Classic car auctions upended by coronavirus
NEW YORK(NYT NEWS SERVICE).- After collapsing last year, auctions for collector vehicles started 2020 on a roll, ringing up more than $300 million in sales at events in January in Scottsdale, Arizona, and in March on Amelia Island in Florida.
Indeed, last month the collector car website BringaTrailer.com recorded more than $26 million in sales, up by some 64% over 2019. Forty cars went for more than six figures, including a customized 1952 Jaguar roadster originally owned by actor Clark Gable that sold for $276,000. He bought the car in 1952 for a sticker price that just topped $4,000.
Little more than a month after the Amelia Island auction, however, and with the coronavirus bringing the economy to a standstill, organizers of the Pebble Beach Concours d’Elegance in Carmel, California, announced they were canceling the event for only the second time in its 70-year history.
“It has become increasingly unclear whether or not gatherings of our size will be allowed in August,” said Sandra Button, chairwoman of the Concours — frequently called the world’s premier classic car show. Many entrants, Button noted, had spent years preparing their cars and were already making shipping arrangements. “In fairness to all, and with an eye to the safety of our participants, spectators and volunteers,” she added, “we had to make the sad decision to postpone.”
The decision was a blow to Monterey Peninsula communities like Carmel, Pacific Grove, Monterey and Seaside. In short order, more than 20 “Car Week” events were called off, including five of six major auctions; separate large-scale shows for Italian and German vehicles; and other auto-oriented gatherings and events. Most pledged to reschedule next year.
Since 2010, Car Week sales have racked up over $3 billion in combined revenue, making those classic car auctions the most lucrative in North America, according to collectible car insurer Hagerty. Last year, for example, the auction house Gooding & Co. alone saw the hammer fall on 184 cars for $116.5 million at Pebble Beach.
As the week’s tentpole event, the Pebble Beach Concours routinely attracts up to 20,000 spectators who pay from $400 to $3,500 for entry. Overall, more than 80,000 visitors typically crowd the peninsula, paying sky-high hotel and motel rates; jamming shops and art galleries; and forming long lines at restaurants. According to the Monterey County Convention and Visitors Bureau, a 2014 study estimated that Car Week — which typically stretches over 10 days — generated some $55 million in economic activity and nearly $5 million in taxes. The Pebble Beach show alone contributes more than $2 million annually to charity.
Even in affluent Carmel, with its pristine white sand beaches and verdant pine forests, the absence of those income streams would be painfully felt. “It’s devastating,” said Chip Rerig, city administrator of Carmel, a community of 3,800 people. “Fifty percent of our revenue has been stripped away by COVID-19.”
Rerig said the cancellation of Car Week would cost “a minimum” of hundreds of permanent and seasonal jobs in the area, and the city budget was likely to go deep in the red.
Against this backdrop is a collector car market that has already been making inroads on the web. The pandemic will only push more of the action online.
“Really special cars sell well, no matter where or when they are being sold,” said McKeel Hagerty, chairman of Hagerty, a firm based in Traverse City, Michigan, that insures collector vehicles and tracks their values. “The classic car world is and will remain resilient. We’re not seeing people panic.”
Hagerty drew confidence from his firm’s experience during the 2008-09 recession when vintage automobile prices briefly declined only to rise to new highs after 2010. “We learned from that crisis,” he said. “People now know it’s in their interest to hold on until we’re on the other side of this.”
The collector market has been notching steady growth in both interest and sales. “High-end automobiles have finally been accepted as both art and as an asset class,” Dave Kinney wrote in the Hagerty Insider newsletter. No longer perceived as “trivial toys,” he added, classic cars are increasingly being recognized as collateral for loans and even as legitimate elements of an investment portfolio.
Citing internal and industry data, Hagerty said that global vintage vehicle sales easily soared into the billions annually, with land-based auctions making up 5% to 10% of that. Last year alone, for example, RM Sotheby’s sold a reported 5,000 cars for nearly $500 million in auctions and private transactions.
“Traditional auctions only account for the most visible classic vehicle sales,” Hagerty said. “They’re widely followed public events, whose results appear in published reports.” Far more transactions, he added, take place in dealer showrooms, through print or online listings or in direct “private treaty” negotiations between buyers and sellers.
As for the immediate future, Hagerty said, “the real question is what happens this fall.” He foresees some auctions temporarily shifting to online and to smaller settings, perhaps in less populated areas and with audiences limited to registered bidders and sellers. Early this month, the Petersen Automotive Museum in Los Angeles announced its “Virtual Car Week” in August to “maintain the global enthusiasm for Monterey Car Week in spite of Concours and event cancellations.”
Some traditional land-based auction houses have already tested those waters. Shortly after the Amelia Island event, RM Sotheby’s shifted its scheduled auction in Palm Beach, Florida, to online. In place of a printed catalog, the firm posted detailed descriptions and high-resolution images to the internet. Rather than crossing the block every few minutes, cars were available for bidding from March 25 to 28.
Despite the hasty changeover, the auctioneer racked up a respectable $13.5 million in sales, with nearly a dozen cars topping six figures and two-thirds of them selling through. Compared to Hagerty Price Guide values published in January, the median discount was only 2%.
“We’re not seeing any fire sales,” said Michael Caimano, a senior motorcar sales specialist for the international auction house Bonhams. “We still have clients with wants, needs and interests.” Though the firm canceled its regularly scheduled Car Week auction in Carmel — typically the largest on its yearly calendar — it plans to stage an online auction Aug. 14. The sale will take place over a single day with a live auctioneer in Los Angeles gaveling down the cars, displayed on video, in real time.
“Any market has ups and downs,” said Caimano, noting his firm’s strong showing at Amelia Island, where it sold some $22 million in cars, including an ultrarare Type 55 Bugatti, once owned by the Rothschild family, which fetched $7.1 million.
Hagerty said, “This isn’t a goodbye,” expressing the feelings of most who put off Car Week participation until 2021. “It’s a see-you-next-year.”