24 January 2017

A tale of two Scottsdales

More and more, we seem to be living in a binary world. The 2017 Scottsdale auctions clearly reflected this. The one-percenters were decidedly glum this year (with a few exceptions) while 30-percenters seemed positively exuberant. Unofficial numbers show about $259 million this year versus $250 million last year.

Scottsdale 2017 was a mirror image of itself five years ago. The top of the market roared into Scottsdale 2012. Overall dollars in 2012 were up $60 million over the bottom in 2010. But the entry level, still licking their Great Recession wounds, remained largely on the sidelines. The total numbers may have looked good, but much of it was built on the backs of more expensive cars.

This year, it was the top of the market’s turn to look somewhat somber while the entry-level to low-middle of the market celebrated. Russo and Steele, Silver Auctions and Barrett-Jackson were all at or slightly above last year’s dollars. All sold more cars (albeit at slightly lower average prices), while RM and Gooding & Company were down on overall dollars. The wild cards were Bonhams, (which had a phenomenal sale, doubling last year’s total) and Worldwide Auctioneers (which enjoyed a very creditable first-time outing in Scottsdale).

Total dollars for all the auctions combined were only about four percent higher than last year (plus $9 million), because try as the non-catalog sales might, (B-J’s docket was swollen by 200 cars over last year), it takes a lot of $30,000 cars to add up to a million dollar car. But as we predicted, 2017 was one of the strongest Scottsdale Auction Weeks yet seen. The second biggest week in Scottsdale history to be exact.

At the lower end of the market, the results of the election did seem to buoy willingness to spend. The sub-$100K market for domestic cars and pickups did extraordinarily well. Purely anecdotal evidence shows a likely correlation between this market and those who support the new president. And with promises to build infrastructure and traditional energy industries, people with skin in those games were likely spending in anticipation of very good times ahead.

The top of the market (Bonhams outstanding showing aside), was not what it had been in 2012-2015. To be sure, Gooding and RM both had individual triumphs, (a 1925 Type 35 Bugatti at $3.3 million and a 1939 Mercedes-Benz 540K Special Roadster at $6.6 million) illustrating that fresh-to-market unrepeatable opportunities will sell well in damned near any market. But numerous lots not falling into that rarefied category were left wanting, either as no-sales (the victims of misalignment between sellers’ expectations and buyers’ willingness to pay) or as below-estimate sales.

Several reasons have been offered, but most seem to center around lack of activity among European buyers. Again, this was eminently predictable. The British Pound Sterling is at a 30 year low and the Euro is at near parity with the dollar. I personally saw almost no Europeans in Scottsdale this year and phone bidding was noticeably subdued. While Europeans may not have comprised anywhere near the majority of buyers last year, they were (as the sage Donald Osborne reminded me) often the under bidders, whether on the phone or in person, pushing the ultimate numbers higher. Not this year.

Another reason for the performance of the catalog houses is a simple question of inventory. The quality of inventory brought to Scottsdale by Gooding and RM/Sotheby’s continues to reflect the slide in importance of Scottsdale week in comparison to Amelia Island where both will likely bring their A-games.

The top of the market is probably going to be stressed for a while. There are bigger issues to be determined in terms of what a hard Brexit might look like and whether the EU will even survive the next five years. None of this is likely to ignite either the Pound or the Euro, and thus the cars that trade in a global marketplace might not have nearly as good a time as good old classic American collectibles.

6 Reader Comments

  • 1
    Bob Kroupa Greensboro, NC January 25, 2017 at 17:01
    Great article. Did Hagerty provide an article on the top ten auction sales in 2016 (US) as they have done in previous years. If so , how can I obtain a copy? Thanks You, Bob Kroupa
  • 2
    JB Tinney Houston, Tx January 25, 2017 at 17:09
    So thats what happen? I brought (5) no.1 cars to BJ to be auctioned off on Saturday afternoon. Total Value $930K 9Conservatively). They brought $660K or about 30% less than they should have. Lesson learned....do not bring expensive cars at no reserve auctions. I do not care when or where they are going off its to big of a gamble. Should have been at R&S and Id still have my cars.
  • 3
    David Castelhano Louisiana January 25, 2017 at 18:16
    I disagree with your assessment of the one percenters. I saw a lot of mediocre cars with unrealistic estimates. This hurts the numbers if that's all you look at. I did see several exceptional cars set records. The one thing I did not see was diversity at the high end auctions. Everyone had the usual suspects, Ferrari 512BBi, Dino 246, Daytona, all variations of Porsche 911s, etc. No DeTomaso Mangustas, Iso Grifo, 508 BMW, nothing memorable. This to means the auction houses need to do a better job, not the market softening. I was with a dozen potential buyers that went home empty handed but were loaded for bear.
  • 4
    Jim Phoenix , AZ January 26, 2017 at 01:25
    My comments are not tied to where the market is today vs prior years but how sales are reported.Attending the last day of Barrett Jackson BJ) last week , I wrote down the prices written on the sold tags of several cars I had been interested in. Later in the same evening I went to BJ's website to review the same sold vehicles only to see higher prices than those on the sold tags . It took me a minute to realize that BJ inflates the down price to include the commission paid by the buyer (in these cases 10 %). Of course the sellers of the cars paid a commission as well . Assuming a car sold for $100k the buyer paid $110 k and the seller realized $90k. Sadly both sellers and buyers only see the final "sales" results. I guess the best thing you can say here is present and past sales comparisons use the same bogus " sales " prices.
  • 5
    Steve Hamilton January 26, 2017 at 15:24
    Nobody I know can afford the extravagant prices at BJ. All it does is jack up the prices for the average Joe. Same crap every year.
  • 6
    Jim Calgary Canada January 26, 2017 at 12:16
    It is actually more realistic to post prices including commission, as that is what was paid in the end. This is generally how most products sold on a commission basis are shown and often how prices paid are posted on the auction web sites where I come.

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