August means anticipation in the classic car market. The major auction companies that stage events in and around Monterey, Calif., have all announced their star consignments and are poised to kick off their biggest events of the year. Predictions have begun for how the Monterey auctions will fare this year, and opinions vary but, for our part, we believe the market is continuing to grow, but is doing so at a slower rate. In other words, the arc we have been describing for the past 18 months will persist, which should be reassuring.
There is no denying that the overall market is expanding. The Hagerty Market Rating has moved from 70.39 to 71.50 since the beginning of the year, and continues to reside in the “expanding” range of the measure. Year-to-date auction totals are 15% ahead of last year’s record figure, and the average online dealer listing price is up since January.
Below the surface, though, what is driving the market has changed. Instead of the more predictable million-dollar cars pushing growth, “modern classics” have emerged as the hottest segment of the market. Not to say that ultra-expensive models don’t continue to appreciate. Those cars that provide impeccable provenance, thorough documentation, and immediate enjoyment are inspiring bidding wars. Those cars in this price range that are wanting in some respect, though, languish.
Meanwhile, cars from the 1980s and 1990s constitute some of the biggest movers from the past 12 months, especially those models that possess rarity, performance, and a legitimate link to competition success. The consignments at the Monterey auctions reflect this shift. Compared to 2014, 75% more vehicles from the 1980s have been consigned and there are 23% more consignments from the 1990s. The number of Porsches from the 1980s has tripled. The number of Ferraris from the 1980s has doubled. It is clear the demand is there.
It is very possible that numbers from the 2015 Monterey auctions will come in below last year’s benchmark $428M tally. In fact, we estimate that the final total will land in the $410-415M range. This doesn’t mean the wolf is at the door, however. Remember that 2014 was something of a “once in a generation” moment, where some of the rarest cars on the planet became publically available. It shouldn’t be too great a surprise that the feat wasn’t topped a short year later. While there is nothing on the docket to compare to a Ferrari 250 GTO this year, there is still no shortage of cars that could be a crown jewel of a world-class collection. Furthermore, there are more cars with the potential to exceed the million-dollar mark this year than last, and at a higher average value, too.
In the current market, buyers are increasingly knowledgeable and discerning, and are willing to pay for the best. They aren’t spending irrationally with the expectation that what they acquire today will automatically be worth more tomorrow no matter its history. This fact alone is encouraging, as slower growth will ultimately be more sustainable, but it may take a bit longer for sellers to recognize this. Keep that in mind as the numbers are reported.