Auction Forum June 2009

A Strong Classic Market

Auctions in the past few months have demonstrated yet again the solid market for cars from the classic era and earlier.

It is a phenomenon that was also apparent during the collector car market crater of the late ’80s. Buyers of classics and antiques hadn’t been lured into the tempting but flawed rationale that drew [more modern] collectors of more recent cars into chasing their tails: buy it now before it costs even more later.
That common misconception also contributed to the irrational runup in home prices, facilitated by easy money and government policies which attempted to make home ownership accessible to buyers who had no reasonable expectation of having the cash flow to support their acquisitions. The buyers of classics, however, have been there, seen that, and survived to keep expanding their collections. They know values – because they set them – and don’t let fever dreams distort their firmly-established concepts of reality.

Recent auctions have brought some exceptional pre-WWII cars to market and moved them on at strong but predictable prices. There’s nothing to suggest that those steady perceptions of value won’t continue to prevail.

At the same time values of cars vigorously hyped in the past two or three years have settled back to much more predictable and rational relationships with prior transactions. Cars with unusual attributes like rarity, history and condition are realizing appropriate premiums. Obscure attributes of value – fabricated distinctions like the “only example in purple with power windows and a green interior” – have diminished in effect.

Overall it is a healthy situation as the market reassesses the factors that confer value and focuses on real differences in history, originality, configuration, condition, provenance and rarity.

There are vast resources of liquidity sitting on the sidelines looking for good cars at realistic values. Some cars that offer great opportunities for diversion and activities have brought good prices or have found new owners while buyers have turned their backs on cars which have few ways to use them. If cash is earning sub-1% returns the psychic income from owning a car that can get invited to the California Mille, a CCCA CARavan or a brass and gas tour is a most attractive return on investment, particularly when that investment is modest and consistent with past transactions.
It’s a good time to be a buyer, and it’s going to get better in coming months.

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