Reading this month’s issue got me to thinking. Who buys cars at auctions? My impression of classic car auctions is that they have sort of become the Cannes festival of the automotive world, a place to be seen and to see. If I were in the market for a classic in the $10-$100K range I'm not sure I'd ever consider buying one at auction. Most cars in that price range don't tend to be super rare or unique, they tend to be the cars that were at least built in their thousands, if not tens of or hundreds of thousands. That being said you can normally head off to Haggerty, E-bay, marque boards etc. and find dozens of similar vehicles for more reasonable money. Once you're in the $250K and above range cars seem to be more rare, unique examples etc. so the auction is just a venue as the particular vehicle has been talked about across the community and people know where, when and how it's going up for sale. Cars in the $100-250K range tend to be a mix of these.
While not 100%, cars in this lower price band seem to end up with 'Well sold' in the auction reviews. so again, why go to an auction to buy a 911SC, E30 M3, MG CGT etc.? It often seems that buying cars like that from auction has cost the buyer a large venue tax? Not hating, just puzzled.
Something else on auctions from the last issue. There was talk with the recent 20% YOY increase in values that people are beginning to predict a bursting of the bubble and a correction coming. This was exemplified by the sale of the Cobra Super snake, I don't have the magazine here, but I seem to recall the price was $5.1M, which was the same as when it was purchased 5 years ago. So, is that the beginning of the correction? Are there vehicles that are actually dropping or bubble proof?
What cars do people thing will be hardest hit by a bubble burst if it happens? I can't help thinking air cooled 911's. It was only 15 years ago that you could get a really nice long hood for $10K. Even 2-3 years ago a nice 911 SC was a $10-15K car. Now rough driver SC"s are $20K and good ones over $30K. Porsche built a hell of a lot of air cooled 911's, their meteoric price rise doesn’t seem sustainable to me.
Thoughts? And incite please on auction buyers.
I would tend to agree on the 911's. It seems like people are thinking of them like Ferrari's, but they built a LOT more 911's. I suspect 911's are a bit more of the "I wanted one when I didn't have the money" kind of thing (kind of what made the muscle cars go all stupid).
The other one I am highly suspicious of are the VW bus's. You think they made a lot of 911's (they made 200,000 buses in 1964!!!) It seems like even the non 21/23 window buses are getting good money, and none of there cost much new.
If this trend continues, you might want to buy up as many pristine CRX's (if there are any) as you can. They are going be big money some day.
Regarding auctions. I think it's more of a lazy / halo thing then anything. They are around a bunch of high dollar cars, so a $20,000 Fiero seems like a deal (sort of like how you think it's dandy you only have to pay a couple hundred bucks to have someone do some simple task when you buy a couple hundred grand house).
To be honest, I wish the car rags would just stop reporting on these auctions.
My buddy recently cashed out his 65 911 because he got offered four times more than he paid for it just five years ago. It was great for him but he told me there is absolutely no way he'd ever pay that much for that car if he we was buying now. He thinks the current 911 prices are way out of whack and decided to get out while the going is good. Who would disagree with that? Go on the 911 forums and you'll notice few people actually talk about the cars any more, just the values, which says something about 911 owners these days. If any car needs a market correction its the 911. And it will be forthcoming some time.
Since I'm not looking for a million dollar Ferrari I'd never purchase at an auction. Even the cars that the rag calls "well bought" IMHO usually seem to sell far more than you can find privately if you're patient.
Private sales can usually provide a lower price, but you do so at your own risk. One of the benefits of buying from a reputable auction house is that they thoroughly investigate the cars. You can rest assured that at an RM auction if the bidder's catalog says "numbers match" it really is a numbers matching car. You may pay more, but at least you get the piece of mind.
Car values are always rising and sinking. Currently (as stated above) early 911 cars have gone mental--- however, mid 80s cars are still affordable (for now) and probably represent the best value in P-car ownership. Also, look out for nice 914 prices---- as a rising tide lifts all ships--- and 914s have been undervalued for a long time.
