The classic-car market is experiencing a slowdown, as evidenced by the results of Monterey Car Week. While total sales for the auctions reached an impressive $397 million, this marked a 16% drop from last year’s record total of $473 million. The market has been cooling for the past 15 months, but this year it finally made its impact on the auctions.
According to Hagerty, the classic-car insurance company, the cooling market can be attributed to increased discipline at the higher end of the market, weakening demand from new collectors, and higher prices that have given buyers pause. Inflation, higher interest rates, and volatile financial markets have further contributed to this slowdown.
Classic cars have been among the worst-performing collectible assets in 2023. Knight Frank’s report shows that values have fallen by 7% so far this year, while art values have increased by 12%. Jewelry and watch values have also seen an uptick. This underperformance of classic cars may be a result of shifting trends and preferences among collectors.
Online auctions sites are posing a challenge to the traditional live classic-car auctions. Sites like Bring a Trailer have gained popularity as alternatives to sales events like Monterey Car Week. In fact, Bring a Trailer reported sales reaching $841 million in the first half of 2023. Last year, total online collector-car auctions brought in approximately $1.9 billion, just below the $2.4 billion generated by live auctions.
One of the most significant indicators of weakness at Monterey Car Week was the sell-through rate, which measures the percentage of cars sold for their reserve price or minimum bid. This year, the sell-through rate dropped to 68%, down from 78% last year. This means that nearly a third of the cars auctioned failed to sell at their minimum price, reflecting a lack of strong demand.
Several high-profile disappointments were observed on the auction block at Monterey Car Week. One of the most notable flops was the auction of a 1964 Ferrari 250 LM by RM Sotheby’s. The car was expected to sell for between $18 million and $20 million, but the highest bid fell short at $17 million, below the reserve price.
Another disappointment was a 1960 Ferrari California Spyder, which also failed to sell at auction. Although the highest bid reached $8.25 million, RM Sotheby’s later disclosed that the car had been sold in a private sale after the auction, without revealing the final price.
The most expensive car sold, a 1967 Ferrari 412P, also fell below its expected range. Bonhams sold it for $30.25 million, making it the fourth most expensive Ferrari ever sold. However, the expected sales price was over $40 million, indicating a lack of enthusiastic bidding.
Some experts believe that the classic-car market, including Monterey Car Week, may be suffering from an oversupply of cars. As older collectors, particularly from the baby boomer generation, start to sell their entire collections, it remains uncertain if the new wave of younger collectors has the same appetite for similar classics. Preferences may have shifted towards more modern cars from the 1990s and 2000s.
K500, the classic-car intelligence firm, stated that there were simply too many cars, auctions, and venues at Monterey Car Week, contributing to the challenges faced by the market.
Despite the overall slowdown, there were still notable transactions at Monterey Car Week. The three most expensive cars sold were:
– A 1967 Ferrari 412P sold for $30.25 million by Bonhams. This car was the road or “customer version” of Ferrari’s celebrated 330 P3 and P4 race cars. Only two 412P Berlinettas were originally built, and Ferrari converted another two 330 P3s to 412Ps. The car sold at the auction was the second of the original 412P models off the factory line and had raced at the highest level.
– A 1955 Jaguar XKSS sold for $13.2 million by RM Sotheby’s. The XKSS was initially a converted race car, transformed by Jaguar after its withdrawal from racing following the 1956 season. With only 16 remaining out of the 25 produced, the XKSS is considered one of the ultimate trophies in the classic-car world.
– A 1961 Ferrari 250 GT SWB Berlinetta sold for $9.5 million by Gooding & Company. This car achieved wins at Le Mans and Sebring, among other races in Europe. With only 165 SWB Berlinettas produced between 1960 and 1963, this particular car’s remarkably original condition, never having been restored, adds to its rarity and value.
Monterey Car Week experienced a cooling market, evident in the decrease in sales compared to the previous year. Factors such as increased discipline, weakening demand, and higher prices have contributed to this slowdown. The rise of online auctions further challenges the traditional live auction model. High-profile disappointments on the auction block highlight the lack of strong demand and lower bidding enthusiasm. Shifting preferences among collectors and a potential oversupply of classic cars may also be factors contributing to the market’s challenges. Nonetheless, notable transactions still took place, demonstrating that despite the slowdown, the market still holds significant value for rare and sought-after vehicles.