Collector-car market stays strong amid recession
How the well-heeled spend their discretionary income in uncertain economic times might be a good leading indicator of market activity.
According to the Historic Automobile Group International, which bills itself as "an independent research house and think tank with specialized expertise in the rare classic motorcar sector," top-tier collectible cars have consistently outperformed the Standard and Poor's S&P 500 index since 1980.
Although the collector-car market has been hit hard like most other investment sectors over the last 24 months, recent evidence suggests it's coming back in a big way.
In August, during a week-long series of classic-car auctions in Pebble Beach, Calif., about $178 million of collectible automobiles were sold, up from $118 million in 2009. The top seller was a 1959 Ferrari 250 GT LWB California Spider Competizione, which crossed the block at the Gooding & Co. auction for a world record price of $7.26 million. Two other Gooding cars topped $6 million each.
The next big test of the strength of the market will be at the third-annual Barrett-Jackson Las Vegas auction, Sept. 23-25. All cars will be sold at no reserve, which means every car will be sold, no matter the bid price. In its first two visits to Las Vegas in 2008 and 2009, Barrett-Jackson sold more than $50 million worth of collector cars.
On paper, the union of Las Vegas and Barrett-Jackson seems like a match made in heaven. After all, what's a better match than Sin City and all its high rollers and sybaritic excesses, and 400 or so choice collector cars, some worth close to $1 million?
Among the items scheduled to be auctioned off during the more than 20 hours of TV coverage on cable channel SPEED is a collection of eight cars and one motorcycle from the late Las Vegas entertainer Danny Gans who died May 1, 2009.
The diverse mix includes old-school muscle cars from the 1960s, a pair of 1932 Ford coupes and contemporary performance cars, including a Dodge Viper and late-model Chevrolet Corvette.
"The cars were meticulously maintained and Danny often drove them to work," said Barrett-Jackson President Steve Davis. "Not only are they wonderful collectibles, they're a piece of Vegas history with celebrity provenance."
"While my mother designed our house, there was no doubt the garage belonged to my dad," said Amy Gans, Danny Gans' daughter.
"He wanted it to reflect the 1930s and '40s era. My dad carefully planned every inch to reflect the passion he had for his collection. Once the garage door opened you were immediately drawn in and treated to a piece of automotive history and in every direction you would look, you were taken to a new destination. Now, the cars will go into the garages of those who want to celebrate his life, as well as cherish the cars he loved so passionately."
In addition to the vintage and classic cars for which Barrett-Jackson is famous, this year's Las Vegas event will feature several eye-popping European exotics that are sure to fetch big money.
Foremost among them is a 2008 Bugatti Veyron, number 80 out of 300 built. With an original sticker price of about $1.5 million, the 1,001-horsepower, quad-turbocharged Veyron was the world's fastest production when introduced two years ago. There's nothing quite like hitting 60 mph from a standing start in 2.5 seconds and a top speed of 253 mph to get the blood circulating in a hurry. This particular Veyron has actually been driven -- it has 11,800 miles on it -- which might make it a bit of wildcard and a car to watch.
"The Veyron is a prize that all car aficionados would like to have in their collection," said Barrett-Jackson's Steve Davis. "The smooth acceleration and handling of the car, powered by 1,000 horsepower, makes you feel like you're in the cockpit of a fighter jet."
For those who find $1.5 million a little too daunting but still want a true thoroughbred European exotic, alternatives include a 2009 Mercedes-Benz SLR McLaren roadster, which carried a more achievable -- relatively speaking -- sticker price of $495,000 when introduced. Built as a cooperative venture between the German automaker and its Formula One racing partner, the SLR McLaren comes with a "Crystal Antimony Grey" exterior and a "Silver Arrow Red" leather interior. It features a 617-horsepower 5.5-liter engine with a black carbon trim package. It's a one-owner car with less than 600 miles showing.
And for those whose tastes run towards all things Italian, there will be five late-model Ferraris on the docket, all built between 1988 and 2003.
"The Bugatti, McLaren and Ferraris represent a nice stable of vehicles for the serious enthusiast who wants to diversify his collection and still drive his car," said Barrett-Jackson Chairman and CEO Craig Jackson.
And for those interested in collector cars as investments, the most important piece of advice remains what it always has been: Buy the best car you can afford, because the real appreciation in value is in top-tier cars, according to Dave Kinney, publisher of Hagerty's Cars That Matter, one of the collector-car industry's top price guides.
"While it is true that some sales data indicates pricing declines, HCTM (Hagerty's Cars That Matter) feels these indicia are isolated to 'story' cars, or cars with needs," Kinney wrote in his September newsletter. "Those top-tier cars in top-tier condition continue to perform strongly. If you don't believe us, ask an owner of a BMW 507, an Aston Martin DB5, or a Bentley S1 Continental."