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Ferrari Prices Accelerate at Record Auction as Others Stall

Jaguar E-Type
A 1964 "Semi-Lightweight" hardtop Jaguar E-Type was offered by Bonhams at its Sept. 16 auction of classic autos, held during the Goodwood Revival Meeting in Sussex. Capable of 165 mph, it was one of just two road models built as variants of the 12 "Lightweight" E-Type competition cars that the factory created to take on Ferrari at Le Mans and other sports car races. The car failed to sell. Source: Bonhams via Bloomberg

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 polarized,” Geneva-based auto adviser Simon Kidston said in an interview. “Big-ticket cars are making more and more money. 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 SA. “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 Sept. 16 at Goodwood in England, with a Bonhams sale of 90 cars with a total value of as much as 11 million pounds ($18 million).

Racing Jaguar

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 2 million pounds. The coupe has a claimed top speed of 165 mph and was made for the shipping magnate Robert Ropner. It has its original gray paintwork and hasn’t been offered at auction before.

The Historic Automobile Group International (HAGI) Top 50 benchmark Index of exceptional classic cars has gained 10.05 percent this year, the London research company said. The price index had annual growth of more than 12 percent from 2003 to 2008, HAGI said.

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

Ferrari’s $16.6 Million

A 1957 Ferrari was sold by Gooding for $16.4 million, a record for any car at auction. In May 2009, a similar Ferrari 250 Testa Rossa of the same date -- though in black and without a Le Mans history -- was sold by RM Auctions in Italy for a record 9 million euros ($12.2 million).

Gooding raised $10.3 million, a record for an American car at auction, for a bespoke 1931 Duesenberg Model J Coupe. It had changed hands for $2.5 million in a private transaction three years ago, according to dealers. A further $3 million was given for a 1956 Ferrari 410 Superamerica Pininfarina Series II.

“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 $9.7 million. The auction featured 14 prices of more than $1 million, with another 15 at Gooding.

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

Investment Cost

Tim Schofield, Bonhams’s U.K. 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.”

In addition to maintenance and restoration costs, if cars are bought and sold at auction, sellers and buyers are liable to transaction fees of as much as 20-30 percent.

(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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