10 February 2016

Arizona auction results point to pause in market

Every January, collector car market-watchers focus their attention on Scottsdale, Ariz., where thousands of cars are offered for sale at no reserve. Rightly or wrongly, the week is credited with setting the tone for the entire year, and 2016’s Arizona Auction Week carried a tension we haven’t seen since perhaps 2009. Would numbers be down? If so, by how much? And what does it mean for the market overall?

The quick answers to these questions are: yes, a bit and we will have to wait and see. Overall figures fell by 15% from last year despite the fact that more vehicles were both offered and sold. As a result, the average sale price slipped by 13%. At each venue, bidding was generally slower, dollars were harder to come by and buyers seemed cautious.

Of course, there is more to the story than the numbers alone. At the top end of the market, all of the star cars sold for expected amounts, but there were fewer such cars this year than in years past. For example, in 2015 the top 10 sales for the week accounted for nearly $53M and included a Ferrari 250 LM, a competition Ferrari 275 GTB, a Ferrari Superamerica, Carroll Shelby’s Super Snake Cobra, and the GM Futurliner. In all, six lots sold for $4M or more last year. By contrast, this year’s top 10 totaled approximately $37M with only two lots exceeding the $4M mark. RM Sotheby’s Mercedes-Benz 540K became the most expensive car ever sold during Arizona auction week at $9.9M including buyer’s premium, but car sellers had more options than ever for where to sell their car this winter (New York, Paris, Amelia Island, etc.).

Another key factor is that skyrocketing prices over the past three years for certain models have elevated attention and brought more cars to market. As a result, there was an oversupply in Arizona for many models. Case in point: The number of 1963-73 Porsche 911s went up by 66% this year from last, and their average sale price dropped by 20%. The number of Ford GTs doubled from last year and prices dropped by 8%.

Furthermore, most of those abundant cars were of average quality rather than being in top condition like most of the recent high-profile sales. A number of long-time buyers in Scottsdale noted that the overall condition of the cars on offer was slightly lower than in recent years, which would expectedly shift values lower.

Of course, some cars are simply finding new footing on the heels of massive gains. Production Ferraris from 1960-74 — easily one of the brightest spots in the market of the last 5 years — have seemingly leveled off. Values in Hagerty Price Guide saw minimal movement in 2015, so this isn't unexpected. Slightly fewer were offered in Scottsdale this year (32 vs. 37), which was an indicator in itself, and many more went unsold (16 vs. 11). Dinos in particular saw a decline, with average prices dropping by 17%. Mercedes-Benz 300SLsToyota 2000GTs and Ferrari 512 BBs all saw their numbers slip this week, too, in some cases back to levels that were last seen in 2012-2013.

Beyond the above factors, there are myriad reasons to speculate about. It is a presidential year and it isn’t unusual for people to tighten their spending as they wonder what will happen with the overall economy and their taxes personally. The global economy is slumping, oil prices are down, foreign currencies are weak, etc., etc. It seems there is enough economic uncertainty to restrain bidders.

The obvious question is what is the longer term effect of lower sales in Arizona? Sellers’ expectations will adjust and prices will likely relax as people realize that 20%-30% YOY growth (or more) isn’t a given across the board anymore. We don’t expect any drastic corrections. Although some prices are down, they haven’t retreated immensely. Most likely, if prices decline, owners will opt to hold their cars. Supply will decline and things should equalize.

Furthermore, there were still bright spots in Arizona. Late model exotics and interesting cars from the 1980s and later continued to excel. This held true across different price brackets. Bandit Era Pontiac Firebird Trans Ams and first generation Chevrolet K5 Blazers also did well. Overall the “nostalgia cars” from the middle of the market are healthy.

And don't forget that the numbers out of Florida the week prior to the Arizona auctions were remarkably strong. Top tier muscle performed well at Mecum’s Kissimmee sale; overall sales soared by 30% and average prices climbed by 20%. When all is considered for the month, sales in January 2016 were 7% below January 2015 and the average sale price is down 9% which is significantly sunnier than how some will try to spin the Scottsdale numbers.

Globally, a similar story is emerging. The first big series of sales to follow Arizona happened in Paris, Feb. 4-6. Three auction companies conducted sales alongside Retromobile festivities, and a near-record price was paid for a 1957 Ferrari 335 S Scaglietti Spider — Artcurial sold it for $35.7 million. Overall numbers were down only slightly (by 4%) and are as much the result of fewer cars selling than any massive shift in the market.

Any way you interpret the numbers, however, it seems clear that the pause in the market we have been waiting for has set in. The big question is how long this pause will last.

