August and September are key months for the classic car market.
Despite the fact that auctions account for less than 10% of global classic car sales according to Hagerty International, auction results are still seen as the principal barometer of the classic car market – and in the last few weeks we have had the most important rounds of US and UK auctions with over $500 million of classic and collector cars being sold. Consequently, the media have been tapping the barometer glass to get an idea of where the bull market they have all been writing about with great enthusiasm is going – and some of them are now hinting that the pressure might be dropping.
The Monterey auctions actually went well, but didn’t match up to the expectations of some observers set by a record-breaking result in 2014. Certain sectors of the market began to plateau nearly 12 months ago, but that doesn’t make a very good news headline so by-and-large the classic car media haven’t been interested in reporting that prices have been relatively stable and still high. “Going up” sounds much better and doesn’t upset their advertisers. The story they couldn’t ignore at Monterey was that fewer cars sold (by percentage) than in the previous year and those that did often sold for less than expected.
The reality is that the auction houses have been making hay – and doing a great job – while the metaphorical sun shines and classic car owners cash in. Owner’s expectations of the values of their vehicles has in many cases simply become too great and just as investors have been getting into the market, some of the speculators are on their way out. Many real enthusiasts have also seen the last 12 months as an opportunity to move cars on the periphery of their collections in order to consolidate and take the step up into the major leagues – Chris Evans looks like he may be doing just that.
It has been a seller’s market of late and this has meant auction house estimates have been creeping up to satisfy seller’s price expectations – whether they are realistic or not. What we have seen in Monterey is a crystallisation of this so it shouldn’t be a surprise that cars weren’t hitting their often lofty estimates. Sell through rates in Monterey were still very high and the total value of cars sold still impressive. It is also noticeable that the supply of the very best cars is beginning to dwindle – again, hardly a surprise given the sheer (record breaking) number of UK auctions and the number of cars being sold. Consider the effect an increasing number of average cars with relatively high estimates has on the sales statistics – particularly when sellers want top dollar for them…
September in the UK heralds auctions at three big events: Salon Prive, Concours of Elegance and Goodwood Revival. It’s the biggest week of the year.
We’ve already had the results from Silverstone Auctions at Salon Prive and RM Sotheby’s London sale and they are interesting. To put them in context, the available stock had a noticeably different profile to the 2014 sales with less of the type of cars that we would expect to sell well available. Feedback on the ground from dealers and buyers is that there were less attendees and less rampant over-enthusiasm all round at both events, and the numbers speak for themselves with lower sell-through rates than in previous years and cars not making their pre-auction estimates. Recently imported LHD cars are feeling the pinch – as will poor quality cars with dubious provenance. Some buyers will definitely feel that they got a bargain if they base their market values solely on previous auction results but that feeling may be fleeting.
Putting these sales in context against the backdrop of the whole market, prices achieved were more in line with true market values with some cars actually selling very well. If you look at the historical performance figures for Silverstone and RM Sotheby’s there has been a downturn, but it isn’t dramatic. How this is perceived and reported in the media – particularly the financial players like Bloomberg – will no doubt have a knock on effect and speculators are beginning to move on. The good news is that many enthusiasts are standing in the breach and ready to come back into the market at the appropriate time, looking for relative bargains and opportunities to upgrade.
No-one should spend too much time worrying about media reports of “lacklustre” auction results. The fact remains that the classic car hobby has grown and the UK auction houses have had a really good run of form – they are just going to have to work a little bit harder to satisfy both buyers and sellers at the same time (a tough job). Yes, on the face of it things have cooled a little over the last few weeks – the reality is that it needed to happen (and has been for a while) and despite the perceived intensity of sales activity the market is still buoyant. Over to Bonhams at Revival to complete the Super September sales.
Enthusiasts take note – you have a great opportunity.