After two years of price consolidation, the classic collector automobile market has moved into full correction mode as the recent sales during this year’s Monterey Auction Week have clearly demonstrated. Achieving a total sales figure of over $370 million in aggregate in 2018, the combined auction houses were only able to shift a total price tag worth merely $ 245.5 million during this year’s auctions the weekend before last in California.
Hardest hit amongst the hundreds of collector autos on sale in Monterey, Carmel and Pebble Beach were the big ticket cars with estimates of over $10 million. Two coveted Ferrari 250 California Spiders went on the block, one from RM-Sotheby’s and the other from Gooding & Company. Neither was able to surpass the psychological threshold of $ 10 million nor the low estimates of $10.5 million and $11 million respectively. The Gooding & Company car, a Long Wheelbase (LWB) version, did however find a new owner at the price of $9.9 million while at the RM-Sotheby’s sale, the seller took his Short Wheelbase (SWB) Cal Spider back home after achieving a high bid of only a measly $9.4 million.
In recent years, more than half a dozen Ferrari 250 GT SWB California Spiders have exchanged hands at sales organised by these auction houses, ranging in net prices from $ 15.1 million to $18.6 million.
Much attention was given to a mishap at RM-Sotheby’s when the leading auction house’s headline car, the 1939 Porsche Type 64, estimated to sell for more than $20 million, was subject to either a technical glitch of a misunderstood bid. After announcing bidding up to the astronomical level of $70 million, bidding was halted and then recommenced to achieve a final bid of only $17 million. The unsold Porsche and RM-Sotheby’s crew have gone into hiding. The incident has raised eyebrows amongst collector automobile circles.
The only auto on auction during Monterey Auction Week to achieve more than $10 million was the 1994 McLaren F1 ‘LM-Spec’ sold for an impressive $19.8 million by RM-Sotheby’s, making only two cars sold so far this year for better than $10 million at auction, together with the Alfa Romeo 8C 2900B Touring Berlinetta sold in February 2019 for $19.2 million. Previous years have seen many more achieve these high price levels beyond the $10 million threshold: 5 in 2018; 6 in 2017; 9 in 2016; and as many as 11 in 2015! The decline in the number of cars reaching these very high prices at auction is a sign of weakening of the market as a whole.
Another measure showing a decline is the average sell-through rate. Here as well, the lower market interest is seen clearly throughout all of the auctions for cars exceeding seven figures. The sell-through figure for this year was 42 percent for cars estimated at seven or eight figures vs. 56 percent at Monterey in 2018.
Prices achieved for cars that actually sold were also in decline relative to their low estimates. The average high bid was 16% below the low estimate this year vs. 10% last year.
An additional trend that shows clearly in the results from Monterey is the increased interest in Youngtimers, a possible sign of a shift in importance that the tastes of younger collectors are having on the overall market. At RM-Sotheby’s for example, of the 21 cars sold for seven figures or more over the Monterey Week, no less than nine are cars less than thirty years old, six of which are less than fifteen years old. Because of this increased demand, no Monterey Week auction would be complete without an array of special series of recent Porsche and Ferrari models as well as new generation Bugatti, even some Pagani and other supercars. McLaren, well established of course in this domain, has no less than three cars on the list of the 50 collector automobiles sold at auction for over $10 million. Not quite as good as Ferrari, which holds 29/50 on the list, but three of the only four Youngtimers on the list (the forth is a 2017 LaFerrari…) isn’t too bad.
The market decline so far distinguishes itself from the major declines of the past. The 1990 rout was caused by a bursting bubble that had been created by over extended speculators. The 2009 fall was due to the financial crisis and ensuing recession. This time around, the market is responding to economic jitters after ten strong years of growth in the number of participants as well as some spectacular price appreciation for standard models but also for new segments of the market that appeal to a new generation of collectors.
Perhaps the classic automobile market could learn a few lessons from the art market about how it expands and contracts over the years. As an asset class, classic cars have been due for a consolidation at least if not a full correction. Collectors who have made their purchases five, ten or twenty years ago are mostly still in very good shape. Only those who have come late to the party might be feeling a bit squeezed by the current price movements.
Daniel is a contributor for Forbes France writing texts in French language for their daily newsletter and trimestrial print editions. His articles cover the classic automobile market as well as luxury and lifestyle of classic automobile collectors.