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.
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.