Monterey Car Week auctions prepare to smash records
This week is Monterey Car Week, an event which has evolved over the last 65 years to become the single most important celebration of automotive heritage in the world. The Pebble Beach Concours d'Elegance has become the world's most important such event, and the round of collectible car auctions (seven almost concurrent auctions this year) now sells almost half the world's most valuable cars.
This article is the main preview, explaining why Monterey has become the center of gravity for the world's collector car industry. That said, we have also covered how to get by on a limited budget at Monterey Car week and the 10 cars that will likely fetch more than $10 million apiece, and the 135 cars which will likely sell for more than a million apiece. There's also an internet viewing guide at the bottom of the article with web site details and times.
A bit of history
The Pebble Beach Concours d'Elegance began in 1950 as a sideshow to the Sports Car Club of America's (SCCA) annual "Del Monte Trophy" road races, run over a 2.1-mile (3.4-km) course on the narrow tree-lined public roads of Pebble Beach between 1950 and 1956.
The horrific dangers of motorsport were on the global news agenda at that time due to the Le Mans disaster which played in movie theater newsreels and early television news channels across the latter half of 1955.
The screen grab above comes from a BBC newsreel but there's also a complete Movie Theatre News Reel of the event by British Pathe here – Pierre Levegh and 83 spectators died in the crash and the resultant reforms did more for autosport safety than any other incident before or since.
The global wake-up call was further emphasized to the Monterey community by the death of American motorsport pioneer Ernie McAfee during the 1956 running of the Del Monte Trophy event at Pebble Beach when his Ferrari crashed into a tree, causing a rethink of the entire proceedings.
A look at the posters showing action in the original Pebble Beach races clearly illustrates the narrow track winding through and seemingly defined by the trees, and McAfee's death made it obvious that the track had to be relocated or the trees had to go.
The Concours subsequently became a standalone event and it is testimony to the organizational capacity of the community that 12 months after McAfee's death, local government had provided some nearby public land and local enthusiasts had created a purpose-built circuit so that motorsport could continue as part of Monterey's automotive celebration.
The site for the new racetrack was a dry lake bed about five miles inland, and the far right poster above shows the continuity of the event in 1957 at Laguna Seca (the evaporated lakebed retained its long-standing Spanish name – Laguna Seca means "dry lagoon" in Spanish). A complete set of posters for the Pebble Beach Concours can be seen on the official concours site, perfectly illustrating the growing sophistication of the event as it incrementally staked its claim to a significant role in automotive history.
In 1986, a young Rick Cole ran the first classic sports and racing car auction in Monterey to leverage the influx of high net worth individuals for the Concours weekend. In 1990, an official auction was added to the Concours.
"Mighty oaks from little acorns grow" goes the 14th century proverb, and it should be recognized that the unpretentious race and concours run in Pebble Beach's 1950s rural environs spawned three globally recognized "mighty oaks" – the world's best-known Concours d'Elegance, the Laguna Seca racetrack which now hosts a year-round schedule of national and international motorsport events, and the Monterey Car Week auctions which have become the premier event of the world's collectible car industry. Laguna Seca's "corkscrew" is also arguably the world's best known racetrack corner.
The importance of Monterey Car Week in the Global Collectible Car marketplace
In the quarter century since Monterey began hosting car auctions as part of the show, 193 of the 500 most expensive cars ever sold at auction have crossed the auction block here. That's 38.6 percent – roughly four in 10 of the world's most expensive cars have sold within a few square miles across four days every August, and that percentage is growing.
No other auction venue in the world attracts an audience of ultra high net worth individuals (UHNWI) quite like Monterey Car Week, and the sales each year have grown to astonishing levels – in three days last August (2014), US$430 million worth of cars were sold. If the market continues to grow as it has done for the last five years, half a billion dollars worth of cars will be sold on August 13-16 this year.
The round of Scottsdale (Arizona) auctions in January accounts for another80 of the top 500 cars sold at auction (16 percent) and Amelia Island (Florida) is third with 41 cars (8.2 percent), giving the United States the Gold, Silver and Bronze medals for the world's most important collectible car auction venues and a whopping 62.8 percent of the collector car stratosphere between just three events.
