by Cam Ingram
It seems like just yesterday that I was sitting in a room full of smart people during the Scottsdale Auto Auction Week this past January and the topic of Black Swan events predominated the discussion. Black Swan became the hyperbolic buzz phrase during the week. There was much speculation about the economic ramifications for the collector car market if such an event transpired. Interestingly enough, none of the scarier predictions from that week of a collector car market mass sale off has occurred. Much to the chagrin of the opportunist, significant automobiles are not flooding the market and being sold for “ripping” deals in a desperate attempt to raise capital.
Instead, RM Sotheby’s pulled off a 69% sell-through rate with their recent Palm Beach online auction. A1996 Porsche 911 GT2 topped the sales with a $891,000 hammer price. As another instant market barometer, cars continue to sell on Bring A Trailer. Yes, the no-sale rate seem higher than it’s been in recent memory but people are still buying random automotive wares from anywhere from $5,000 to $150,000 in today’s uncertain economic climate. As such, I’ve asked my distinguished friend and Sports Car Market Letter contributor Steve Serio to provide one of his notorious straight talk commentaries about the state of the collector car market on this issue of RS Insights.
I hope you enjoy his entertaining message.
Collector car life after Covid-19
by Stephen Serio
I’ve been asked to give my view on collector car life after the coronavirus and Covid-19. Be careful for what you ask for…
My crystal ball is still in the body-shop getting repaired from the last time I heaved it, the genie in the bottle is social distancing, and I’m done burning white sage and calling on archangels to ward off the various buffoons from countless social media sites who have to the gumption to prognosticate (with mighty authority, I might add) about the collector car future… Hey McFly, there are no authorities on this topic at the moment, unless of course you lived through the pandemic in 1918 and then the floor is yours. I’m all ears.
Much like most news coming from a variety of media outlets regarding any newsworthy topic these days, all of this should be viewed with one eye squarely cocked. (They are probably Russian bots, aren’t they all bots? Did the Russians invent click-bait? They must have.)
These apparently bored and senseless “automotive observers” have the gravitas of junior high school guidance counselors breaking up pre-teen couples grinding while they slow dance. Obviously they have never actually run an automotive business (or any business) or were left in their cribs too long (we need to see the curriculum vitae from these various “experts” before they utter another insipid word) and they probably need a hug and a safe space.
I’m here with one man’s opinion about where this might end up….that’s all this is. I hope you enjoy the topic with some levity, but serious levity.
Caveat emptor, I may very well be dead wrong so I’ll say it first…but I don’t think so. (I also reserve the right to update this rant in 30 days and apologize in advance if I am 180 degrees from today’s opinion at that future time.)
Listen up, I’m here to make you smile about the future and maybe allow you to breathe calmly about our hobby using some past experiences and a few observations that I think will apply moving forward.
Being the ripe old age of 60 (which I’m told is the new 27), I’ve seen a handful of nasty historical events that have led to some pivotal and monumental life changes across the world: Black Monday, 9/11, various wars and skirmishes worldwide, the 2008 market crash (Bernie Madoff scum included there), Brexit, and now this. Some of these events came without any warning and some were predicted, but all were unsavory and very nasty in one way or the other to our collective psyches, wallets and social behaviors. The common denominator was that no one could have properly understood the positive or negative impact and outcomes to our hobby after any of these crises.
In retrospect, over the long haul, none of these events knocked the collector world off its axis for very long. By the way, the car hobby is non-existent to 98% of the world and we don’t warrant serious sympathy from those folks with real problems.
As a species I believe we are mentally resilient and strive for happiness and positive experiential interactions after the dust has settled from any cataclysmic event. Life is not all rainbows, unicorns, Hostess Snowballs and Negronis, but this is what feeds our health every day, isn’t it? My best example of explaining this is from the movie Ford vs Ferrari.
John Bernthal, who portrayed Lee Iacocca in this wonderful flick, gives a passionate speech about why Americans would want sports cars after growing up in the 1950s and surviving WWII (now substitute the 1950s with late 2020). “Boys” wanted girls and fast cars, that’s it. (Now I’m not comparing my lockdown to the sacrifice my parents made during that period in the 1940s. 6 months of confinement does not equal 1 day of that horrific time, so let’s get that straight.) Maybe in the aftermath of this pandemic era we will define and separate the real car guys from the poseurs, in my view that’s a positive…a nice side bar. Point being, the true car lovers, the backbone of this hobby are (a) always going to enjoy what they have (b) most likely will still have a punch list of what they want next (c) are not going to sell their pride and joy for 50% of what it’s worth because the events this upcoming season have been canceled or postponed. The opposite may very well take effect here from the pent-up angst, boredom, and worry.
I understand clearly that many people will have been laid off, been sick and may have a seriously rough go of this, none of that is to be glossed over or taken lightly. Some people may have to sacrifice a lot and that may come at the cost of some favorite rides. These people are not the crux of my rant. And I feel for anyone who “has” to sell a car or a home!
Let me segue here and go off-piste for a moment regarding opportunistic bottom dwellers. And you know who you are, with your “I’m doing you a favor by now being the expert in what your car is worth, so I’ll offer you 50% of your asking price”. Decorum dictates a polite answer. Screw. Strong letter to follow. Let me know when you want to sell YOUR cars (no doubt you’ve listed what you collect in your insulting bloviating self-important email) and I’ll be there offering YOU 50 CENTS ON THE DOLLAR. See how that works, it doesn’t.
Please save the quasi-rational, faux economist moment for your dog or someone who cares. Owners of long-term businesses or dealerships didn’t get here by poor planning, being easily panicked, or running down the street while the stock market hiccups. They also don’t sell great cars at below wholesale prices and if they did, long term friends of their businesses might just get the first call, ya think? Every one of my peers gets these calls and we all have the same response…really? That’s enough ink for your lot. Back to the predictions and how they are based on the past nasty historic moments and the periods shortly thereafter…
Great cars, many times, change hands quietly between serious collectors and rarely do these folks panic or liquidate collectibles that will make them happy when Doomsday passes. A handful of folks interested in seven-figure cars who I was engaged with prior to this lock-down have all hit the “pause” button, not the “eject” button. These buyers and sellers shall remain serious.
Commerce is still happening on Bring a Trailer, watch for yourselves. Auction companies who had to re-jigger their events didn’t have a “zero” sell-through rate over the last few weeks either just because the event was online only.
All of this is pretty positive in a time of confinement and lockdown, don’t you think?
Great cars will always have customers who want them. Cars that will open the door to life lasting experiences will always be desirable. Cars that create a happy diversion for you and your family will always have a place.
And yes, there is another side to this…
In any downturn, compromised cars or C-level collectibles will probably get punished. The weak get weaker and that is where an opportunity may arise for a buyer. There may be opportunities to buy or lease new cars as well with new car dealer inventories being backed up….time will tell.
Now this is the tricky one. Historically in market corrections and big downturns, collector cars have been a safe haven when serious car people diversified their portfolios. This is a coin toss. No promise this happens again but…
Until there is reason to panic, chill. Take a breath, go into your garage, be thankful and wait. This too shall pass…