Jim Stewart has a long piece in the New York Times looking at the declining prices for high-end collectibles, including classic cars. The story has a misleading headline suggesting all the buyers of these assets are ‘new’ billionaires and they’ve suddenly gone cold.
Stewart asks why ultra-luxury apartments, art and classic cars all seemed to hit a wall at the same time:
The market chill is especially pronounced for classic cars, the luxury asset class that had the highest run-up in prices over the last 10 years (490 percent), according to the recently released 2016 Knight-Frank wealth report. The big classic car auctions held every January in Scottsdale, Ariz., were a disappointment, with total sales falling 15 percent from last year, the first decline since 2010. “Prices are dropping relative to last year,” said Eric Minoff, a car specialist at Bonhams who was in Florida this week for the Amelia Island car auctions. “You can’t have 20 percent appreciation every year. But if you bought in 2008, you’re still far ahead.”
But Car and Driver points to a effect that may cover all three markets and be more driven by a glut of supply rather than cooling demand (though surely in today’s volatile markets demand must be cautious):
The subsequent effect has been two-fold: firstly, sellers have had the power to strong-arm the auction houses into taking on cars with unrealistic estimates attached and, in the resulting rush to populate an increasing number of auction catalogues, they’ve been less selective with the cars they have taken on. “All the auction houses have been subjected to a drop in sale rates, and we must all adapt to the market trends,” says Group Director of the Bonhams Motoring Department, James Knight. “The sort of cars that are readily available and can be bought every day of the year – Jaguar E-types, Porsche Carrera RS 2.7s, Ferrari 275 GTBs etc – have been subjects of a feeding frenzy over the past few years, and that has naturally cooled off.” Gord Duff, Car Specialist at RM Sotheby’s, notes similar observations: “Depending on the marque, the value adjustments can be largely explained by simple supply and demand. Take air-cooled Porsches and sports cars from the 80s and 90s, for example, which had all been on such a rise in the last few years – resulting in a flood of examples on the market, and in turn, a cooling in prices.”
The Assets of the Ultrarich Come Closer to Earth (The New York Times)
This is where the collector car market is going, say the experts (Classic Driver Magazine)