2017-08-25 13:39:02
Wheels: Bidding Before California Car Show Suggests Collectible Market Is Healthy

MONTEREY, Calif. — Classic car values started to decline slightly about a year and a half ago. The big question before the six major auctions last week that preceded the Pebble Beach Concours d’Elegance was whether the slow retreat would pick up speed. Not this year, apparently.

The year-over-year figures for the auctions decreased, to $327 million from $338 million. But the decline was much gentler than expected, an indication that the market may be stabilizing.

“Really, it was the best result possible,” said Cam Ingram, a collector and restorer in Durham, N.C. “The Monterey auctions were a healthy barometer of a stable market, with educated buyers making the right buys for right reasons.”

If there was any doubt, it was erased in a suspenseful 27 minutes on Friday, during the sale of a 1956 Aston Martin DBR1 racecar and a 1970 Porsche 917K racecar.

The RM Sotheby’s auctioneer at the event hammered to signal that the Aston Martin had been sold for $22.5 million, about 10 percent above the pre-sale estimate. On the same day, a rival auction house, Gooding & Company, sold the Porsche for $14.08 million in about seven minutes. Both sales were met with more than polite applause.

“The expensive high-profile cars that had to sell, almost all sold, and less-expensive, well-presented cars that carried a realistic reserve sold for market-correct numbers to enthusiast, end-user owners,” Mr. Ingram said. “The speculators all seem to have gone elsewhere for the moment.”

There were a few reasons for the anxiety before the auctions: Surging stock and real estate markets now compete with passion investments. Perhaps more worrisome, car collectors are getting older, with some baby boomers deciding to leave the market. As a result, the collector car market is well off its 2014 peak despite an improving economy.

Prices have fallen before, including during a recession-induced contraction in 2008-09. But that fall did not last long. Things were already starting to look up by 2011, with buyers at the top of the market — those bidding for cars costing more than $1 million — spending conspicuously again. Mid- and entry-level buyers returned to the auctions in 2012-13.

Brian Rabold, vice president for valuation services at Hagerty, an insurance and data-analytics firm in Traverse City, Mich., that focuses on classic cars, said that “2014 may have been the peak year in dollars at the Monterey auctions, but it probably simply reflected the fact that the smartest of the smart money timed their exits well. The momentum probably reached its height in late 2013.”

It was not all sunny drives and humming engines in Monterey, Calif.

Sellers expecting to get as much as they would have 18 months ago went home with their cars. This was particularly evident in the part of the market where prices were at or below $250,000. The experience of the consignor of a pretty 1973 Ferrari 246 Dino illustrated this. Prices for the model peaked in 2015 and have been sliding gently since. The high bid of $220,000 at Gooding & Company may have been market-correct for 2017, but the seller opted to hold out for something closer to the pre-sale estimate of $250,000.

In contrast, a different seller at the same auction decided to take just $137,000 for a 1955 Mercedes-Benz 190SL roadster, despite an estimate of $200,000.

Still, there were many eye-popping sales. In addition to the Aston Martin DBR1 and the Porsche 917, a 1995 McLaren F1 went for $15 million at the Bonhams auction. Interesting transactions were made for less expensive cars, too.

A 1963 Studebaker Avanti R2 sold for a record $127,000 at Mecum Auctions. The Avanti was a European-style touring car designed under the supervision of Raymond Loewy. Pegged as a potential blue-chip collectible almost since it went out of production more than 50 years ago, the Avanti previously had not taken off as a collectible, rarely exceeding $30,000.

“It’s taken a younger generation’s appreciation for great midcentury modern design to fully embrace the Avanti,” said John Kraman, a television commentator and an analyst for Mecum Auctions.

The mood created by the Monterey-area auctions, which typically set the tone of the market for the rest of the year and perhaps beyond, was far more upbeat than had generally been expected.

For those inclined to worry, plenty of concerns remain on the horizon for the collector car market. It is an actuarial certainty that car collections amassed by baby boomers will come to market in increasing numbers, and probably relatively soon. It is unclear whether Gen Xers and millennials will have the money or the interest to absorb such an abundant supply of collectible cars.

But that is hand-wringing for another day. For now, the strong breeze coming off Monterey Bay on Sunday could easily have been mistaken for a collective sigh of relief.