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Mon 29 Aug 2011 12:52 PM

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Ferraris zoom at record $167m sale as others stall

Classic car market sees split as auction bidders favour certain big-ticket brands

Ferraris zoom at record $167m sale as others stall
A 1957 Ferrari was sold by Gooding for $16.4m, a record for any car at auction (Bloomberg Images - for illustrative purposes only)
Ferraris zoom at record $167m sale as others stall
A 1957 Ferrari was sold by Gooding for $16.4m, a record for any car at auction (Bloomberg Images - for illustrative purposes only)

The classic-car market is dividing between the best models, whose prices are racing to records, and others that are faltering on the sales’ start line, dealers say.

Auction totals are beating forecasts and some sellers made bigger returns from their Ferraris this month than from volatile financial markets. Still, investors are aware that an average classic auto can offer less lucrative returns.

“The market has polarised,” Geneva-based auto adviser Simon Kidston said in an interview. “Big-ticket cars are making more and more. The rest is becoming much more difficult to sell.”

Kidston attended this month’s Monterey Car Week, North America’s bellwether for the market, where the three biggest auctions increased by 11 percent over last year.

“The results were better than anyone could have expected,” said Kidston, the founder of Kidston. “The auction houses are having to work harder, though. Certain cars are being guaranteed and bidding isn’t as deep or as frenetic as it was three years ago. The top lots went to known collectors. There aren’t enough younger new buyers entering the market.”

There will be another test of demand on September 16 at Goodwood in England, with a Bonhams sale of 90 cars with a total value of as much as £11m ($18m).

A 1963 “Semi-Lightweight” hardtop Jaguar E-Type, one of two road models built as variants of the 12 competition cars that the factory created to take on Ferrari at Le Mans, may fetch as much as £2m. The 165 mph coupe has its original gray paintwork and hasn’t been offered at auction before.

Gooding & Co, RM Auctions and Bonhams raised $166.7m from the Monterey sales, up from $150.2m in 2010. Gooding and RM both had official totals of $78.2m, with selling rates of more than 80 percent for respective offerings of 127 and 144 cars. More sales came after the auctions.

A 1957 Ferrari was sold by Gooding for $16.4m, a record for any car at auction. Gooding raised $10.3m, a record for an American car at auction, for a 1931 Duesenberg. A further $3m was given for a 1956 Ferrari Superamerica.

“That was a strong price,” said Dietrich Hatlapa, founder of HAGI and the author of “Better than Gold: Investing in Historic Cars.” “Quality material changed hands and people were prepared to pay for it. A lot of money has been pulled out of the stock markets and some of it has found its way into tangible assets like classic cars.”

A silver 1937 Mercedes-Benz 540 K Spezial Roadster was RM’s top lot, at $9.7m. The auction featured 14 prices of more than $1m, with another 15 at Gooding.

Bonhams’s auction of less stellar autos at Quail Lodge found buyers for 53 percent of 401 lots, raising $10.3m, with no cars managing a hammer price of more than $1m. Last year’s sale raised $18.6m.

Tim Schofield, Bonhams’s UK head of cars, remains skeptical about some classic autos as an alternative investment.

“We’re not seeing much of that kind of buying,” Schofield said. “Cars have to be insured and garaged, and from the first day they’re made, the condition deteriorates. We sell to passionate collectors.”

(Scott Reyburn writes about the art market for Muse, the arts and culture section of Bloomberg News. Opinions expressed are his own.)  

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