The emergence of the Pebble Beach auctions was the factor which caused the center of gravity of the world's collector car industry to make the trans-Atlantic move to this quiet coastal town one hour South of Silicon Valley. Throw in the other collectible car auctions spread across the United States, and America now accounts for 70 percent of top tier collectible car sales.
Success begets success
Because Monterey Car Week is a successful environment, owners hang onto their cars until Monterey comes around, and many European owners now send their cars across the Atlantic for the consideration of Monterey's unique audience when it's time to sell them. Hence the offerings are better at Monterey, so more people travel greater distances to see the best offerings and so on. RM's Monterey sale in 2014 saw bidders from 28 countries other than the platoons of Ultra High Net Worth Individuals that call the United States of America home.
The new world order for elite collectibles
Gooding & Company is the official auction house of the Pebble Beach Concours d'Elegance, but many of the world's most recognizable auction houses have flown their banner here and those that continue to sell cars have all stayed on. Christie's was once part of the Monterey week but has now vacated the automotive space, and while the names Brooks and Butterfields have both been used in conjunction with Bonhams at Monterey, the original 220 year-old brand has endured and is now used solo.
The current world order is now well established and just three auction houses sell the majority of first tier collectible cars anywhere in the world. RM-Sotheby's is the dominant elite auto auctioneer on a global scale having sold 221 of the top 500 (44.2 percent) most valuable cars, Gooding & Company is second with 137 cars (27.4 percent) and Bonhams is third with 71 cars (14.2 percent). Add them together and between them, the "big three" have sold 429 of the top 500 (85.8 percent).
Interestingly, the recent marriage of Rob Meyers' RM auctions with Sotheby's means that two of the world's oldest auction houses (in continuous operation – auctions have been around for thousands of years, first being used to sell people) are in the top three auction houses in the collectible automobile space. Sotheby’s is the world’s fourth-oldest auction house, having been established in 1743, while Bonhams began trading in 1793.
By contrast, David Gooding launched Gooding & Company at Monterey in 2004 after holding senior roles at both Christie’s and RM Auctions. Gooding & Co.'s official Pebble Beach auction is held on consecutive nights from 5pm on Saturday, August 15 and 6pm on Sunday, August 16.
Bonhams holds its Monterey auction at nearby Quail Lodge and Golf Club from 11 am onwards on Friday August 14 (appropriately named the Quail Lodge Auction), and this year, RM-Sotheby's has two auctions, though they're both in the same venue, the Portola Hotel, collectively running from Thursday August 13 to Saturday August 15.
The smaller of the two auctions is on the evening of Thursday, August 13, 2015 between 6 and 8pm. What it lacks in numbers it makes up in quality, being the astonishing Pinnacle Portfolio, the single most valuable collection of automobiles ever to go to auction. More on the Pinnacle Portfolio farther down the page.
RM-Sotheby's annual Monterey Auction is held in two 4-hour stints (6pm to 10pm) on Friday, August 14 and Saturday, August 15, and it seems certain to sell the most cars over $1,000,000 of any of the auctions.
That's not the end of the auctions at Monterey during auto week though – Mecum has a daytime auction (Thursday, August 13 at 10 am, Friday, August 14 at 11 am and Saturday, August 15 at 11am), Russo & Steele has an auction (Thursday, August 13, Friday, August 14 and Saturday, August 15th, all starting at 5pm), as does Rick Cole (see below for details) and JR Auctions too (Saturday, August 15th starting at 1 pm), and they all have million-dollar cars to sell.
The Rick Cole Smartphone auction system
The modern digital mantra that "there is always a better way" could never be more relevant than with Rick Cole's new smartphone-based auction system. After being absent for many years from Monterey, the original Monterey auction company has returned to the market with what many saw as a low-key approach last year.
Using a smartphone platform (video demo here) and readily accepting the bidding credentials issued by other auction houses, Cole and partner Terry Price decided to address the shortcomings of the current location-based auction system and launched at Monterey last year. The auction house immediately captured a $27 million share of the elite Monterey Car Week market and is poised to increase that share this year by providing convenience via the now ubiquitous smartphone and by holding an internet-only auction.
One of the issues of having so many events in such a small locale is gridlock – it can sometimes take an hour to drive just a few miles. Monterey during Car Week is not an easy place to get around. With six "live" auctions running across the Thursday-to-Saturday time-frame, there are often two, sometimes three auctions all taking place at the same time in different locations. So Cole decided to combine personal viewing of the vehicles with a virtual auction, putting the bidding process entirely into the smartphone. The auction starts at 2pm Friday and runs continuously until midnight Saturday.
