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Michael Sheehan's Ferraris-online.com Article

Monterey 2011: Flocking to Top-Tier Ferraris

The $16.4m Testa Rossa was sold to a pair of college professors in 1972 as a burned-but-rebuildable wreck for about $2,500

As appeared in:

Sports Car Market—November 2011 issue

Sheehan Speaks

by Michael Sheehan

1959 Ferrari 250 GT LWB California Spyder — $3,355,000 at Gooding & Company
1959 Ferrari 250 GT LWB California Spyder — $3,355,000 at Gooding & Company

Any fears of a slowdown in the collector car market vanished at this year’s Monterey auctions — and top-tier Ferraris led the way.

Total sales almost reached the $200m mark, a $26m jump over last year’s spectacular $172m result. RM Auctions led the show, with 123 of 144 cars on offer selling for a whopping $78.2m. Gooding & Company was very close behind, with 106 of 126 cars sold for a total of $78m.

Mecum was third and remained the high-volume, low-price leader with 443 of 707 cars sold for a total of $22m, Bonhams had an off year, with 65 of 128 cars sold for a total of $10.7m, and Russo and Steele sold 144 of 222 cars for a total of $8.5m.

Top-end Ferraris soar by 50 percent

Looking at the Big Ferrari picture, the average high-end Ferraris sale price was up by an eyebrow-raising 35%. In 2010, there were 14 Ferraris sold for more than $1 million, with prices totaling $36.5m at an average sales price of $2.6m. At this year’s Monterey auctions, there were 13 Ferraris sold at more than $1 million, with total sales of $45.5m — and an average sales price of $3.5m.

Multiple high-end sales were beyond expectations, a pair of modern race cars was weak, but across the board, most Ferrari sales were strong, especially at the top end.

Gooding’s sale of the 1957 Ferrari Testa Rossa prototype, s/n 0666 TR, brought a new world record auction price of $16.4m with commission. This Testa Rossa had a well-known ownership history from new, was raced as a factory car in period and was Ferrari Classiche-certified in 2008. Bidding started at $10m and quickly passed $13m to resounding applause. The final $16.4m total beat the previous all-time high seller — another ‘57 Ferrari 250 TR, which sold for $12.4m at RM’s Maranello auction in May 2009.

For those who track Ferrari minutiae, s/n 0666 TR was sold to a pair of college professors in 1972 as a burned-but-rebuildable wreck for about $2,500. Once restored, it was on the show circuit through the late 1990s before being sold in January 1998 for $4.5m on the 48-month payment plan.

Only five years later, it was sold to a senior ex-Microsoft executive for about the same price. He was the happy seller at this year’s auction.

Over-the-top sales

Another over-the-top result at Gooding was the “barn-find” 1966 alloy-bodied 275 GTB, s/n 8163, which sold at a “where-do-you-go-from-here?” $1.54m. When one factors in the mandatory cost of restoration, there will be no upside for many years. On the other hand, the new owner now has a “car with a good story” with a “lost-in-time” story.

RM’s over-the-top Ferrari sales included the 1960 Ferrari 250 GT SWB Berlinetta Competizione, s/n 2209, for $5.28m. This was a strong sale, as s/n 2209 had a mediocre race history, was crashed and rebodied by Drogo in 1967, stolen and recovered and then rebodied as a Comp 250 SWB by Grand Prix Metalcraft in England from 1980 to 1983. (In today’s Internet world, there are no secrets, which can only lead me to assume that the buyers in Monterey had done their homework and were happy to pay for what they got.)

In addition, s/n 2209 did not have the correct engine — although the correct, numbers-matching engine is available in Europe at an extra $492k. Other strong sales at RM included the 1962 Ferrari SWB covered-headlight 400 Superamerica coupe, s/n 3559 SA, sold at $2.09m; 1952 Ferrari 340 Mexico Berlinetta, s/n 0226 AT, sold at $3.685m; 1955 Ferrari 750 Monza Spyder, s/n 0492 M, at $2.53m and 1953 Ferrari 375 America Coupe, s/n 0327 AL, at $1.98m.

Old cars, new cars and no-sells

Reflecting the strong across-the-board market, Gooding got big prices for two early coachbuilt Ferraris: the 1950 195 Inter Coupe, s/n 081S, which sold at $990k, and the 1952 225 S, which sold for $880k. While these are rare and unique “one-off” early Ferraris, they are simply not a lot of fun to drive, which made their strong prices a surprise.

In the under-$500k price range, Gooding sold the 1969 365 GTC, s/n 12271, for $374k and the 1974 365 BB, s/n 18553, for a very strong $212k.

RM sold the 1966 330 GTC, s/n 9091, for $314k, the 365 GTC/4, s/n 15211, for $171k and the 365 GTB/4, s/n 16539, for $358k. All these sales showed further strength in the lower-end, Enzo-era Ferrari market.

Few modern Ferraris sold, but Gooding did sell the 1985 Ferrari 288 GTO, s/n 54247, for $748k, which was a market-correct price in today’s very strong supercar market.

In the world of sub-$1m modern race cars, the 512 BBLM, s/n 29511, with a Daytona, Sebring and Watkins Glen race history, was bid to a mere $750k and did not sell. This low price was down from 2010’s sale of the 512 BBLM, s/n 26681, the first of the Silhouette BBLMs and with a Daytona and Le Mans history, which sold for $880,000. These two cars reflect the market’s reaction to the demise of the Ferrari Historic series. 126C4 F1 car, s/n 074, was also a no-sale at $350k, another reflection on a great car with no place to go to play.

Ferraris at RMFerraris at RM
Ferraris at RM

Strong at the top — again

More than ever, Monterey 2011 demonstrated a strong and liquid market for the highest-quality Ferraris, with RM and Gooding competing for the best cars and the highest prices. The lesser cars went to Bonhams, Mecum and Russo and Steele. The prices for top-notch Ferraris certainly defied the planet’s overall economic climate. Do they show a rush to “pride-of-ownership collectibles”?

It’s clear that a lot of aging Baby Boomers are buying and enjoying really big cars and a lot of buyers just don’t worry about the relationship between the financial markets and the collector-car market.

While Sports Car Market doesn’t mention subscribers’ names, several of this year’s top-end buyers are members of the Forbes 400, and membership to that club starts at over $1 billion.

I’ve previously written that “guys who buy $1m cars are worth far more than $10m, guys who buy $5m cars are worth far more than $100m.” At this year’s Monterey auctions, collectors who spent more than $10m buying one or multiple Ferraris — or other great cars — seem to be worth north of $1 billion.

Following the Ferrari money

We continue to have four diverging markets in the Ferrari world.

The deep-pocket players are cheerfully shifting what can only be described as very discretionary income into high-quality collectibles, such as the best-of-the-best Enzo-era Ferraris, which are steadily moving up.

The middle Ferrari market — the $500k-to-$1m Enzo-era cars and the 288s, F40s, F50s, and Enzos — is strong, with surprising recent upside.

The bottom — which remains flat to down, and includes lower-tier Ferraris, such as the 308s, 328s and others — goes to players with fewer assets who are focusing on preserving their limited cash.

The Montezemolo-era cars only go down.

The lasting lesson of Monterey 2011 is that buyers with massive discretionary income are clearly lifting the top end of the market.