In an auction that ended Aug 7, Gooding & Co sold a 1966 Ferrari 275 GTB the colour of a white sand beach for $3.08 million. Even more unbelievable: It was done online. The uniquely engineered, 1-of-40 coupe commanded the most expensive sum ever paid for a car sold on the internet.
Such a high sale for a car not actually seen in person is a canny indicator of the relative health of the collector-car market in the midst of Covid-19. But not a surprise.
"I think this car is virus-proof in the sense that it is a really, really exceptional 275. It is basically an all-original car with an original interior, a lot of original paint, and long-term ownership," David Gooding, auction house president and chief executive officer, said in an interview before the sale. (In true auction house discretion, Gooding & Co declined to identify the person who purchased the vehicle.) "It is special - pandemic or not."
Indeed, the best Ferraris are faring very well in the pandemic world: They constituted four of the top five lots at the Gooding auction, and six of the top 10 results of RM Sotheby's "Driving into Summer" sale in May, which saw a 2003 Ferrari Enzo alone sell for $2.64 million - until last week the highest price paid for a car in an online auction.
Three of the top 10 sellers in a Barrett-Jackson online auction in July were Ferraris, a critical anomaly for an outfit known almost exclusively for selling American muscle cars and rough and ready trucks.
The results sent a strong "Yes, you can!" message to any industry collectors and enthusiasts wondering if their cancelled summer sales would hold up in an online format - especially for the most elite and perfect collectable cars, such as racing Aston Martins, Jaguars, and racing Ferraris.
"There is serious, armour-plated Kevlar protecting the one percent who give a toss about this car passion," says Steve Serio, a car broker to the rich and famous.
"Vehicles above that $100,000 price point - think, cars that sell at Pebble Beach - or the parts of the economy not as closely tied to the oil industry, [will] see little change," echoed Hagerty's John Wiley in a recent report on the effects of the novel coronavirus on the collecting world.
All told, more than $70 million worth of classic and collectable cars have been sold online by the world's top auction houses since the start of the pandemic.
Some cooling off
Sales results of individual, extremely special cars have generally pleased during the pandemic. (It should be noted that a record online sale has little precedent, since significant Ferraris have never been sold online.) But there have been pockets of pain.
Just 36 of 54 lots at the Gooding auction sold, a 67 percent sell-through rate. Sotheby's July online auction sold 38 of 53 car lots, a 71 percent sell-through rate. At Bonhams, which held its second in a series of live online motoring auctions on July 25, the sell-through rate barely crested 70 percent. Pre-Covid-19 sell-through rates were as high as 75-80 percent in live auction sales.
The message: Collectors are willing to buy cars, but only the best. They will happily leave the rest alone.
In any downturn, compromised cars and low-level collectibles get punished, Serio echoed in a market analysis column on April 2. The world's wealthiest - those least affected by pandemics and who remain unaffected by downturns – were not buying them, anyway. "The weak get weaker," Serio says. And the strong get stronger.
Porsches, in particular, have taken a hit. At the most recent Gooding sale, a 1984 Porsche 911 Carrera and a 1978 Porsche 928 failed to reach their low-price reserves and did not sell; an over-hyped 1971 Porsche 911 in rally-style livery also stalled out, with a final high bid at $630,000 - half its $1.2 million high estimate.
At RM Sotheby's in May, a 1978 Porsche 911 Turbo custom car, a 1960 Porsche 350, and a 2008 911 GT3 all failed to sell online; in July, a 1968 Porsche 912 Targa, a 1991 Porsche 911 Turbo, and a 1988 Porsche 944 also failed to sell, among others.
Such results indicate that the Porsche bubble that pushed 911 Turbos and their vintage brethren to Everest heights over the past years has officially popped. Serio has long described the cooling of the Porsche market as a "healthy" correction.
In general, modern cars fare better online
Several lesser-known Ferraris at recent online auctions have failed to sell, too, victims of optimistic pandemic pricing that expected them to follow the lead of rarer examples.
Ditto a gaggle of prewar coaches and a Mercedes-Benz 300SL Gullwing that Gooding failed to sell—a particular disappointment, although instructive as to which types of cars sell better online than in person.
Mercedes 300SLs generally serve as "gold standard" indicators about the health of the collector car market, Gooding says, but those that are less than immaculate do not present as well online as they do in person. All things being equal, newer, and better-known cars fare better in online sales than older cars. The modern ones can offer the benefit of Carfax and other ownership data, which confer peace of mind about a vehicle's mechanical stability and reliability.
"That Gullwing is an unrestored car, so it really takes a special person [to own one]," Gooding says. "Pandemic online sales are still a new world. There is still a lot of unknown. The market is good and strong, but you cannot just be totally bullish about everything."
Remain calm. It was already happening
A market correction was bound to happen after the exuberant sales figures of 2017 and 2018. In fact, it was already happening, Hagerty analysts noted in January. Even before Covid-19 hit, Arizona Auction Week, which ended Jan. 16 in Scottsdale, Arizona, saw $244.1 million in overall sales, a 3 percent decrease from 2019's $251 million tally, despite a 17 percent increase in the number of cars being sold. In August last year, Monterey car week suffered similar declines, with sales totals across all auctions lagging behind 2018 results by 34 percent, according to Hagerty.
After peak years of multimillion-dollar auctions in exclusive golf clubs at Pebble Beach, California, and at Frank Lloyd Wright-designed hotels in Scottsdale, 2019 involved several ultra-high-net-worth speculators easing out of the collecting frenzy, which relieved some of the high-price pressure.
The challenging environment for collectors has to do with the larger economy. The wave of investment dollars that flowed into collecting after the Great Recession has slowed, and tax advantages that allowed collectors to roll gains from car sales into other cars have been eliminated over the past few years.
Gooding remains sanguine. "When Pebble got cancelled," he says, "everything sped up. I have found that lately, people are actually more open-minded about pricing. These are clients who have a long history with us. Online or otherwise, things have a way of working out. The demand of quality cars has not faded during such uncertain times."
It seems that some people still want to kick the proverbial tire before they buy, too. Gooding just announced that its postponed "Passion of a Lifetime" sale will proceed-live-in the UK early in September. (Bidders unable or unwilling to travel internationally can bid via phone.) RM Sotheby's will also hold a live sale for bidders only in Auburn, Indiana, on September 3-5. Bonhams will do the same on August 14 in Los Angeles.
Car lovers may end up the real winners on either count. If the pandemic and ensuing lockdowns have helped cool off an overheated market, being able to bid, either in real life or virtually, means they have a better chance of finding that dream lot.
Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement