Lessons from Monterey: It’s a buyer’s market, partially because there’s too much going on

1963 Mercedes-Benz 300 SL Roadster at the 2017 Pebble Beach Concours d'Elegance

The data didn’t look good going into the 2017 Monterey auction week. On the heels of a strong four-year run that peaked in 2014 with $403 million in sales, the last two years saw 2% and 15% declines. The Hagerty Valuation team, using a variety of data—including the reduced number of million-dollar plus cars on offer, auction estimates, and total cars up for sale—predicted another decline this year.

But data doesn’t buy cars. People do. And, in spite of fewer cars and, to me, an overall decline in the quality offerings, 2017 proved us wrong with a preliminary total of $327 million, just a few points below 2016. This was helped along by a tremendous number of multi-million dollar feature cars selling, and selling well, but that alone is as telling as anything because movememt at the top end is a sign of a healthy marketplace. By the time the dust settles, with post-block deals coming together, I think 2017 will surpass ’16.

Behind the numbers, however, everybody wants to know “what the market is doing.” Well, I think it is doing just fine. Buyers have become cautious of a lot of cars that had significant run-ups in value over the past few years (air-cooled Porsches, Ferraris, Jaguar E Types, Mercedes-Benz 300 SLs). Much like the kid who didn’t believe you when you said the stove was hot and had to learn the hard way, buyers still believe they might get burned … but they want to try it anyway. This is evident in the fact the cars are still trading, but at quite logical numbers. That also provides a second chance for anyone who felt priced out of a car they wanted 24 months ago.

Five Cobras on offer over the weekend prevented any bidding frenzies
Five Cobras on offer over the weekend prevented any bidding frenzies
Bonhams

Other good deals were a simple result of supply and demand. Take 1963-65 Shelby 289 Cobras, for example. Somehow every auction had one, and the ones that sold, despite wildly varying quality and histories, all landed between $900,000 and $1 million hammer prices. The Shelby Cobra market has always been very stable, and the consistency from this year shows that is continuing. But when you have multiple examples spread across five auctions, it’s possible that there is more than one car per potential bidder, or that bidders see ample supply and decide to watch from the sidelines. If there had been only one great 289 Cobra for sale in Monterey, I think it would have sold for at least 20-30% more than what we saw for the three that found new homes.

What about Ferrari Daytona Coupes? Clearly 2017 was the year to buy one of those in Monterey. Much like a few years ago, when there were over 20 300SL Roadsters on offer, this year saw eight Daytona Coupes. Much like having all those SLs for sale in one place drove their values down, the resulting Daytona sale prices appear to have reset market price for that model as well—at least in the short term. Two Daytona sales that stood out were the one at Bonhams that hammered for just $465,000, and the famous “Harrah Hot Rod,” one of the coolest Daytonas of all, being delivered new with factory Competition options, hammering at RM Sothebys for just $625k against a $750k–$950k pre-sale estimate.

Of course, there were the usual breakout high sales as well. The Aston Martin DBR/1 that sold at RM for $21.5M is an obvious one, or even the 1963 Studebaker Avanti R2 that sold at Mecum (by yours truly) for $115k at the hammer, both new world records.

One of the coolest Ferrari Daytonas ever went for well under the presale estimate
One of the coolest Ferrari Daytonas ever went for well under the presale estimate
RM Sotheby's

But beyond the high sales and some notable market shifts, what struck me about the 2017 Monterey auction week was the inconsistency within the results. For those of us old enough to have attended these events for, ahem, decades, the reason is clear. Monterey’s auction scene has gotten too big. What was originally one race, one show, and then added one auction has become six auctions, two races, multiple shows, and more social events and parties that I can count. The auctions and events overlap and fight for attendance. Friday alone had Mecum, Bonhams, the Quail, Gooding & Company, RM Sotheby’s, Russo and Steele, and racing at Laguna Seca all competing … and a nightmare traffic snarl connecting them all.

Adding to this is the automotive manufacturers who have decided to fill this week with new car launches and social events, further complicating the schedule for many. Think of how many new car dealer principals are also car collectors, for one. Each of these events make sense on their own, as Monterey offers a beautiful setting and a high density of deep pockets, but have we passed the saturation point? I think so. Take the Scottsdale auction week as a comparison. It is also a monster, with the same number of auctions, but virtually no competing events outside of that or the logistical issue of being on a peninsula.

That said, I don’t expect anything to change. This chaos creates opportunity. I suggest if you’re looking to buy a car in Monterey, preview all of the sales early. Identify the cars you like. Pay attention to which of those may be over-subscribed. Do a proper inspection to make sure the steak matches the sizzle in the catalog. Ignore the pre-sale estimates. Send your regrets to any cocktail party that may conflict, get to the auction, and be ready to bid. You never know what you may walk away with if you play your cards right.