Telephone bidding has been part of the mix at major auctions for decades, internet bidding is a more recent phenomena, but creating a virtual auction which closes at midnight Saturday and can be done from a smartphone, the Rick Cole system has managed to combine high-quality cars, in-person inspection of the cars and side-step the clutter by finishing the auction when all the other auctions have finished. It's different and innovative, and the early adoption of the platform in 2014 suggests it just might become a significant part of Monterey Car Week.
"People love it," Price tells Gizmag. "They don't have to be there, they can inspect the cars at their leisure, and they have time to consider their bids, instead of having to make important decisions in just a few minutes on the block."
"I've found many times after I've sold cars at live auctions, underbidders would come to me later and say, 'I should have gone higher.' Most people just don't make the best decisions inside the pressure of three minutes, which is the average time a car spends on the block, and in many cases, we're talking about substantial amounts of money.
"I think it works better than the live auction system, it's a far friendlier and relaxed environment, we aren't charging the consigners a consignment fee, we're not charging the bidders to become bidders, and we pay on the same day we get paid, rather than 30 days or 45 days later which is the norm", says Price.
With the smartphone platform, the bidder can consider the bids in greater comfort and even discuss them with friends. It's also possible to automate bidding in a number of ways if the bidder is elsewhere doing something that requires full attention. In Monterey, that quite possibly means attending one of the many other auctions or functions in a very cluttered calendar. Remote bidding isn't new, but in the crowded environs of the Monterey Peninsula, it could be yet another "killer app" for the burgeoning collectible car industry.
The Pinnacle Portfolio
The above image shows just a fraction of what's on offer from the Pinnacle Portfolio, from front to back being the 1964 Earl’s Court Motor Show Ferrari 250 LM, 2012 Bugatti Veyron 16.4 Super Sport, 1959 Ferrari 250 GT LWB California Spider, the Pope's 2005 Ferrari Enzo, 1971 Lamborghini Miura P400 SV, 2008 Koenigsegg CCXR, 1955 Mercedes-Benz 300 SL Alloy Gullwing, and the first production Bugatti Veyron 16.4 built.
The Pinnacle Portfolio is on paper at least, bigger than the previous biggest collections by some margin, and if all the cars sell, at least 20 percent bigger than the current record-holding Andrews Collection ($53.9 million), the Pratte Collection ($40.4 million), the Milhous Collection ($38.3 million), the Otis Chandler Collection ($36.1 million) and the barnfind Baillion Collection ($28.5 million).
"While many of the world’s most impressive collections were established in the public eye of the car-collecting world, The Pinnacle Portfolio was assembled with a clandestine, surgical precision unlike any other that has come to market. Its almost obsessive focus on perfection, rarity, and the superlative, irrespective of price, makes it the most significant and valuable private collection of motor cars ever presented at auction," says RM Sotheby’s Shelby Myers.
Given the name of the collection, it would be easy to assume it is an investment portfolio such as those that exist in other "investments of passion" marketplaces. Managed funds exist for property, jewellery, art, stamps, coins, wine, equine bloodstock, and even vintage guitars, and given the extraordinary returns offered by collectible cars, it's only natural that a financial instrument should be created to make money from the unmatched appreciation of the value of Tier 1 collectible cars.
The Pinnacle Portfolio is not an investment fund, but the collection of a single individual. The owner of the Pinnacle Portfolio is a US-based collector who has preferred to remain anonymous, and he is currently selling the larger part of his collection in order to refine it to a smaller number of more significant cars.
Clearly, the portfolio has been put together with a keen eye for cars with spectacular provenance such as the 2005 Ferrari Enzo that was owned and blessed by Pope John Paul II and the 1,000 bhp Saleen S7 Twin Turbo which appeared in the movie Iron Man as part of the collection of the fictional Tony Stark (played by Robert Downey Jr).
Cars that have appeared in movies command a significant premium at auction over those that haven't (check out that link for numerous examples such as the Porsche 911 driven by Steve McQueen in the first few minutes of the movie Le Mans which sold for US$1.37 million – 10 times book value) and the blessing of a Pope can sometimes cause people to pay irrational figures, as we saw when an otherwise standard 2013 Harley-Davidson Dyna Super Glide with a street value of around $12,000 sold for EUR 241,500 (US$330,938) at Bonhams’ Les Grandes Marques du Monde sale in Paris last year.
