Does it make sense to pay $2.16 million for a 30-year-old car that gets six miles to the gallon? If you're one of the world's elite car collectors, it does.
That's the amount one collector paid in January for a 1970 Plymouth Hemi Barracuda. The demand at auction for classic cars built before the Environmental Protection Agency even existed has been rising, and that price might even seem like a bargain. Auctioneers say the volume of $1 million-plus sales has risen markedly in the last five years especially, though prices began regularly surpassing seven figures in the early 1970s.
According to Sports Car Market magazine, which tracks the country's high-value classic-vehicle auctions, some 60 classic cars have sold for more than $1 million at auction in the last 12 months alone. Sports Car Market's list doesn't include models that were bid to $1 million and over but did not sell.
Meanwhile, the garage of cars that have managed to fetch way over $1 million is growing rapidly as well. In fact, according to Blenheim (Ont.)-based RM Auctions, the average price of their top 10 auctions this year is about $3.9 million, with final bids of individual sales spanning from just under $3 million to about $6.5 million.
What could make a car—especially one that's not likely to be toyed with much, let alone driven, after purchase—worth so much?
Long-Ago Classics and More
Some of the cars on the list have exceptional, nearly one-of-a-kind backgrounds. A 1954 Pontiac Bonneville Special that sold in January, for instance, was one of just two original concept vehicles. Neither it nor its erstwhile twin had been seen at auction since the late 1990s. It was snapped up for just over $3 million.
More recently, a 1927 Bugatti Type 35C Grand Prix drew attention from prospective buyers for its accompanying and impeccably maintained records, nearly 80 years' worth. In August, it sold for nearly $2.6 million, the price no doubt bolstered by the reemergence of the same brand name under new ownership by Volkswagen Group (see BusinessWeek.com, 6/6/06, "Bugatti's New Level of Vroom").
But not all pricey auction vehicles come from long-distant periods. While most mid-1990s used cars won't fetch $17,000, a 1994 McLaren F1 closed for over $1.7 million this summer at an auction in Monterey, Calif. That car is, of course, considered one of the penultimate supercars from those years, capable in its prime of reaching top speeds over 230 mph. The model was rumored to originally sell for over $1.25 million.
Modern fashions can have an influence on the tastes of classic collectors. The current muscle-car revival, exemplified by models like Ford's (F) new Mustang and DaimlerChrysler's (DCX) successful Dodge Charger, has rekindled interest in those models' predecessors from the 1960s and 1970s (see BusinessWeek.com, 6/9/06, "American Idol," and 10/13/06, "Dodge's Hard Charger").
Higher and Higher Bids
The good news for auctioneers doesn't end there, though. A series of brand-new muscle models is slated for release over the next few years. Those include reiterations of the once-popular Dodge Challenger and Chevrolet Camaro (GM). With nameplates like these making a comeback, collector interest as well as the eventual prices fetched at auction likely will only grow.
RM Auctions says one of its first auction pieces for 2007 is likely to set an even higher bar. A company spokesman referred to another Plymouth Hemi Barracuda, a 1971 model, to be offered for sale in mid-January, as both a King Kong of the muscle-car era and "holy grail" of muscle-car auctions. The company hopes it will kick off the year with that sale, expected to bring in about $4 million.
Indeed, that model's rap sheet reads like a collector's wish list: one of only 11 ever built, one of only seven bound for U.S. shores, one of only four equipped with a pistol-grip four-speed transmission, and the only one sporting matching bumpers and convertible top—all with a mere 282 miles on the odometer.
And though it and models like it now being prepared for sale may be particularly rare, it's likely next year's list could be composed of classic cars with closing prices over three, four, or even $5 million.
Click here to see a roundup of the most expensive cars of 2006.