You can still find good value, but you'll need to pay attention to what cars haven't jumped in price yet. For instance, a nice Ferrari 308 was a $30K car 5 year ago. Today, you'd have to spend at least twice that much.....and prices are still rising.
You can also find deals when a car is a bit out of place---- ie-- a TR-6 at a Barrett-Jackson auction (they are more known for muscle-cars) , or a Bugeye Sprite at a high-end auction. Sometimes these cars are overlooked by the auctions more publicized "star cars".
The bubble bursts, the bubble grows, and there are factors for each. There are still deals to be had.....even at auction.
Joe put it nicely. At the recent auctions we have seen deals as well as cars sold for seemingly too much.
In some cases, the higher prices are justified because we're talking about the best example. Is every E30 M3, for example, worth that much? Probably not, but this one was among the best and people were willing to pay for it.
And in some cases, I admit, they're average examples that are well sold. Yes, I think some people buy just for the experience.
I recently sold two cars via auction--Bring a Trailer and eBay. Going in, I really didn't know exactly what they would bring. I figured the auctions would let the market decide. One brought in a little less than expected while the other did better.
The whole collector car thing only amuses me these days... Once I finished(sold) the 70 Super Cobra Jet Mach1, I never looked back...
RM is far better now, we deal with them a lot and have had good experiences all around. They've really stepped up their game. Sotheby's has bought part of RM now.
B/J is no better than your local "Dollar Bill's Easy Auto" used car lot.
This was our last RM purchase and it did not disappoint.
http://www.rmauctions.com/az15/arizona/lots/1957-mercedes-benz-300-sl-roadster/1071711
We get to chat with the previous owner before hand, learned all about the cars history, got to crawl all over it, look under, test drive, everything.
B/J won't even let you look under the car before it comes up for sale.
I see a huge burst coming as the baby boomers age out of the market. Many blue-chip cars, especially muscle cars, are going to loose their appeal to a younger generation. Older cars will fair even worse. Try selling a 1930's car to a dot-com millionaire.
The flip side will be that cars like the 959 will bring serious money.
It seems lot of cars have seemed to escalate very quickly recently, (past few years). I've followed a few Maserati's, mostly because I am curious about where my Merak may be heading. I have always loved the Merak. Though it isn't a highly respected Maserati, in the SS sans Citroen Hydraulics form they are very nice and fun cars. I swear about 5 or 6 years ago a Maserati Bora would have went for maybe $40k then a few years later they were $60k, then $80-90K just a couple of years ago. Now they are through the roof and I have seen auction prices for so,so cars like $ 180K! and nevermind Ghibli's.
I am thinking that the rise in some cars are dragging others up. A Daytona or Muira price may be mental but the Bora, though not as racy or exotic may actually be a better car for actually "using" and it's a lot less, also the re-emergence of Maserati as a brand in the US may have helped bring their older cars back into focus.
pinchvalve wrote:
Try selling a 1930's car to a dot-com millionaire.
That describes some of my customers. A lot of those guys have taste.
Pre-war stuff doesn't have the emotional attachment that muscle car era stuff has.
The guys buying full classics and early sports cars are buying as an investment.
Put your money into the stock market and it just disappears into the ether and returns a bit later. You can't enjoy it, all you do is look at a number on a spreadsheet.
The guys spending 6 and 7 figures on a car are buying it because they can go into the garage and go "Oh, look, there's my money and I can take it out and enjoy it." When they tire of it, it is usually still worth what they paid if not more.
The Ferrari market is giving better returns than any mutual fund right now.
I bought my E-type at BJ about 10 years ago. I bought it there because I was able to look at about a dozen in a weekend and found the one that was the right Series, in the right condition and the right price for me. Buying privately, I probably would have spent a year flying around the country inspecting cars.
I think the auction companies do bring value to the market. They certainly have made our fixed assets surprisingly liquid, as you can sell a car almost instantly now.
There are some special cars that you just cannot find anywhere else and there are still some deals out there.
That said, yes, if you are looking for a TR6 or similar car than club newsletters and magazines and websites like ours are still a great source. And, I would never buy a car (unless it was a basket case) without thoroughly driving it, putting it on a lift and having an expert inspect it.
