Classic car collectors can learn from the $48.4 million 1962 Ferrari sale
There are practical lessons to be learned from this year's biggest sales
Last month in Monterey, California, a 1962 Ferrari 250 GTO sold for $48.4 million - the highest auction price ever recorded for a single car.
It’s a sale completely unrelatable for the vast majority of car lovers. But that doesn’t mean there aren’t practical lessons from the year’s biggest, most important sales. Anyone who wants to buy a classic or collectable car in the next 12 months should pay heed.
Here are eight points to consider:
General auction prices for good cars are fair, and sales are strong
By many accounts, this year’s Monterey auctions were a success. Over three days of sales from six major auction houses (Bonhams, Gooding & Co, Mecum Auctions, RM Sotheby’s, Russo & Steele, and Worldwide Auctioneers), 849 cars sold for a total of $371m. That’s a 13 per cent increase in total sales over last year and 8 per cent higher than classic car insurer Hagerty’s estimate for this year’s result.
Even more telling, the cars sold had a median price of $95,200 (up $5,000 from 2017) and had a sell-through rate - the amount of cars sold versus the amount of cars offered - of 61 per cent, up from 59 per cent last year.
Totals didn’t reach 2014’s high mark of $428m in sales, but the numbers look strong in comparison with recent years - most cars are selling for fair prices, without weird bubbles pushing numbers to extraordinary and irrational heights. It’s healthy for everyone.
There’s something good for sale at every price level but you may pay a premium for six-figure cars
Big sellers like that 250 GTO grab headlines but cars in the seven-figure price bracket are rarities and in high demand.
While 20 per cent of the lots of entry-level collector vehicles (those costing less than $25,000) sold above market value, 47 per cent of the lots of mid-market cars ($25,000-$250,000) saw bids above market value, and the top of the market ($250,000 and more) saw 54 per cent of lots bid above market value. The takeaway: if you want one of the best cars, you’ll need to be willing to pay more than even the highest estimates.
There are bargains in the below $20,000 range
While million-dollar Ferraris and Jaguars grab much of the attention, there is truly something for everyone when it comes to pricing. At Mecum, a 1977 Honda Civic CVCC cost $22,000, and a delightful 1956 Volkswagen Beetle built by a well-known Hollywood builder named George Barris cost just $5,000. Even cheaper and cooler: a 1981 Alfa Romeo Spider and a 1985 Mercedes-Benz 380SE each sold for $4,000 at the Mecum auction.
The Porsche and Ferrari markets have corrected
“Selling three cars for $91.5m can hide a lot of misses,” said Jonathan Klinger, who wrote the final auction report for Hagerty’s. (He was referring to the $48.4m Ferrari 250 GTO, a 1963 Aston Martin DP215 that sold for $21.4m, and a 1935 Duesenberg SSJ that sold for $22m.) “The $1m to $10m range underperformed this year, and Ferrari in particular did not fare well.”
What’s more, the sell-through rate for Ferrari was “a shocking” 53 per cent, he said, down from 68 per cent in 2017. Excluding the outlier 250 GTO, this year the average sale price for Ferraris dropped more than $1m, to $1.3m.
“Porsches corrected in 2016 and 2017, and Ferrari may be doing the same now, which we will be watching closely,” Mr Klinger said. “Historically Ferraris have been a leading indicator for the market.”
You’re going to have to pay for the good stuff
Low mileage cars are selling very strongly, according to Hagerty data, but it has to be the right mileage.
“Low mileage” doesn’t mean “no mileage” - it just means fewer miles recorded on a particular car relative to other cars of the same make and model. No mileage, on the other hand, means a car is unproven, with no interesting driving history to boot: “Collectors will pay eye-watering amounts for very specific examples” with the right driving pedigree, Mr Klinger said, while refusing to even bid on similar models that lack pedigree.
To wit: Mr Klinger described the $112,000 sale price for a 1948 MG TC with 28,000 miles and three owners from new as stunningly high. Elsewhere, a 2002 BMW M5 with fewer than 500 miles on its odometer sold for $176,000. Similar models of these well-known brands with more miles sell for thousands of dollars less.
The audience is smarter than ever
In an age where identifying VIN numbers, ownership history and the most minute details of the most obscure parts are available to buyers willing to do their research, it’s more incumbent than ever on the people trying to sell their cars to bring out the good stuff.
“You cannot fool a soul if what you have is mediocre,” said Stephen Serio, owner of Aston Martin of New England and the Bond Group, a consultant and brokerage for collectable cars. “I could have walked through a great many of the auction previews and said, ‘That’s been for sale for a year; that’s been for sale for two years; that’s a colour change because the dealer couldn’t sell it, and it needs to find a home.’”
In short: today’s sophisticated buyers won’t buy things just because they’re in an auction. That said, if you have a proper estimate and reserve on your car, and it’s very specific and rare, it will fetch a good price. The 1935 Duesenberg SSJ that sold for $22m at Gooding & Co is one example of such a very specific, very rare car with a long, well-known and well-vetted history. Fifteen such pre-war icons landed among the top 25 American cars sold in Monterey this year, up from eight in 2017.
Auctions aren’t the best place to buy most production cars
“Auctions serve a great purpose for selling some types of cars at realistic numbers,” Mr Serio said. “I say to people all the time, why would you buy something at an auction that is a production car? Unless it’s a one of a kind thing or something where you know everything about the car, why would you buy something where you don’t know who you’re bidding against? It’s not transparent; you can’t do a proper inspection.”
After all, it stands to reason that if you know you’re bidding against a prominent billionaire you may bow out of the competition before you would if you knew you were bidding against your buddy from down the street.
The term “production cars” means cars made for sale on the general market, not as one-off or bespoke and limited editions. It includes such well known collectables as the Jaguar E-Type, Porsche 911 S and 911 Turbo and 550 Spyder, Dino Ferrari, Mercedes 300 SL. They’re important enough to be worth a lot of money - and significant enough for shady dealers to try to sell inferior examples of them at bloated prices.
Some people who attend auctions have the false impression that if the auction company takes on a car to sell, it must be a good car. This is not necessarily the case. Fraud surrounding desirable production models such as those mentioned above does happen. Cars at even the best auction houses are not vetted to a high degree. It’s the responsibility of the buyer, not the auction house, to ensure the authenticity of the item at hand.
“It’s the job of auction houses to take what they believe are great examples, but depending on the auction company, they’re just reiterating to bidders what the seller is telling them. It might be true,” Mr Serio says. “I’ve seen captains of industry buy cars blind without inspection, because it’s up on a stage. Then the car gets home to them, and it won’t even think of running off of the transporter.”
This is the most important takeaway of the Monterey auctions: just because a car is offered by a fancy auction house doesn’t mean it’s a good car. No matter how high the catalogue estimate; no matter how pretty the catalogue photos.
“To be really jaded about it, a great many cars that go to auction can’t be sold privately - that’s why they go to auction,” Mr Serio said.
“Sophisticated buyers won’t buy stuff like that. Newbies will.”
Updated: September 11, 2018 02:34 PM