14 Reader Comments

  • 1
    Hal Tucson, AZ February 10, 2016 at 16:39
    It doesn't look like the author factored in the fact that the 2015 numbers were skewed greatly by the sale of the Ron Pratte collection at Barrett-Jackson. That collection accounted for around $40 million in sales all by itself. Take out the Pratte cars and the 2016 numbers might actually show an uptick in the market. Just one man's opinion.
  • 2
    Garth Gibbons Denver , CO. February 10, 2016 at 18:39
    how is the market for mid year corvettes ?
  • 3
    Ira Schoen Washington, DC February 10, 2016 at 18:51
    There is an elephant in the back of the room -- and few are willing to acknowledge. It's called "age", that is, the current average age of buyers (and sellers) at auctions. Look closely -- 65-75 is a fair estimate. In 10 years or less, expect a "sell-off", because there are not enough younger buyers who have an interest in buying classic vehicles to meet the supply that exists.
  • 4
    Dr. C. Green Valley, AZ February 10, 2016 at 19:16
    The unsustainable tangent mellowed as a function of both unrealistic expectation and gravity. The welcome sigh of relief should be embraced by those who love and drive the cars. I was there in AZ; the aroma of phoniness was palatable. The overweight, cigar chomping, narcissists anxious for camera face time prevailed, theatrical robot ringmen waved towels like estrogen-injected Steeler cheerleaders, and the Velocity channel version of craigslist droned on. Define boredom. If you're driving a lonesome highway, top down or sun roof open, no specific destination, just a man and his thoughts, and contemplating writer Rabold's inquiry, "the big question is how long this pause will last", you may be due for a medication adjustment. You missed the last train to Clarksville. If not, drive on.
  • 5
    John Johnson Phoenix, AZ February 10, 2016 at 19:17
    When comparing YOY Scottsdale auction totals, I think that you overlooked one major factor: last year's Barrett Jackson's sale of the entire Ron Pratt collection caused a feeding frenzy and set the bar artificially high. John J Phoenix
  • 6
    Michael M Adirondacks Upstate New York February 10, 2016 at 20:53
    Consider that a so called pause in the collector car auction market might in fact be the result of the fact that collector car auctions ( over the last decade) have gotten much bigger and there are a lot more of them and they are held more frequently. Lo and behold they are also now on TV practically around the clock and on several cable channels. Maybe there are just not enough buyers to keep all of the venues at peak performance results.
  • 7
    Nancy Bushly United States February 10, 2016 at 21:46
    You always talk of the high dollar cars. You forget vehicles such as much 63 Chevy Nova 2dr ht, I am the 2nd owner and it does not even have a 100k. I insure it through you. I know what I can sell it for. I have 3 people in Billings MT wanting to buy it. One man offered me $200 for it which is what you have it values at. Try including some of these cars, it's not just ultra rich who buy. I just aquired a 53 GMC truck, and can't wait to start restoring it. I will call for insurance when I head out to pick it up in March. Sincerely Nancy Bushly
  • 8
    Howard Toronto February 10, 2016 at 22:03
    The collector market would be great, without all of the auctions inflating most of the "apparent" selling prices, for the automobiles that are well beyond the average collectors reach. Interesting that they do not promote the "affordable" collectibles.
  • 9
    Clay Campbell Calgary Canada February 10, 2016 at 23:08
    I also feel prices were down this year as Canadians were not purchasing at the usual rate we do. Its very hard for Canadian Collectors to add 60% to hammer prices.
  • 10
    jim smith United States February 11, 2016 at 09:55
    Stock market is tanking. These people have a LOT of money in stocks.
  • 11
    Steve H. the Ozarks February 11, 2016 at 10:20
    Well said, Dr. C. I was watching on TV, and got the same air of fake hoopla....even the most ordinary of Muscle Era cars were touted by the over-enthusiastic commentators as some sort of "gem".
  • 12
    Clay Campbell Calgary Canada February 11, 2016 at 11:23
    I feel another contributing factor in the decline of prices was of course the lack of Canadians purchasing cars at all the AZ auctions. Its tough for a lot of Canadian buyers to add 60% to the hammer price ! Have to agree with Dr.C. lots of stupid money again at all auctions !
  • 13
    CAL South Dakota February 11, 2016 at 00:08
    As usual auction watchers gravitate to a few select brands to judge the health of the collectible car market - the hot muscle market of yesteryear has mostly corrected itself as will the blazingly hot vintage Ferrari tomorrow - it is too easy to attribute a few high sales as the bellwether of the entire market...or the lack of multiple high sales as a market decline - Mecum's Kissimmee auction is a better indicator of the hobby health as buyers pick off something they will wash, wax and drive for enjoyment - these car nuts are the bulk of the hobby and support the aftermarket products that continue to improve street performance and fuel economy - if Hagerty wants to judge the health of the market it would be better to keep the car nut rides in one category and the big buck foreign cars separate - this report tends to raise fears that Ferrari values are stalling...but then it gushes that Mecum had a huge increase in sales...where is that "pause in the market"?
  • 14
    Doc Newport Beach, CA February 24, 2016 at 20:55
    I enjoyed reading the article and the comments (even more), I think truth prevails in most everyone's thoughts. I look at my friends who collect cars, they are all older then myself (53 yr here) most are 65 plus and they have a full stable of cars. They are thinking of selling off some of their collection rather then expanding, some might want to horse trade but here in CA garage space and even warehouse space is at a premium. I just don't know that many guys my age or under that are into Collector Cars, I work with a few Physicians who like cars and drive newer Mercedes, Porsche or Bentleys but none of them under 55 have a collector car in the garage. Is it a dying sport, hobby? I hope not..

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