On Aug. 22, the morning after car lovers in Carmel, Califonia, had swallowed their last drop of Champagne and heard the final hammer fall at the annual auctions in the foggy coastal enclave, number-crunchers were already hard at work tallying the week’s cull.
All told, more than 1,200 cars sold across five auction houses brought in $469 million (R8.1 billion), an increase of nearly 19% over the previous record, in 2015.
The auction houses celebrated, crowing about selling $22 million (R379 million) Ferrari 410s, $10 million (R172 million) Mercedes-Benz 540Ks, and $9.2 million (R158 million) Hispano-Suizas wrapped in rose-hued wood.
But what the results from the world’s most famous used-car lots mean for the market the rest of the year is rather more complicated.
“A potential recession, higher interest rates, war in the Ukraine, and post-Covid behavioral shifts – all were in mind,” says Juan Diego Calle, the chief executive officer of Classic.com.
“The industry is clearly resilient to whatever is happening broadly. But going forward, it’s a mixed bag.”
Those volatilities mentioned do affect how cars are bought and sold globally, but the collectible car market is more complicated than just cause and effect.
The truth is that macroeconomic factors don’t affect classic car buyers – or the vehicles they want – equally. Not even close.
Hot Headliners
The buying mood for the fall will depend on the contents of that proverbial mixed bag.
Prewar vehicles – that is, cars made before World War II – will remain strong till the end of the year, says Bryon Madsen, chief strategy officer for RM Sotheby’s.
In Carmel, the auction house offered a handful of prewar cars with multiples of the same make/model, all but one of which sold, demonstrating that the market for Packards and Duesenbergs is reasonably strong.
“We feel this trend will continue through the end of 2022,” Madsen says.
So will the stellar performance of blue-chip regulars like the bombastic Italian racers that won grueling endurance races in the 1950s and their exotic progeny.
“Ferrari, for instance, has a pretty steady value line,” says Dave Magers, CEO of Mecum Auctions.
“Economics having an impact on a particular brand like that, I don’t think it makes much of a difference. And in the last 22 months, uncertainty in some respects has tended to drive people to buy things now, instead of later.”
Other of Monterey’s highest sellers, like the 1937 Bugatti Type 57SC Atlante that sold for $10.34 million (R178 million), further highlighted for forecasters that the top of the market is still flush with cash.
Expect to see the same at upcoming auctions, Calle says, and what is a truism in all but the absolute worst market conditions: “Great cars will continue to sell for great money.”
There are plenty of fall auctions from which to choose: Bonhams has its annual Goodwood, England, sale on Sept. 17; RM Sotheby’s has a sale in Marshall, Texas, on Sept. 22; Broad Arrow has a sale in Gloversville, N.Y., on Oct. 14; and Mecum has a sale in Las Vegas on Nov. 10, to name a few.
Those who know say the best lots will continue to pull strong numbers, especially those in Europe.
“Given the euro and the US dollar hitting parity for the first time in 20 years, it has been harder for European buyers to tap into markets outside the euro zone,” Madsen says.
“RM Sotheby’s has three upcoming auctions in Europe and three auctions in the United States. Given that these sales are located in local markets, in Switzerland, Germany, and the UK, we believe each local market is appropriately sheltered from some of these effects.”
Just beware of aberrations, insiders say.
No sale demonstrates the strong buying attitude for the ultimate holy grail cars more than the Mercedes-Benz 300 SLR Uhlenhaut Coupe that sold at auction in May.
The one-of-one gullwing racer obliterated the previous world record for a car sold at public auction when an unknown buyer purchased it for $142 million (R2.45 billion).
“For Mercedes to be able to say that, not just in theory but in unequivocal reality, the most valuable car in the world is a Mercedes – that is a powerful statement that puts a lot of people, other people, in their place,” Simon Kidston, who facilitated the sale, said at the time.
But the unprecedented sum comes with one caveat: It is likely “unrepeatable,” he added.
“Does it now mean that every gullwing roadster or 540K is worth more? I don’t think so,” he said.
“The allure of the Uhlenhaut Coupé does not extend to every Mercedes.”
Healthy Cooling
Then there’s the other side of the scenario.
While sales of the most significant, most expensive multimillion-dollar vehicles will stay strong for the rest of the year, close observers of the summer auctions will have noticed a general slowdown in the sales pace for midtier cars – those worth more than six figures but less than a half-million dollars.
No-sells in Carmel included a 2003 BMW Z8 bid up to $400,000 (R6.9 million); a 1937 Delahaye that reached $290,000 (R5 million); and a 1967 Jaguar E-Type that didn’t make it past $150,000 (R2.6 million).
What’s more, appetites for the cheapest entry-class of cars have slowed, too.
At the Mecum auction, lots including a 1968 Chevrolet Impala bid to $22,000 (R380,000), a 1972 Datsun bid to $40,000 (R690,000), and a 1997 Mercedes-Benz SL600 bid to $10,000 (R172,000) all failed to sell.
Analysts have even observed lower sell-through rates at both live and online auctions throughout the summer.
In August alone, overall sell-through rates were 16.3% lower than in August 2021, according to data from Classic.com.
Experts are characterizing the cooling as a healthy correction rather than a dangerous drop.
It brings additional benefits for buyers, especially those in middle markets who may indeed be affected by market volatility.
Autumn pricing will be more predictable than in earlier months, when the general tendency toward wildly erratic sales skewed perceptions of actual market values.
“For a while it seemed like buyers were on a frenzy to buy whatever they could get their hands on,” Calle says.“Prices kept rising, often with no rhyme or reason.”
By now, the Covid-19-boosted urge for some collectors to grab at anything they could buy has passed.
“There could be a question if some of the basis of a strong market is from remaining pent-up demand for buy and sell after two-and-a-half years from the pandemic, but it seems this driver [has] cooled off prior to Pebble Beach,” Madsen says.
Even better, market cooling in the next few months will lead sellers to be more flexible with their reserves – the minimum price for which they’re willing to sell the vehicle – or do away with them altogether.
That means buyers can afford to be more selective with their wish-list purchases.
“To be clear, prices are not dropping, they are merely stabilizing,” Calle says. “Relative to other asset classes, that is actually good news.”
Keyword: Collector car prices are finally stabilizing