If there was any doubt as to the health of the classic-car market, Monterey Car Week in August squashed that. More than US$400 million (Dh1.47 billion) in classic cars were traded throughout the week – a record figure that further cemented the Pebble Beach Concours d’Elegance and the seven-day celebration of automotive excellence as the most important events in the annual motoring calendar.
It’s important for a number of reasons. For investors looking at alternative ways of locking money away into appreciating assets, classic cars are incredibly important. Not convinced? Well, consider this: last year, a little more than $310m in classic cars were traded at auction throughout Monterey Car Week. This year’s $400m marked a 28 per cent increase on hammer prices – a relatively healthy chunk of cash over and above last year’s record takings. It’s also three times more than the total raised in 2009. Average sale price rose to a little more than $535,000 and the median jumped 39 per cent to $99,000.
And this counts just the cars sold at auction – not the others that were sold during private deals in the days following the auctions – including the 1966 Ferrari 365 P Berlinetta Tre Posti three-seater, one of only two ever made, and which failed to meet its reserve, despite commanding $22.5m in bids during the second night of the Gooding’s auction. It was not altogether surprising given the car’s rarity, but some observers felt that the car far exceeded its worth at auction and should have sold.
Not all auctions are equal. This year marked the rare appearance of a highly desirable Ferrari 250 GTO into a public auction – one of 10 cars offered as part of the Maranello Rosso Collection sale conducted by Bonhams at the start of the week. The GTO was one of 73 cars bought by a group of investors from the family of the late Fabrizio Violati in June, and had been owned by Violati and his estate for 49 years – the longest single ownership of any Ferrari 250 GTO ever.
Violati was an interesting character. He came into family money as general manager to a group of brands that included Ferrarelle carbonated water, and bought the 250 GTO – known by its chassis number, 3851GT – from the racer and snow-car inventor Ernesto Prinoth for $4,000 in 1965. Violati was the car’s fourth owner. It was first bought and pressed into sports-car racing action by the French driver Jo Schlesser, and was wrecked, killing Schlesser’s driving partner Henri Oreiller, during the Coupes de Salon race at the Montlhéry Autodrome on October 7, 1962. The car was rebuilt by the factory and sold to the Italian racer Paolo Colombo in 1963 who campaigned it successfully in hill-climb events throughout the year before selling it on to Prinoth in 1964.
After a relatively minor crash in 1965, Prinoth considered cannibalising the car for its engine. It had become less competitive in circuit racing and hill climbs, and the V12 engine could have been transplanted into a racing power boat or sold as a unit to another racer. Luckily, Violati stepped in, offered Prinoth a handsome sum of cash, and secured his first Ferrari.
The car’s appearance at Bonhams generated a lot of interest. Only 39 250 GTOs were ever built and they are the most coveted of all cars by collectors – primarily because they so rarely pop up and they still hold their own against modern contemporaries when truly let off the leash. Nick Mason, the Pink Floyd drummer and collector, regularly races his and ardently believes that cars of the 250 GTO’s ilk need to be exercised regularly and not locked away on display.
The Bonhams tent heaved under the pressure of thousands of auction fans, keen to see just how much the car fetched. A buzz rippled around the crowd. Expectation was high, and so were some of the estimates. How much? $45m? $50m? Someone even suggested $100m. Some laughed. Others shrugged it off. Anything was possible, and it was near impossible to predict whether the bidding would escalate into a frenzy or whether the crowd’s enthusiasm would filter through to the people at the centre of the action; those waving bidding paddles.
In the end, the hammer fell at $34.65m, plus 10 per cent auction fees, bringing the cheque total to $38.1m – a new record for a Ferrari 250 GTO sold at public auction – to a European buyer bidding by telephone. Some felt that the car should have gone for more – and there was audible disdain from the crowd as the bid increments slowly whittled down to $50,000 chunks near the end – but Mason, who was present for the auction, said that he felt the price was “about right”.
“Maybe it had something to do with the fact someone died in the car, but, yes, I think it was about what the car is worth today,” Mason said. “It would have been nice to have had the two buyers in the room; that would have created a bit more of an atmosphere.”
Others felt that the car deserved more than an “undignified scrap over small change”, as one auction observer noted. Quite how he viewed $50,000 as “small change” still resonates uncomfortably with me.
