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the Telegraph looks at whether the super-heated classic car market is sustainable
A world record price of £22,843,633 for a Ferrari 250 GTO notwithstanding, prices of classic cars at auction over the summer have continued to rise and show no signs of slowing.
Observers and enthusiasts mutter darkly that the bubble must burst, but is that really so?
Classic and Sports Finance, a company which collects auction data, recently analysed the results of the three big UK auctions in September – the new Silverstone Auctions sale at Salon Privé, plus the established events put on by RM Auctions at Battersea Park in London and Bonhams at the Goodwood Revival. It then compared these with the 'big three" auctions from Monterey Car Week in California during the preceding month, and its report makes interesting reading.
Edward Legge, the director of business development at Classic and Sports Finance, said: 'The bottom is not falling out of the market, although I think that it's in the interest of the market to keep things sensible.
'There is definitely a trend where the auction estimate is not being met. It could be down to a number of factors, but perhaps sellers have too high an expectation of their cars' value [due to the continued rise of values in general].
'Having said that, we expect to see another little spike in values when the market really starts to pick up again at the end of March and into April."
From its analysis of the three big auctions in September, the company has identified that Ferraris are still a favourite, although the values of Porsches have slipped somewhat.
James Knight, the group director of the Bonhams motoring department, told me at the Goodwood Revival a few weeks ago that the market is in rude health. 'It cannot carry on like it is for ever, no market can, but with the low interest rates we have at the moment, values will continue to rise – although not in spectacular fashion like they did in the 1990s.
Knight continued: 'The question really is, what would have to happen for the market to have some sort of correction.
'It will slow down at some stage, it has to, but I can't see anything on the horizon to change it."
He also said that financial uncertainty isn't a major factor when it comes to buying classic cars at auction, and that investors aren't having a significant impact. 'Not so many people are financing their acquisitions, they're buying from a position of liquidity, which means that when the market does slow down a bit we're not going to be in a position to see enforced sales.
'The market is still fundamentally a hobby, people buy because of an interest and emotional attachment to a motor car. Investors are few and far between.
'It's still enthusiast-driven, even though we're dealing with bigger and bigger numbers."
It's a sentiment shared by Legge, as well as by Max Girardo, the managing director of RM Auctions Europe. He said: 'It is not a bubble as such. I think some cars will stop increasing in value but the market won't come crashing down.
'The higher end of the market is very stable. Things will adjust, but at the end of the day it's supply and demand – the best cars in the world are in the hands of very good collectors who know that if they sell [to try to make a profit] they can't get another one."
So the market will continue to be strong for some time to come and, as ever, the values of the very best cars will continue to appreciate, while prices for those models that may have been dragged along in their wake are likely to stabilise. It's a view that nobody appears willing to contradict while the current state of affairs benefits both sellers and the auction houses.
As long as classic cars in general enjoy a high profile, that has to be a good thing for the lower value enthusiast market. At the end of the day, it's all about appreciating the historic cars we own, whether it's the rarest Ferrari or humblest Ford.
Source, telegraph Motoring.
A world record price of £22,843,633 for a Ferrari 250 GTO notwithstanding, prices of classic cars at auction over the summer have continued to rise and show no signs of slowing.
Observers and enthusiasts mutter darkly that the bubble must burst, but is that really so?
Classic and Sports Finance, a company which collects auction data, recently analysed the results of the three big UK auctions in September – the new Silverstone Auctions sale at Salon Privé, plus the established events put on by RM Auctions at Battersea Park in London and Bonhams at the Goodwood Revival. It then compared these with the 'big three" auctions from Monterey Car Week in California during the preceding month, and its report makes interesting reading.
Edward Legge, the director of business development at Classic and Sports Finance, said: 'The bottom is not falling out of the market, although I think that it's in the interest of the market to keep things sensible.
'There is definitely a trend where the auction estimate is not being met. It could be down to a number of factors, but perhaps sellers have too high an expectation of their cars' value [due to the continued rise of values in general].
'Having said that, we expect to see another little spike in values when the market really starts to pick up again at the end of March and into April."
From its analysis of the three big auctions in September, the company has identified that Ferraris are still a favourite, although the values of Porsches have slipped somewhat.
James Knight, the group director of the Bonhams motoring department, told me at the Goodwood Revival a few weeks ago that the market is in rude health. 'It cannot carry on like it is for ever, no market can, but with the low interest rates we have at the moment, values will continue to rise – although not in spectacular fashion like they did in the 1990s.
Knight continued: 'The question really is, what would have to happen for the market to have some sort of correction.
'It will slow down at some stage, it has to, but I can't see anything on the horizon to change it."
He also said that financial uncertainty isn't a major factor when it comes to buying classic cars at auction, and that investors aren't having a significant impact. 'Not so many people are financing their acquisitions, they're buying from a position of liquidity, which means that when the market does slow down a bit we're not going to be in a position to see enforced sales.
'The market is still fundamentally a hobby, people buy because of an interest and emotional attachment to a motor car. Investors are few and far between.
'It's still enthusiast-driven, even though we're dealing with bigger and bigger numbers."
It's a sentiment shared by Legge, as well as by Max Girardo, the managing director of RM Auctions Europe. He said: 'It is not a bubble as such. I think some cars will stop increasing in value but the market won't come crashing down.
'The higher end of the market is very stable. Things will adjust, but at the end of the day it's supply and demand – the best cars in the world are in the hands of very good collectors who know that if they sell [to try to make a profit] they can't get another one."
So the market will continue to be strong for some time to come and, as ever, the values of the very best cars will continue to appreciate, while prices for those models that may have been dragged along in their wake are likely to stabilise. It's a view that nobody appears willing to contradict while the current state of affairs benefits both sellers and the auction houses.
As long as classic cars in general enjoy a high profile, that has to be a good thing for the lower value enthusiast market. At the end of the day, it's all about appreciating the historic cars we own, whether it's the rarest Ferrari or humblest Ford.
Source, telegraph Motoring.
