Friday, June 8, 2012

Dave's Laws of Collector Car Values

This list will grow as I am able to express additional concepts.
  1. As any one model becomes expensive, the market finds acceptable alternatives and makes them expensive.
  2. The more a collector car is worth, the more it tends to appreciate.
  3. More valuable cars are more easily able to settle on new accepted higher values.
  4. The more a collector car is worth, the harder it is to assign an absolute ceiling to its value, and the more easily it can exceed accepted values.
  5. The less a model is worth, the more susceptible it is to violent fluctuations in value.
  6. (HT to the Auerbach Doctrine) More valuable cars are more subject to market manipulation.
  7. People start being able to afford collector cars in their Forties, and they buy the cars they liked when they were kids. If it was on a poster then, it's going to be collectible when that generation reaches C-level positions.
  8. Veteran-era cars are prone to "age creep," the tendency for succeeding owners to assign ever-earlier dates of manufacture to them; i.e., a 1901 becomes an 1899, then an 1897.
  9. Rare cars are prone to "rareness creep." With each successive owner, factors that might depress the value tend to be omitted, i.e., owner one used a replacement block when restoring it, but owner two doesn't tell owner three. At the same time, factors that enhance the value gain credibility--a rumor that Elvis once rode in it becomes "this was Elvis's first car."
  10. Sexy body work and a high fun-to-drive factor can ameliorate badge snobbery. Dino values have increased 400 500% in the last decade.
  11. A single exceptional sale--i.e., 23-window VW Transporter--can effect the market for the model. This effect can be transitory; or it can draw attention to a previously overlooked car and help establish a new, higher basement price.
  12. Obscurity can mitigate any other factors that would otherwise increase value. Thus Etceterinis, with a few exceptions such as DeTomaso and Bizzarrini, are worth less than their name brand counterparts, regardless of pedigree.

Tuesday, June 5, 2012

Mercedes War Booty and the Consignor Conundrum

1935 Mercedes-Benz 500K Roadster

John Draneas does his usual excellent job looking at the legal complexities of the case of the disputed ownership of a 1935 Mercedes-Benz 500K Roadster.

But as a guy who has sidelined in auction catalogue write-ups for a major house from time to time, I have to disagree that "RM, like all major auction companies, puts great effort into researching the cars in their auctions." I'd say it's more like the minimum that will suffice. Who can forget the Auto Union that took down Christie's whole department? It became clear after the fact that it would not have taken much research at all to establish the car's bona fides--or lack thereof.

In fact, when he asks "what if the auction company knew about this claim ahead of the auction? That would make things quite different," I think that's the whole reason right there. I feel that for a variety of reasons, auction companies don't want to hear bad news, not only to protect themselves from that potential exposure; but also because they want to keep those big consignments rolling in. "You wouldn't believe how hard it is to get good consignments today," an action house president told me recently. There are now at least 200 old car auctions in the US and Europe annually and some--like Mecum--require a whole heck of a lot of cars to feed the beast. Your reputation with the consignor is at least as important as your reputation with bidders, and if you do too much digging, you run the risk of scaring them away. In this business, every single consignor is gold.