Sum­mer sea­son

New Zealand Classic Car - - International Market Report -

As you read this, I am away in the north­ern hemi­sphere en­joy­ing the flesh­pots of Europe. My first port of call is the His­toric Grand Prix of Monaco, at which the Euro­pean auc­tion sum­mer sea­son kicks off. So, next month, I will bring you a full re­port on how the 1925 Bu­gatti Type 35 Grand Prix two-seater fared against its pre­sale es­ti­mate of €1.1 –1.4M (some­thing in the re­gion of NZ$1.6–2.5M). The Bu­gatti will be one of just 40 cars to be of­fered by Bon­hams at the Fair­mont Ho­tel in Monte Carlo, which over­looks the in­fa­mous Sta­tion Hair­pin bend.

But the star of this in­au­gu­ral 2016 Bon­hams auc­tion will surely be the 1952 works Jaguar C-type, ‘POV114’. This leg­endary rac­ing Jaguar was driven by an il­lus­tri­ous cadre in­clud­ing Peter Walker, Stir­ling Moss, and Tony Rolt and is de­scribed in the sale cat­a­logue as “the world’s finest as-orig­i­nal, run­ning, long-term-pre­served ‘time-ma­chine’ Jaguar C-type”.

In the same town on the same week­end in May, RM Sotheby’s, on the Av­enue Princesse Grace at the ex­clu­sive Monte-carlo Sport­ing Club, will of­fer plenty of ‘heavy­weight’ cars, in­clud­ing no less than a dozen Fer­raris. I’m keen, how­ever, to view the lit­tle 1960 Fiat Mare by coach­builder Hol­i­day, which is be­ing of­fered with­out re­serve. Who knows, I may even put my hand up to bid! I am also keen to see what hap­pens with the 1965 Alfa Romeo Gi­u­lia Tubo­lare Za­gato (TZ), hav­ing only re­cently auc­tioned off a TZ Greppi re­cre­ation at last year’s Theodore Bruce Mo­tor­clas­sica sale in Mel­bourne to a client in Switzer­land for over A$250K.

The right time

There are cer­tainly plenty of seem­ingly fan­tas­ti­cally de­sir­able ve­hi­cles out there in the auc­tion mar­ket­place at the mo­ment, such as the 1961 Fer­rari 250 GT SWB (short wheel­base) due to come up at French house Artcu­rial Mo­tor­cars’ Le Mans Clas­sic sale in July.

It would ap­pear that now is both a good time to be sell­ing and a good time to be buy­ing. Re­mem­ber that, if you are a buyer at auc­tion, the old Latin adage caveat emp­tor (let the buyer be­ware), still stands true. When you are pur­chas­ing, you are buy­ing the ar­ti­cle as it is found; there­fore, you need to make sure that you do your home­work prop­erly. Re­search is of para­mount im­por­tance when buy­ing a car at auc­tion, so un­der­take a thor­ough over­view of all the avail­able doc­u­men­ta­tion that goes with the car and find out as much about its his­tory as you can — do not get se­duced by the shiny paint­work and the un­de­ni­able glitz and glam­our of­fered by the top auc­tion houses. Re­mem­ber, too, to then look past the free glass of cham­pagne that may be prof­fered and be­neath the sur­face as much as you can. Af­ter all, the auc­tion house should be try­ing its ut­most on be­half of its ven­dors to present a car in its best pos­si­ble light — even if it is in the half-light which Artcu­rial pro­vided when of­fer­ing the Bail­lon Col­lec­tion of barn finds in Paris in 2015!

A fi­nal word of warn­ing: re­mem­ber that dif­fer­ent auc­tion houses have dif­fer­ent buyer’s premium (BP) rates, and taxes, such as GST, payable on those pre­mi­ums. Make sure that you know ex­actly what those pre­mi­ums, on top of the ham­mer price, are be­fore you start bid­ding so you are cog­nizant of the to­tal price you will have to pay, in­clud­ing buyer’s premium (IBP).

Now, where to find that lit­tle Fiat beach car? Lot num­ber …?

This is­sue, we fol­low last month’s top­ics cov­er­ing in­vest­ment po­ten­tial, sup­ply and de­mand, and the right choice of car by look­ing at the state of the mar­ket.

Some ar­gue that the mar­ket is cool­ing off, lev­el­ling out, un­der­go­ing mar­ket cor­rec­tion — what­ever your pre­ferred term, we’ll see if this is hap­pen­ing; re­view what drives this; ex­am­ine which ar­eas of the mar­ket re­main pros­per­ous; and, per­haps most im­por­tantly, look at what the fu­ture holds.

Qual­ity is key

Gen­er­ally speak­ing, de­mand hasn’t tailed off. There is no bub­ble about to burst in New Zealand, but I re­main firm in my be­lief that buy­ing qual­ity is key, and, with qual­ity much in de­mand, I can only see a healthy fu­ture for qual­ity clas­sic cars here.

The prob­lem some­times is that sell­ers with qual­ity cars in hand have the power to ask un­re­al­is­tic prices, re­sult­ing in cars not be­ing sold or, worse still, cars be­ing sold at un­re­al­is­tic prices.