One final thing, the auctions are fun as hell and provide an amazing car show experience if nothing else. And if you want to learn more about them, sign up for one of our auctions tours. They are free for subscribers.
Oh, and as for the bubble bursting, as long as you head down to your local bank or money market purveyor, and they offer you less than 1% interest rate, you are perfectly safe investing in old cars.
Cool, some interesting comments in here ranging from seeing the grass through the floor boards to the guarenteed and investigated and guaranteed providence.
As a note, when I was talking about auctions, I wasn't really including ebay or other online sites. I see e-bay as being the great leveler, in that the supply side is so high, it's self correcting on price over time. For instance there are 30 986 Boxsters on there to choose from right now.
If you were going to an auction where there are numerous examples of the same type then I can see that would possibly have a similar effect, the difference is with ebay all 30 are effectively on the block at the same time so if one or more is going high or low, you can adjust your thinking on another. With live auctions you have to wiat for sample one to finish before considering sample two.
I'm not in the position to consider a classic as an investment until the Government lets me pull money out of my 401K or Roth to buy a classic without penalty or taxes, until then my ingvestments are in more traditional forms. If/when I buy a classic it will most certainly be in the lower end / toy status. I may get lucky like my good friend who bought a 356 Pre-A for $14,900 in 1999 and was told he over paid. He sold it in 2014 for 114,900 so a cool $100,000 profit in 15 years. It wasn't his intention, he just bought his dream car and sold it when he was scared to own it due to it's value. But I would never count on that.
Adrian_Thompson wrote:
I'm not in the position to consider a classic as an investment until the Government lets me pull money out of my 401K or Roth to buy a classic without penalty or taxes, until then my ingvestments are in more traditional forms. If/when I buy a classic it will most certainly be in the lower end / toy status. I may get lucky like my good friend who bought a 356 Pre-A for $14,900 in 1999 and was told he over paid. He sold it in 2014 for 114,900 so a cool $100,000 profit in 15 years. It wasn't his intention, he just bought his dream car and sold it when he was scared to own it due to it's value. But I would never count on that.
I subscribe to a great magazine called Sports Car Market. It is directed towards people that spend a lot of time and money at auctions, either buying or selling. However, I haven't been to an auction or bought or sold a car in many years and I find it an interesting read. It does some great analysis of specific cars-- their history, provenance, as well as the price that was paid. It also provides results of auctions around the world, mostly in the US and UK, along with someone's opinion of the quality of the car and the price.
The editorial stance and "investing" advice of the magazine is very consistent. They do not recommend buying classic cars as an investment, as much as they track values, etc. They recommend buying them because you love the car and if it appreciates, then great. In fact, they have recently bemoaned the apparent rise of collector car investing partnerships and other types of speculators, which tend to inflate the market and create a bubble. This happened in the 80's, and some people's memories are long and some are not.
My E-Type has probably appreciated at least three times my purchase price and maybe more in 10 years-- but I would be just as happy with it if it hadn't appreciated at all, or even depreciated some. I get my joy from driving it and looking at it. However, the price to my wife was a new Corvette, despite my protests about the different costs of ownership, and that damned thing depreciated $24k in four years. 
In reply to Basil Exposition:
Trust me, I remember the price run up in the 80's. A Series 1.5 E-type Roadster was my first dream car and it's still up there. When I was in high school you could buy a mint one for £10,000. I had a great plan, go to collage, graduate, get a job earning £10K a year, live like I did in collage and bank £5K for two years then buy one.
Then the bubble started growing. By the time I graduated a nice Series 1.5 cost more than my first appartment (£45K) and I was long long out of the market. I blame my parents for birthing me 4-5 years too late 
Thanks for the conversation. I too believe that you should buy what you love and not worry about the money. That said, with the way cars have beaten other investments, and the flood of folks getting into the game, largely because of that fact, it is naive to not realize that old cars can be a pretty good investments.
This knowledge makes spending money on old cars a bit easier to swallow.