The other nine cars in the collection garnered a further $27.8m, raising the total for all 10 cars to nearly $66m (all figures include sales fees). That included a 1953 Ferrari 250 Mille Miglia Berlinetta designed by Pininfarina that graced the cover of the American magazine Road & Track in July 1955 ($7.3m); an ex-Gilles Villeneuve Ferrari 312 Formula 1 racer that won the 1978 British Grand Prix ($2.3m); and a 1958 Ferrari 250 GT Series 1 Cabriolet ($6.8m).
While there are huge margins to be had for numbers-matching ex-factory-coddled rarities, not everyone is in the market for a top-dollar Ferrari, and every auction throws up surprises. A 1965 Ford GT40 prototype sold for $6.9m, well below its pre-sale estimate of $8m to $10m. A McLaren F1 – again a relatively rare specimen at public auction – also went unsold when it failed to meet its expected $12m to $14m estimate. That’s a considerable increase on the kind of cash that an F1 was attracting just four years ago when Gooding & Company sold one for $3.4m.
But there are fantastic investment opportunities to be exploited for those even at the more modest end of the collectors’ market, too, particularly for those with a keen eye for what collectors may turn to next. Had you had the foresight to sink a reasonably affordable $85,000 into a 1960 Mercedes-Benz 190 SL in 2010, you could expect to sell the car for about $200,000 today. A 1952 Jaguar XK120 bought for $92,000 in 2008 has now doubled in value. A BMW 507 Series 2 sold in 2009 for $935,000 will easily fetch a million more now. And that’s just the tip of the iceberg.
“There are really not that many collector’s cars out there,” explains Julius Kruta, the head of Bugatti Tradition and a Pebble Beach regular. “And those that are out there, we’re aware of and know about. There are exceptions, of course, but the value of these cars just increases year by year.
“As a place to park money, cars offer a level of security and investment that other commodities simply don’t. We’re seeing a lot of new money come in and that is, in some cases, elevating the prices of some of these cars beyond the reach of even the traditional collectors. Some of them aren’t even particularly interested in the cars – they just know that they’ll get a better return on their cash than they would if they put it in the bank or into anything else.
“I mean, who would have ever thought that the Dino would be such a wanted car. Just a few years ago, you could pick them up for nothing – now, you need a lot more to get a foot in the door.”
Try $440,000 for a late model 246 GTS (2.4L V6) and $748,000 for a 1968 206 GT (the curvier, 2.0L, V6-powered one, one of only 153 built with a body made from alloy). If you’d spent $583,000 on a Ferrari F40 in 2010, you could expect to bank $1.3m if you sold it now.
Generally speaking, and unsurprisingly, Italian exotica remains the number one target market for collectors. The eye-wateringly gorgeous 1985 Ferrari 288 GTO’s relative rarity (272 made) has seen prices balloon from a not-inconsiderable $750,000 in 2011 to about $1.5m in just three years. If you’d bought a 1967 Ferrari 330 GTC at auction that year instead for $275,000, you’d have made a $412,000 profit on it this year. Anything with the prancing horse on the bonnet is guaranteed to escalate in value. Got a 308 GTS or GTB stashed away somewhere? Patience may be your best guarantee of a healthy retirement lump sum.
It’s not only Ferraris that collectors are looking for. The original Maserati Ghibli 4.9 SS has rebounded with vigour. Just three years ago, $88,000 would have put one in your driveway. This year, the hammer fell on that same model for $264,000 – precisely three times what it fetched in 2011.
The Jaguar E-Type is another that is quietly appreciating, too. Two Series 1 models went under the hammer at Gooding’s; one made $247,000 and the other – a concours-level restoration roadster complete with Jaguar Daimler Heritage certificate and its original round toolkit and hardtop – a staggering $528,000. Buy-in for late 1950s Alfa Romeos is far more affordable: try $60,000 for a 1958 Giulietta Spider, which has jumped $12,000 in two years. It may not sound a lot, but it’s a considerable margin given the initial outlay.
If the auction floors at Pebble Beach this year are any indication of the health and promise of the classic-car market, then 2015 will be a tremendous year for investors – whether they’re established collectors or new to the market. And, for the rest of us, there’s always the hope that we’ll stumble across a barn full of well-cared-for classics primed for a trip to Pebble Beach next August.
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