the car was bid to its generous estimate, it did not sell."

But $893k just a year later? Yes, the market has spoken



And as 507s go, so goes the rest of the market. The prices of the big guys, like GTOs and 540Ks, along with their friendly little brothers, the SWBs and 300SLs, have continued to climb, and European exotics of all flavors seem to have been swept up by the surging tide.

In my 20 years of writing about the market, I have never seen high-end cars accelerate in value like this. We are used to the ebbs and flows in selected areas, like Healey BJ8s jumping from $60k to $100k in two years (and now relaxing to $75k). Or Boss 302s going from $20k, where they were stuck forever, to $85k, and then coming to rest at $70k.

But for the ultra-exotics, there seems to be no end in sight. We are now in a phase of, "Can you get me one?" not, "How much does it cost?" If you're looking for a Ferrari 250 SEFAC SWB ($5m), a Maserati A6G Zagato ($1.5m), or a Bentley Speed Six ($2m), just waving money around won't put one in your garage. It's a matter of knowing the right people-who know the right owners-who can put together the right deals. Or waiting until one comes up at auction, and then being prepared to keep your paddle aloft until the record-breaking end.

Where's the money coming from?



There has been some discussion that the upward escalation of prices is due to new, wealthy collectors from developing countries entering the fray. Others have commented that the weak dollar, compared to the Euro, has made our cars cheap. While both of those factors are surely playing a part, dealers tell me that many of the A-list cars are being bought by old-line collectors in America. These guys have been around for a long time, and as they see the market surging, they are jumping in because they don't think it is coming back down in the foreseeable future.

There are new guys, and they are making a splash. Witness the sale of the 330 TRI/LM, s/n 0808, by RM at Maranello for $9.3m. It last sold in 2002 for $6.5m, and had been extensively shopped around to the most likely collectors, with no takers. On auction day, it was a new player from South America who stepped up to break the bank.

These new collectors tend to be more willing to pay top dollar than old-line collectors, because the veterans base their valuations on past sales, whereas new collectors accept current values as simply being where the market is today. When the Microsoft and Cellular One boys started collecting with a vengeance back in the 1980s, they paid what it took to get the best, regardless of past values. Which is the same way they bought their houses, their art collections, their yachts, and their jets.

It's important to recall that a collector who is buying a $6m car isn't likely to be scouring Craigslist for cars listed as "restored" or keying in "Otto Vu" at Collectorcartraderonline.com. A $6m car is just a small part of his collectible portfolio, which means that a decision to buy at $5m or $7m is not based on his financial means but on his evaluation of the market and the car itself.

Which is why this market has gone so far, so fast. Those who are bidding things up are by and large not speculators or dealers. They are savvy guys who are in it for the long haul, and who figure that if there is a car they have always wanted, it's going to cost more next year than this, so they are pulling the trigger sooner rather than later.

Will these prices be sustained? Yes and no. I do believe that collector cars were out of favor and undervalued for nearly 20 years, and it is only now that we have caught up, and in some cases surpassed, the prices of 1990. It is also true that ultra-rich people are simply richer than they were 20 years ago; the billionaires' club just isn't as exclusive as it used to be. Which means that even if prices exceed those of 1990, when adjusted for inflation, cars are still cheap.

Though I have faith in the ultra-high end, I would still advise caution before paying a nose-bleed price for anything built in numbers over 500, including current flavor-of-the-month specials like Ferrari Daytonas. If the market does hiccup, there can easily be far more for sale than there are buyers, and that market will come crashing down.

Free Corvette Market Seminar and Breakfast



Thanks to support from key players in the industry, the first annual Corvette Market Insider's Seminar in Scottsdale, hosted by Russo and Steele, will now be free for SCM and CM subscribers, as well as registered bidders at Russo and Steele. It will be held at the Russo and Steele auction tent on January 18, from 9 am to 11 am. Another bonus-a catered breakfast will be provided free of charge, and Russo has a reputation for putting on a terrific spread. The tuition for non-subscribers is $55 each or $100 for two. Space is limited, and early registration is required.

The topic is "The Corvette Market: Yesterday, Today, and Tomorrow," and I will be moderating a panel discussion by a group of first-rate market and restoration experts, including Dave Kinney (USAppraisal), Jim Jordan (County Corvette), Kevin Mackay (Corvette Repair), David Burroughs (Bloomington Gold), Colin Comer (author, Million-Dollar Muscle Cars), and Michael Pierce (NCRS). For more, see page 99; register online at www.vettemarket.com/scottsdale.

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