The Business of Investing in Collector Vehicles
My first Retail management gig came in the mid-1970’s when, as a frustrated Zone Manager for Renault, one of my dealers offered me a piece of his business if I would come in to help him run the sales operations. I soon learned that auctions could be more than a place to buy and sell cars.
Bordentown was just up the road from us and there was many a week that I took cars there to make payroll. Welcome to the world of Retail!
Later I learned, while working for BMWNA in the 80’s that auctions were also a place to move off-lease vehicles that no one wanted. Residuals were not a strong consideration then. High Line dealers were also just starting to learn that they needed to be in the Used business as well as New and some auctions began to cater to them. Today, of course, we now have Manufacturer closed auctions as everyone works to control the prices and residuals on their product.
The Rise of Collector Auctions
Shortly after the recession of 1988 another type of auction started to become popular; the Collector Auctions in Scottsdale, Arizona, and has now become a huge, nationally televised event. Not only for the wealthy investors, these productions are entertainment for those of us who grew up with many of these vehicles, but can no longer afford them.
Amelia Island 2016
Now in its 21st year, the Concours d’Elegance began as a car show for private collectors and racing enthusiasts. Eighteen years ago RM Auctions, now RM Southeby’s, staged its first event at the Concours. Six years ago they were joined by Gooding & Co., and two years ago Bonhams joined in as well. They don’t go up against each other so there are 3 full days of show-and-sell prior to the activities of the main event. Actually, they have become an event unto themselves. One has to wonder when Barrett-Jackson, Mecum’s, or Russo & Steele will come to the event.
Normally there are 300+ vehicles on display as participants of the Concours, not counting the 400+ that show up for Cars & Coffee on Saturday morning. These are just local folks who bring their prizes out for show. This year there were 300+ vehicles sold at the auctions as well, and that only represents
65% of those offered for sale, with an average sale price of $438,000 including commissions, for a total of just north of $134 million. Not bad for three days work!
Attendance at all three was heavy, but especially so at Gooding & Co. due to the offering of 15 pieces from Jerry Seinfeld’s collection of Porsches along with 2 significant VW’s. Collectively they sold for $22.2 million. One lone Ferrari, a 1961 250GT California SWB Spider, went for $17.1 million all by itself.
Last year RM Southeby’s auctioned off part of the collection of the late Malcom Pray, a long time Connecticut dealer who had amassed a sizeable collection.
Unlike a commercial auction where individual dealers are typically the buyers and sellers, it is not uncommon to see groups of people bidding on some cars. A 1937 Bugatti Type 57SC Sports Tourer was sold at Bonhams to a group of three men who took almost an hour to work up their courage to spend $9,735,000 on that one vehicle. It was absolutely gorgeous!
The sale environment is quite different also. There are no sales lanes; in fact the set-up is much more theatrical with each car presented on a raised stage with pictures of it shown on huge screens. The auctioneers are typically European with British accents seemingly preferred. Gooding & Co. and Bonhans hold their shows in massive tents while RM Southeby’s is in the Ritz Carleton’s ballroom. This is not a business environment as we know it, but trust me there’s big business going down here.
With the expansion of the Collector Auctions the Amelia Island Concours d’Elegance has now become a five-day event. It isn’t often that we can combine business with pleasure, or even find relaxation out of our stores that still involves cars and motorcycles (yes they’re there too). It all adds up to a wonderful long weekend, even if you’re not a buyer at these prices. It’s still fun to watch the action and see the cars of your youth that you never dreamed could be worth so much.
Author: Jim Richter
Jim Richter is a Fixed Operations Consultant and Performance Coach with M5 Management Services, Inc., an international company working with dealers, distributors, and manufacturers. He has spent over 45 years in the automotive, power sports and marine industries analyzing and assisting parts and service operations throughout North America and Europe. His work experience includes dealerships, field and management positions with major manufacturers, and his own consulting company.