Then there are those sell­ers who do not have qual­ity cars but think they do, so they ad­ver­tise them at the same price as qual­ity cars, also re­sult­ing in cars not be­ing sold or be­ing sold at un­re­al­is­tic prices.

Fur­ther­more, the sorts of cars that are read­ily avail­able and can be bought ev­ery day of the year have been sub­ject to a feed­ing frenzy over the past few years, and that has nat­u­rally cooled off.

Mar­ket trends

The re­al­ity is that we must all adapt to mar­ket trends, and, de­pend­ing on the mar­que, the value ad­just­ments can be largely ex­plained by sim­ple sup­ply and de­mand. Take sports cars from the ’70s and ’80s, for ex­am­ple, which had been on such a rise in the past few years. This re­sulted in a flood of ex­am­ples on the mar­ket and, in turn, a cool­ing in prices.

So, I’m say­ing that sales of cars that are re­peat­able and of­ten of av­er­age qual­ity and cars that are over­priced have quite rightly cooled off. In con­trast, I can con­firm that qual­ity cars are con­tin­u­ing to sell well.

From my point of view, the up­per sec­tor of the mar­ket is hold­ing up rather nicely and will con­tinue to do so, as long as cars are priced ac­cu­rately. The un­wa­ver­ing quest for the best re­mains on the rise.

The value gap be­tween a good ex­am­ple and a great one is be­com­ing more pro­nounced, and this is likely to con­tinue. To­day’s col­lec­tors are more ed­u­cated and savvy than ever be­fore; they do their home­work well and are more se­lec­tive, mean­ing there’s a grow­ing gap be­tween the so-called av­er­age cars and the very best.

Buy­ers are nowa­days more care­ful to eval­u­ate rar­ity; qual­ity; and, above all, the his­tory of cars. If they con­sider a price too high, they will not make an of­fer, be­cause they be­lieve they can find a bet­ter ex­am­ple or one at a lower price in the near fu­ture.

It’s heart­en­ing to see peo­ple com­ing into the col­lec­tor’s mar­ket and spend­ing their money on good-qual­ity cars. For in­vestors, clas­sic cars are never a sub­sti­tute for more tra­di­tional types of in­vest­ment; they are al­ways com­ple­men­tary to other as­sets in a port­fo­lio, and, with the stock mar­ket not ap­pear­ing very fruit­ful in terms of re­turn on in­vest­ment at the mo­ment, more and more peo­ple are con­tin­u­ing to in­vest in clas­sic cars.

The fact re­mains that the vast ma­jor­ity of in­vestors op­er­at­ing in this mar­ket are en­thu­si­asts, whether they also have an eye on po­ten­tial in­vest­ment or not, but it’s great to see the ma­jor­ity of these peo­ple still mak­ing smart, in­formed de­ci­sions while en­gag­ing in their hobby.

We are en­ter­ing into pos­i­tive times, in re­spect of the mar­ket’s long-term pros­per­ity. The col­lec­tor-car mar­ket is alive and healthy, and I con­tinue to see an en­thu­si­asm from col­lec­tors and strong money for rare, high-qual­ity clas­sic ve­hi­cles.

At­ti­tudes and be­hav­iour

What I’m also start­ing to see is lack of con­fi­dence in the tra­di­tional type of in­vest­ments, and a change of at­ti­tude in New Zealand to­wards sav­ings, in­vest­ment, and wealth.

In­vest­ment and sav­ings at­ti­tudes and be­hav­iour are in­flu­enced by the struc­ture, com­plex­ity, trans­parency, and per­ceived past and fu­ture per­for­mance of dif­fer­ent kinds of in­vest­ment op­tions, as well as by the gen­eral lack of in­de­pen­dent fi­nan­cial ad­vice, the su­pe­rior per­for­mance of prop­erty in­vest­ment, per­cep­tions and per­sonal tol­er­ance of risk, the of­ten low level of fi­nan­cial lit­er­acy about prod­ucts other than prop­erty, the na­ture of the in­for­ma­tion peo­ple use when mak­ing fi­nan­cial de­ci­sions, the per­sonal or fam­ily ex­pe­ri­ence peo­ple have with in­vest­ment, a gen­eral wish to have per­sonal con­trol over the in­vest­ment, and a ten­dency to trust the ad­vice of friends and fam­ily over un­known pro­fes­sional ad­vi­sors.

All of this ce­ments the no­tion that New Zealan­ders pre­fer in­vest­ing in prop­erty or as­sets they have con­trol of. This has paved the way to clas­sic cars be­com­ing a com­ple­men­tary in­vest­ment to prop­erty, be­cause, like prop­erty, peo­ple have con­trol over their clas­sic car in­vest­ments, which is what most New Zealan­ders want.

It’s great to see com­mon sense tak­ing shape and a coun­try pop­u­lated by peo­ple who have a great love of and take en­joy­ment in these cars, and that will never change.

Safe driv­ing — un­til next month.

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