“We’ve got to separate the signal from the noise.” That’s what collector car connoisseur Miles Collier says when we are trying to find our way to the core of a challenge. Miles’ saying refers to tuning a vintage radio, where you adjust the dial until the static disappears and a voice can be heard clearly. As we sift through the information coming our way about Scottsdale 2016, we’ll find lots of noise — surrounding a very clear signal. This issue is dedicated to analyzing what happened in Scottsdale, and you’ll find a reference to the softening market on nearly every page.

Welcome to the correction

Simply put, the market is undergoing a correction. Prices can’t keep going up forever. Sooner or later everyone who wants to pay $200k for a short-nose 911S has got one. Everyone who lusts after a 25th Anniversary Countach for $300k has landed one. Before we find ourselves keening with Dino owners who can’t get $500,000 for their 246 GTS Spyders, let’s remember that just four years ago, $250,000 would have been considered all the money. There’s no shortage of explanations for the slowdown in sales and prices. They range from worries about the presidential election to the collapse of oil prices. For the 30 years I’ve been observing the market, I’ve been offered lots of reasons why things slow down. The factors range from rising interest rates to strong euros. It’s never the cars. It’s rising (or falling) home mortgage interest rates or something equally abstract. However, when the market is going through a phase of irrational exuberance, few collectors seem to look for — or even care about — underlying financial reasons for zooming prices. Instead, we all marvel at the rising prices and say things like, “Porsche 911SCs have finally been discovered; they were undervalued for too long!” How about this as a simple explanation for the softening of SC prices: Collectors are wising up and realizing that Porsche built a lot of SCs, they will always be a second- or third-tier collectible, and prices had just gotten out of hand. Perhaps that’s just too logical.

The rise and fall and rise and fall

I’ve watched more than a few booms and busts. I recall selling a 1988 Testarossa for the sticker price of $135,000 at Ron Tonkin GT in Portland, OR, and watching it get flipped for a $50,000 profit the same day. I’ve seen the same TR sink to under $50,000 and be almost sale-proof in the mid-’90s. And during the past two years, we’ve watched them climb to $250k and more. What’s a TR really worth? A first-gen TR was produced in relatively large numbers (7,200), has no racing history, and is noteworthy only as it represents Ferrari’s last attempt to build a rear-engined 12-cylinder car. This doesn’t amount to much of a collectibility rating. In my opinion, these cars will stabilize in the $150,000–$200,000 range. Is that a major market disruption? No. It’s just the market figuring out the inherent value of this car.

The Ford GT mystery

A very bright spot in the market — and one that remains mysterious to me — is the Ford GT. As an “homage” or “tribute” car, it has no history besides that which reflects on it from books and videos of Ford’s victories at Le Mans in the 1960s. Some Ford GTs sold for nearly $100,000 over their $140,000 sticker price in 2005, but soon enough you could buy as many as you wanted for under $150,000. In the past two years, prices have taken off, with the cars painted in the “heritage” scheme of Gulf pale blue and orange bringing over $400,000. This is a $100,000 bump over the other paint jobs available from the factory. And woe to the owner of a “stripe-delete” car. “Those plain-looking cars are just a really tough sell,” one dealer said to me in Scottsdale. I scratch my head on this one — a “heritage” paint job is worth a $100k bump on a “tribute” car. Plus, the lower the miles, the more valuable the car. Consequently, the ideal car has less than 1,000 miles and a heritage paint scheme. The chances of a car like this ever hitting the road are exactly zero. Ford will have a racing version of the second-gen car as well, and if it’s successful, it could help sustain values. But the Ford GT is collectible only because it is in favor with the market right now — not because it represents a pinnacle of Ford’s achievements on the racetrack. And things that come into favor can just as easily go out.

Better to bounce than crater

I predict that the market will continue to bounce around for the next 24 months. We’ll see an occasional Ferrari 335 S rock the auction world, and we’ll see air-cooled 911s going from crazy expensive to just double what they were five years ago. We’ll see ordinary cars like Ferrari 308s and 328s plateau and slide backwards a little bit — to only 50% more than they were three years ago. We’ll call that a correction as well. Collector cars are not going to crater — they’re going to move along with the currents in the world economic markets. More than ever, it is important to buy a good car with a solid history, as a fickle market rejects the imperfect. In my opinion, the market is healthy. It’s just moving to a different set of value parameters, and prices will reflect that.

Welcome Mr. Osborne

You’ll find a new column starting this month in SCM. Longtime contributor and close personal friend Donald Osborne offers his thoughts on collecting in “Unconventional Wisdom,” which you will find on p. 54. Well known as a car valuation expert, writer and TV personality, Donald travels the world seeking out the rare and the unusual, and we are fortunate to have him share his experiences with us. ♦

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