Six decades of the world's fastest cars
One other reflection on the Pinnacle Portfolio is that the collection contains near-perfect specimens of most of the cars that have held the title of the "world's fastest production car" in the last 60 years. These start with the Mercedes 300SL and include the Ferrari 288 GTO, Ferrari 365 GTB/4, Lamborghini Miura P400, Porsche 959, Ferrari F40, Jaguar XJ220, McLaren F1, Bugatti Veyron, Bugatti Veyron Super Sport ad infinitum.
Ditto, the Pinnacle Portfolio contains no less than four cars from the 1,000-horsepower club. It's a shame we don't know who actually owns the Pinnacle Portfolio, because if he's going after a lesser number of more significant cars, it'll be interesting to see what the final form of the collection might look like.
Finally, in our reflections on the offerings at this year's Monterey Car Week, we thought it might be worth considering the elements of chance on auction prices.
Supply and demand are a fickle pairing
Each year atMonterey, randomness plays its role. Sometimes, purely by chance, numerous examples of an individual model all go to auction at the same time.
Last year, 17 Mercedes-Benz 300 SLsturned up at auction counting both Gullwing and Roadster variants, and there was justenough more supply than demand to stall the rise in prices. Monterey is the one event where everyone in the collector car world pays attention, and a freeze in prices can cause themarket to catch a cold and that appears to be what happened (see the above chart).
It is most likely that the stall in 300 SL prices will end in Monterey, and with less supply (only 11 this year) and ever-growing demand, prices for 300 SLs will breach the $2 million barrier this year and keeprising.
If the above chart doesn't convince you of that, check out this article and the accompanying chart at the specialist SL Market web site where the full sales history of the 1401 Mercedes-Benz 300 SL Gullwings and 1858 Mercedes-Benz 300 SL Roadsters has been charted since they sold new. Knowledge is power in this game, and historical perspective is necessary to understand the nature of your investment.
Sometimes the strength of the market or the remarkable networks of the elite auctioneers can overcome such potential gluts.
In 2011, RM Auctions ended up with no less than five different Mercedes-Benz 500K and 540K models in its auction catalog for Monterey (a 1937 540K Spezial Roadster, a 1939 540K Spezial Roadster, a 1936 540K Spezial Coupe, a 1936 540K Cabriolet A and a 1935 500K Roadster), and ended up selling all five of the supercharged 8-cylinder masterpieces in a single night. In the end, no doubt after much time working its network in the lead up to the event, it sold all five, with the cars fetching $9,680,000, $4,620,000, $3,080,000, $2,970,000 and $3,767,500 respectively, for a total of $24.12 million. Sometimes the appearance of several cars at the same time and place can be an advantage as it ensures that all the potential buyers of the model will be there.
This year there are a numerous examples of several or more cars of the same model all appearing at the same time, and it will be fascinating to watch how the market perceives this.
Relatively small numbers of significant cars such as three Porsche 959 Komforts, three Toyota 2000GTs, two 2015 McLaren P1s, three Maserati MC12s, five Ferrari F40s, two Ferrari 288 GTOs, two Ferrari 250 GT California Spiders, or three Ferrari 250 GT/L Lussos, are unlikely to have any effect on prices, but this year there are eight Ferrari 275 GTBs and 11 Ferrari 365 GTB and GTC models going to auction, and it will be a litmus test on the strength of the market as to the prices they fetch.
It's the most exciting event of the collectible car calendar, and within 48 hours, the circus will be in full swing. Watch for our reports over the next seven days.
Internet Viewing Guide
The magic of Monterey Car Week is now largely available on line with live video feeds of the most significant events, including the centrepiece of the week, the Pebble Beach Concours d'Elegance which can be viewed on Motortrendondemand.com or on the Motor Trend Youtube Channel.
If you're not on Pacific Daylight Time (PDT), you can set the alarm clock using this handy web site. It's free and fascinating to watch, and might provide an interesting way to diversify the nest egg if you keep watching and reading. Our aim is to ultimately provide a comprehensive information service on the returns available from investing in collectibles as an alternative asset class.