Despite the worst financial and economic situation in recent memory and new car markets with unit sales that have fallen to well below replacement volumes the collector car market is rolling along.
That doesn’t mean it is exuberant, nor that sales and prices are expanding, but it does mean that significant volumes of collector cars are finding new homes at healthy prices.
Where deals aren’t being done they seem to be due to disconnects between sellers – who have deluded themselves into thinking the 2007-2008 prices should be pumped up by a 10% inflation factor to arrive at 2009 price levels – and buyers – some of whom are bottom-feeding opportunists who think every transaction should be a distressed sale. Neither of them are correct, or even reasonable but the disparity in their expectations makes it very difficult to find common ground in the middle.
That view is supported by general agreement that “No Reserve” transactions are taking place at entirely appropriate values. These values recognize that 2009’s asset values are not 2007-2008’s, that the utility, rarity and recreational value of collector cars still exists and, despite moaning in media, over 90% of the people in this country who want to work actually have jobs.
So this month we have the odd confluence of four auctions reporting sales down in total from last year (adjusting Bonhams sale at Hendon for the Spitfire) with the highest price ever recorded for a collector car at auction from RM’s Maranello sale of the Ferrari Testa Rossa s/n 0714. Both Bonhams Hendon and Worldwide’s Keels & Wheels sales had modest increases in the median transaction value, but RM Maranello and Bonhams Monaco both recorded lower medians.
The latter, particularly at RM Maranello, parallels the auction companies’ difficulties in closing the deal on expensive cars. While RM put together the Testa Rossa deal and had an entirely respectable 75% sale rate (modestly better than 2008) the nine cars that didn’t sell had high no-sale bids that totaled $27,382,887. That is more than the successful hammer bids on the 27 cars that sold. All but one of the nine closed on an unsuccessful bid over a million dollars. The one that didn’t stopped at $778,500.
Why? Well, in at least one case it was engine trouble when the Le Mans class-winning Daytona Competizione stopped pumping oil through its V-12 during demo runs on the Fiorano track.
It might be that even people with seven figures to spend on impeccable Ferraris are a little reluctant to put so many eggs in one basket these days, or that people who own these cars, even if they’re interested in selling them, have the wherewithal to hold on to them until the market (for collector cars, bonds, equities, mortgages, real estate, etc.) clears up, i.e., so much for distress sales of million dollar cars.
At one point a few months ago observers with a sense of history and prior experience were noting that in past recessions the collector car market didn’t show the decline’s full effect for six or nine months. If that’s the case, the April-May sales are at the 9-month mark. If this is as bad as it gets … it’s not very bad. There’s no need for TARP money here.