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Monterey: This Year Was Different, A Lot Different

Dave Bentson Client Story, Dave Recommends, Expert Insight

Over the past five years at Monterey, Gooding has averaged $118 million worth of vehicles sold. Mecum had a 56 percent sales rate. And on average, $353 million worth of cars have sold in auctions leading up to The Pebble Beach Concourse.

This year is different. A lot different, as a matter of fact.

Monterey Car Week has always attracted the one-tenth of the top one percent. This year, you had to be in the one-tenth of the one-tenth to sell a car and exceed expectations. Last year, Gooding sold $129M.   This year, $91.5M. That’s a 30 percent decrease. Of the last 50 cars that crossed Mecum’s block on Saturday, only 14 sold. That’s 28 percent, folks.

Of the 10 most expensive cars that sold this weekend, exactly two made it to the bottom end of the published estimates: Both of those by the skin of their teeth. And we’re going to struggle to make it to $300 million worth of cars sold.

Nearly everyone anticipated a market correction this year. But I’m not certain anyone forecast it was going to be this drastic. I must admit, I was wrong in predicting that “the best of the best will do exceedingly well.” They didn’t. Most didn’t sell.  And those that did, struggled to do so.

 

Let’s look deeper:  Several examples

Not everything that crossed the blocks struggled to sell. One car not necessarily on our radar was this 1926 Mercedes 24/100/140 Phaeton. The estimate was $275-375K, yet it sold for a whopping $660,000.   Quite impressive considering past results for these cars.

In contrast, while many “contemporary classics” have exceeded expectations in recent years, this 2007 Maserati MC12 Corsa did not sell and failed to meet the lower end of its estimate by $600,000. It was one of more than a few cars that missed the lower end of their estimate by deep six figure numbers.

Other cars we thought that did well: This 1979 Porsche 911 Turbo at RM Sotheby’s. Most air cooled Porsches and especially 930 Turbos have cooled in recent months. Not long ago we were offed a 1-owner 1,200 mile example for marginally more, so we’d view this as well sold. And while there were discussions of this McLaren F1 cresting the $20 million mark, we’d argue $14.2 million for a car with 9,600 miles on it is about right.

 

So now what?

Do these results signal doom and gloom? Should we prepare for a collapse of the collector car market similar to the financial crisis of 2008? Even my wife was a bit pessimistic Saturday evening for the collector car market (she absorbs much of this information through osmosis simply by living with me.)

While a 30 percent market correction is unfortunate, if you’ve been listening to me over the past couple of years, we told you prices would be headed down. Absolutely, collector cars are an asset class that fared far better than most others in the downturn of 2008. Which is why new dollars chased a limited supply of cars and produced a bubble. But the vast majority of us do not have the bulk of our retirement assets tied up in collector cars. They are not a significant component of our asset mix, such as our businesses, properties, equity and bond investments, or REITs.

Are vintage cars precious, collectible, highly valuable works of art that we should cherish?   Absolutely. But many of them are toys. Are they also investments? Some. But think of it this way:  Losing 60 percent of the value of your car in 18 months is a conscious decision every person makes who buys a brand-new Bentley. Why should those vintage cars you’re buying be any different?

 

Where to go from here

PAG clients who retain our services on an on-going basis know what cars I believe will increase in value in the near- and longer-term. And I’m proud to say there were multiple examples that substantiated our claims, even this past weekend. We believe there are cars out there that folks can enjoy that will appreciate. For a full analysis of cars that exceeded expectations this past weekend, consider retaining our services and we’d be delighted to develop a customized report.

For the rest of you looking for some (nearly) free advice:   For $199, you can subscribe to Sports Car Market and obtain a Platinum Subscription. There you’ll find a year’s worth of digital editions of the magazine with more advice than you’ll be able to absorb. Much of it good advice, by the way.

Finally, don’t ever be afraid to contact us and schedule a consult.  We deal with all sorts of collectible cars of all different values. There are no stupid questions. And stay tuned to future PAG emails. In next month’s issue, we’ll be featuring three highly popular topics:

  • Bought a Car and Made a Mistake?
  • Failed to Sell your Car at Auction?
  • When to Hold and when to Fold…
Dave BentsonMonterey: This Year Was Different, A Lot Different