Articles

Michael Sheehan's Ferraris-online.com Article

High-End Ferrari Buyers Show up at Monterey

Monterey demonstrated a strong and liquid market for the highest-quality cars. Prices were market-correct for those Ferraris with more modest histories, collectability and condition

As appeared in:

Sports Car Market—November 2010 issue

Sheehan Speaks

by Michael Sheehan

Lot 351—‘54 Ferrari 375 MM Berlinetta which sold at RM for a market-correct price
Lot 351—‘54 Ferrari 375 MM Berlinetta which sold at RM for a market-correct price

In the run-up to this year’s Monterey auctions, there was much concern in the dealer community because so many high-end Ferraris were about to go on the market.

After the disastrous economy of 2009 and this year’s tepid recovery, were there enough buyers to absorb the sheer volume of high-dollar Ferraris to make the Monterey auctions a success? With record total Monterey sales of $138m in 2008, then down to $120m in 2009, would 2010 be a boom—or a bust?

Now that the dust has settled, total sales are in at $172m, a whopping $52m increase from 2009. These results blow away the most optimistic expectations. The buyers were there, and they brought their checkbooks. The results are even more impressive when compared with the traditionally higher Scottsdale auctions sales, which were $153m in 2008, $129m in 2009 and $121m earlier this year.

Monterey’s record sale figures were due to the remarkable volume of sales in the rarified air of seven-figure cars.

Looking at the big picture, 43 cars were estimated at a million dollars or more, and 34 sold for a total of $83.4m—including commissions. That is a serious, unprecedented, number. As for high-end Ferraris, 14 sold for over $1m, at a total of $36.5m with commissions. This year’s Monterey auctions were simply the most successful group of auto auctions ever, period.

The top-end sales

As always, a few prices were record-breakers, a few iffy cars sold for all the money and most sales were market-correct.

At the top end of the pecking order, Gooding sold the 1959 Ferrari 250 GT LWB California Spider Comp, s/n 1603 GT, for $7,260,000. From new with an alloy body, covered headlights, a full comp. spec. engine, an alloy-ribbed gearbox and disc brakes, this car had all the bells and whistles. There were four real bidders in the house. Two dropped out at around $6m, with the underbidder going all the way to $6.5m (before commission).

For those who track long-term price trends, we sold this same California Spyder for $860k in 1992, so it was a pretty good long-term investment. Gooding also sold the 1961 Ferrari 250 GT SWB SEFAC Hot Rod, s/n 2845 GT, for $6,105,000, a surprising amount in historian circles, as this Ferrari had its share of clouds in its past.

RM had a strong weekend, selling the very elegant 1954 Ferrari 375 MM Berlinetta, s/n 0416 AM, for $4,620,000. This is a great car at a strong—but market-correct—price. RM also sold the 1959 Ferrari 250 GT LWB California Spyder GT, s/n 1489, for just $2,612,500, but open headlight cars always sell well below those with covered headlights.

And those that didn’t sell

Meanwhile, at the other end of the spreadsheet, the 1958 Ferrari 250 Pontoon Fender Testa Rossa, s/n 0738 TR, did not sell at a high bid of $10.75m. This car was sold new to Brazil, crashed and then rebodied as a coupe in Italy. Then the car returned to Brazil, where it became a derelict before going to England to be restored. In recent years, 0738 TR crashed very heavily in three historic races, and the car simply had too many stories to bring more money — at least today.

At Mecum, the 1959 Ferrari 250 GT LWB TdF Competizione Berlinetta, s/n 1321 GT, had no real bidding at anywhere near its current value. Simply put, the money simply wasn’t in the room. However, it did bring a lot of attention to Mecum, which may have been the plan all along.

In the less-than $1m market…

In the less-than $1m price range, 512 BBLM, s/n 26681, the first of the Silhouette BBLMs, sold for $880,000. This relative low price was a clear market reaction to the demise of the Ferrari Historic series. Reflecting the shifting sands of time and taste, two early coachbuilt Ferraris did not break the $1m mark. The 1953 Ferrari 212 Vignale Coupe, s/n 0289 EU, sold for $654,500 at RM, and the 1949 Ferrari 166 Stabilimenti Farina Inter coupe 037S sold for $462,000, also at RM. While these cars are rare and unique “one-off” early Ferraris, they are simply not a lot of fun to drive and have had little upside for years.

Modern Ferrari sales

In the more modern cars, RM sold the 2007 Ferrari FXX Evoluzione, s/n 142163, for $1,925,000, which is a lot of money for an ultra-high-end track toy. Bonhams sold the Ferrari 1990 F40, s/n 85416, for $386,500, which is a market-correct price for an average F40. Gooding sold the 1991 Ferrari F40, s/n 89216, for $583,000, which is a very strong price that reflects the quality of this F40 and the strength in the supercar market for exceptional examples.

Flat prices at the bottom

In the under-$500k price range, Gooding sold the 1972 Ferrari 365 GTC/4, s/n 14959, for $110,000. Bonhams sold the 512 BB, s/n 33799, for $94,770. And RM sold the 1993 512 TR, s/n 96657, for $88,000. These are all market-correct prices. These bottom-end Ferraris sell well, and they are user friendly, but prices are flat-lined.

Strength at the top

More than ever, Monterey demonstrated a strong and liquid market for the highest quality cars. Prices were market-correct for those Ferraris with more modest histories, collectability and condition. Monterey has evolved into a multi-podium stage, where quality counts and the middle—or bottom—level cars just do not make it to the podium at RM, Gooding and Bonhams. The competition continues to grow among these three to bring the best cars to the Monterey weekend.

Looking at the role of collector cars as a part of the overall economic climate, do these strong sale numbers defy the general overall economic climate? Do the strong sales indicate an economic recovery is beginning? Is there a move of capital to collectibles? Alas, my crystal ball was recalled for defects, just like Ferrari 458s, and I won’t get it back from the shop for a few more months.

What most would agree on is that there was no lack of bucks or buyers at Monterey, and the move was in the top end. Some surmise that a lot of aging baby boomers may see this as a last chance to buy and enjoy really big cars. As was obvious at Monterey, a lot of buyers just don’t worry about the relation between the financial markets and the collector car market. Guys who buy million-dollars cars are worth far more than $10m, and guys who buy $5m cars are worth far more than $100m.

Following four markets

We have four diverging markets in the Ferrari world: The deep-pocket players are shifting some of their assets into high-quality collectibles, such as the best-of-the-best Enzo-era Ferraris which are steadily moving up.

The middle market, which is the $500k-to-$1m Enzo-era cars and the 288s, F40s, F50s and Enzos is strong, but with token upside.

The flat-to-down bottom market includes lower-tier Ferraris, such as the 308s and 328s. These cars go to players with fewer assets who are focused on preserving their cash.

As for the Montezemolo-era cars, they only go down. A rising tide does not lift all boats equally.