As for Sport Car Market, Margie and I are good friends with the owner, Keith Martin, and if you want the latest on auctions and car values, I can easily recommend that publication.
Say what you want about using them as an investment.
I used to tease my wife and tell her that my old cars were the redneck stock market.
When the time came to buy a house, my 1980 Indy Pace Car and 1973 Formula turned into a nice down-payment.
In reply to Trans_Maro:Two, Not one but two, Restored #2 VW buses (Average Selling Price: $65,000) sold for appx. $126,500 at the Barrett-Jackson, Scottsdale auction. And a Restored #2+ XK120(Average Selling Price: $135,000) sold for $74,800 at the same auction.
I know I'm probably considered a little skittish. But three $60,000 + & - swings from Average Selling Price at the same auction petrify me, were I considering rides as investments!
In reply to pinchvalve: I agree with the muscle cars losing their appeal to the younger generations. I don't think the older cars will fare badly at all. They've already been through their, My dad/mom or older brother had one stage.
In reply to Rupert:
VW microbuses, American pony cars and Full classics are three very different markets and you can't really compare them.
Also, Barrett-Jackson is in the business of not giving a berkeley about their customers, buyer or seller. They've passed garbage cars off on customers with the attitude of "not our fault, we're just the middle man" and it's affecting the prices of vehicles at their auction.
It's the job of the auction house to get the best price for their customer. If you look at how the better auctions promote their sales vs what B/J does, you'll see. We get a big book every few months from RM, it's like a high-quality coffee table book filled with information about the upcoming cars. They spend money to get customers to bid high. If the bidding goes up, the auction house's take goes up as well.
If you want to gauge prices in the investment car market, take a look at Gooding & Co, RM Auctions and to a lesser extent, Mecum and Auctions America. THOSE are the real players in the high end car market.
There are certain cars that will come and go depending on the generation that currently has the income to buy classics. But some will always be valuable. Even if we have no fuel to run it, people will want a Mercedes 300 SL as a decoration.
TR8owner wrote:
He thinks the current 911 prices are way out of whack and decided to get out while the going is good. Who would disagree with that?
I think I would disagree. I had a crazy stupid offer on my very nice Lotus Elan back in the late
80s and didn't sell. Why? In order to buy another, I'd just spend all the money I just, hypothetically, received. And, I love my car. It's my hobby. I still have my car.
But, yes, I'm well aware of market prices (an SCM subscriber here, too) and my finger is on that
pulse constantly because I wouldn't be doing the car or myself any favors if my insurance didn't reflect the same.
gjz30075 wrote:
TR8owner wrote:
He thinks the current 911 prices are way out of whack and decided to get out while the going is good. Who would disagree with that?
I think I would disagree. I had a crazy stupid offer on my very nice Lotus Elan back in the late
80s and didn't sell. Why? In order to buy another, I'd just spend all the money I just, hypothetically, received. And, I love my car. It's my hobby. I still have my car.
But, yes, I'm well aware of market prices (an SCM subscriber here, too) and my finger is on that
pulse constantly because I wouldn't be doing the car or myself any favors if my insurance didn't reflect the same.
The thing is I know some people who are selling Porsches not just because they are now worth 2-3-5-10 times what they paid for them, but because that vale is now so out of whack they are scared to drive them. They no longer feel comfortable driving something that is worth as much as a house because they are terrified of ever potential scratch or ding. The inflated value has decreased their enjoyment of the car.
In reply to Adrian_Thompson:
"The inflated value has decreased their enjoyment of the car."
You're exactly describing my buddy. He was afraid to drive his 65 911 and insurance was skyrocketing. Plus he thought the 911 crowd was changing for the worse. He sold his 65 and his 93 RSA and is out of 911's all together. He replaced them with a late model NSX and an immaculate Triumph TR3 to cover both bases - a practical exotic and a classic. Two cars he can actually still drive and enjoy.
I hope TR8's never go up. That way I can still afford to drive them on the street and race them in historic. I picked up a spare 3.9 engine out of a wrecked Land Rover for $150. several months ago. Try doing that with a 911.
