Many investors and auto hobbyists alike are understandably still pretty shaky about putting money down on the stock market. But that hesitation hasn't shown any lasting sign of translating to the top of the market for collector cars.
That's the verdict after last weekend's big Monterey auctions, long considered some of the top sales of the year, and strong indicators of what's moving and shaking.
According to the LA Times, this year's Monterey auctions together made more than $116 million; that's down from last year's pre-stock-market-plunge $130 million total, but very respectable all considering.
While those without a personal fleet manager might be holding on to their money a little more tightly than usual, buyers and sellers at the very top of the market partied like it was 2005—the most recent time when the top of the market was surging to ever-higher levels for nearly every type of car. "Some of the once in a lifetime cars—the ones that if you're in the market for 30 years you might only see one or two—did spectacularly," said Dave Kinney, a widely respected values expert and publisher of Hagerty's Cars That Matter, a price guide for post-war collector cars. "And the well-prepared number-one cars and spectacular restorations have done as strong as they've ever done."
1946 Mercury Sportsman convertible - RM Monterey 2009
The biggest story of this year's auctions, according to most experts, was the hand-built 1965 Shelby Daytona Coupe at Mecum—at a $7.25 million hammer price. RM auctioned off a vintage woodie collection for $7.5 million, with one of them, a 1946 Mercury Sportsman convertible, selling for $335,000.
One of the few exceptions was the '38 Bugatti Type 57C, the so-called Bugatti's Bugatti and formerly property of Ettore Bugatti, which RM sold at a lower-than-expected $1.375 million.
Looking at the rest of the market, things aren't quite as strong as they were a few years ago. Earlier this summer, we reported that the general market for muscle cars has sagged slightly, with parts cost on the rise and attendance down at some of the regional shows.
"The middle market stuff is a little bit softer, so the stretch between a number one and a number two is a little bit greater than it has been," explained Kinney. Yet Kinney said that at Monterey there were plenty of people "paying up for the right car, trading in their okay car or their stories car, letting that one go…because they want the best one in the world."
The cheaper cars—and best deals at Monterey, depending on how you look at it—were to be had from the cars that had slight flaws, no paperwork, no history, or other issues that would only be deal-breakers to the most demanding collectors, according to Kinney.
"In keeping with the idea of trading up, it's a pretty good time to buy your dream collector car, not because they're going for bargain-basement prices, but it's a little bit of a market reset."
It's much better than it could have been. Late last fall Kinney couldn't get return phone calls from dealers and those who he relies on for pricing information. They eventually said that cars just weren't moving, but now it's a good sign that they're actually picking up inventory.
"The ones that ran up in 2006 to 2008 are the ones that went down the fastest," says Kinney. "They've reset to the 2005 level."
Among those are Ferrari Daytonas (1968-73) and 250 Lussos (1962-64). They had reset but then had gone up quite fast.
Kinney said that it's nothing like the early-1990s collector-car market crash, "when they were unsaleable and values cut in half, or even less."
1957 BMW Isetta - RM Monterey 2009
Even given a market reset, according to McKeel Hagerty, CEO of Hagerty Insurance Agency, a major insurer of collector cars, classic American cars from the 1950s and earlier aren't going significantly down any time soon, because "The cost of doing a proper restoration on a fifties American car has dramatically gone up…just to do the chrome is 20 or 25 thousand, and that's starting to get priced in with the cars at auction."
Hagerty had himself been hoping to get a bargain on a sharp-looking '57 BMW Isetta, then was disappointed to see the price driven to $42k—much higher than its estimate. "People are figuring out that it's not only about going fast or having a red Ferrari."
"You have to be disciplined about it," said Hagerty. "We've not even since the beginning of this recession seen distressed selling."
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Hagerty said that there was one especially memorable instance of distressed selling. "RM had a bunch of VW-credit owned Lamborghinis," he said, adding that they were liquidated from a dealer who got into financial trouble, with the credit company circumventing them. The new 2009 Lamborghini Gallardo LP560-4 models were selling at about $180k each—that's almost ten percent off sticker—"a smokin' deal" for a brand-new, full-warranty car, according to Hagerty.
As for the muscle-car market, there wasn't anything like that happening. The market has adjusted slightly but it hasn't been hurting either—which is a bit more surprising as some who has a muscle car in the garage count on it as a big portion of their assets; and many aren't even retired yet.
From all the lost jobs, "you'd think their value would be cut in half" as owners are forced to part with muscle cars, but that's not the case, said Kinney.
Kinney said that he's hearing a similar story from a lot of collectors and enthusiasts: "I didn't understand my stock market account and I trusted somebody else. You know what, I understand classic cars and if I buy one of those and put it in my garage, it doesn't disappear into the ether like my 401k."
"And having that in the portfolio is much more interesting."