#39 - 2022 Predictions
I doubt Boris Johnson sympathizes with my view but January provides the perfect opportunity to take a look over the trials and tribulations of the last 12 months. Assess the good from the bad, the rough from the smooth, the lock down garden party from the Tory business meeting…..
2021 was a funny year for the car market….both mainstream and collectable. The aftermath of the initial COVID-19 lockdowns caused pandemonium to supply chains and production lines with most of the world still paralysed by shortages in raw materials, overcrowding at ports and general logistics carnage. I think many still struggled to comprehend the scale of this ongoing backlog.
The predictable net result of all of this was that the nearly new car market exploded with valuations going through the roof as new car deliveries were delayed indefinitely and customers scrabbled to get hold of the remaining stock available. We had countless conversations with customers asking for guidance on whether to sell into this buying mania. Our response was quite simply “it’s a zero sum gain”. Get paid more for your old car and pay more for your new one…..no thanks but we will hold tight and ride this one out.
Meanwhile on the collectable and investment grade side of things, the market has behaved a little more orderly. There was no panic buying or shortage of supply. Instead it rationally kept ticking along with pockets of value being discovered whilst slightly overdone sectors tended to stabilise if not sell off a little.
So what trends have we seen for this year and what do we think looks interesting moving into 2022?
Now if you mention the words “Classic” and “Ferrari” to most car enthusiasts and collectors you are likely to receive a wry smile before they turn and run away in the opposite direction…. as quickly as possible! It is one of the biggest misperceptions made when it comes to older Ferrari’s that not only do they cost a fortune to purchase but you will require an equally large purse to maintain them. Allow me to debunk a couple of Maranello myths.
No doubt your internet browser will become ablaze with pictures of 250 GTOs, SWBs and Dino’s when you start scrolling through the classic Ferrari classifieds. Absolutely exquisite motorcars steeped in road and racing provenance with a “grandi” price tag to match. However the real party piece of these automotive behemoths is that their time in the limelight has too frequently undermined the beauty and capabilities of their immediate siblings. This in turn means people tend to forget about them. They sit in the shadow unloved and underappreciated which creates some truly fabulous buying opportunities.
We had the fortune of acquiring an early Ferrari 308 GTB Vetroresina (Fibreglass) at the end of last year. It was a sympathetically restored 1976 Giallo Fly RHD, dry sump example which had covered just under 20k miles from new. The 308 sits at a fascinating point in time on the Ferrari tapestry. It benefits from the smooth and curvaceous lines of the 60s and early 70s Ferrari’s yet still has a hint of 80s “boxeyness”. If you asked someone to draw a picture of a mid-engine Ferrari it is highly likely it would share the silhouette of the 308.
Now if you look at the cars which bookend the 308’s existence, its predecessor, the 246 Dino, is changing hands for £300-500k depending on provenance and specification (chairs & flares etc) while its successor the 288 GTO is achieving anywhere from £2-2.5mm if you can actually get your hands on one. The 308…..if you manage to find a very good Vetroresina example you will be paying £120-130k while good early steel bodied examples can be found from £90-100k. In our opinion that is way too cheap and the market is grossly undervaluing these cars.
Not only were the 308s some of Leonardo Fioravanti and Pininfarina’s finest work but the F106 AB V8 is an absolute masterpiece. Too long has the 308 sat in the shadows of the Dino and 288 GTO and we believe prices are about to go soring. Find a good Vetroresina or dry sump steel bodied GTB with strong provenance and you are onto a winner for sure…the year of the 308 is upon us!
Next to Stuttgart and one of the longest standing auto manufacturers in the world. Much like Ferrari, Mercedes deep roots in motor racing and the resulting automotive icons to spawn out of it such as the 300 SLR and CLK GTR have long been established in the hearts of many collector and investor. In more recent years though, Mercedes sports car offering has tended to play second fiddle to the likes of Porsche, Audi and BMW. As a result and in a similar vein to the 308, there are a host of modern classic Mercedes sports cars which have fallen off the radar and consequently look like incredible buying opportunities right now. The two we have ear marked in particular for this year are the CLK DTM AMG and CLK63 AMG Black Series.
In 2003, Mercedes won the Deutsche Tourenwagen Masters (DTM) Championship with Bernd Schneider at the wheel of a Mercedes CLK DTM race car. To celebrate, Mercedes created a very limited production road going version of Mr Schneider’s race car….and so the CLK DTM AMG was born.
Officially launched in 2004, the arrival of the highly exclusive CLK DTM AMG was actually a fairly low key affair with the 100 coupe production units sold out almost instantaneously at a list price of €236,060 with buyers including Jenson Button, Kimi Raikkonen and Takuma Sato.
Based on the Mercedes C209 CLK, the chassis was reworked to match that of the race car. The rear axle was extensively redesigned with stiffer bushes, new hub carriers, reinforced driveshaft and height adjustable torsion suspension. The car also gained multi-disc limited slip differential and composite brakes. The 5.4 litre supercharged V8 benefited from significant revisions over the common rail M113 E55 block including modifications to the crankcase, pistons, valve gear, cooling, intake manifold, supercharger and exhaust system. The net result was 574bhp sent through a reworked AMG SPEEDSHIFT 5-Speed gearbox.
Cosmetically, the car borrowed design queues from the DTM race car with vented front and rear arches, revised front and rear bumpers and valances along with a new carbon fibre rear wing. Internally, the race car feel continued with the removal of rear seats in favour of a carbon fibre box section, b-pillar strut brace behind the carbon fibre bucket seats and door cards.
The CLK DTM AMG remains to this day one of the rarest and arguably most desirable sports cars ever to be produced by Mercedes. It harks back to a golden age when manufacturers still had the gumption, freedom and opportunity to build true road going race cars and there are few better examples from this era than the iconic DTM AMG. With prices of investment grade examples changing hands for £250k-275k, we firmly believe prices have a lot further still to run. Especially when you consider prices of the DTM AMG’s most comparable stablemate, the CLK GTR and where they are currently trading. The house view is we see DTM AMG’s prices between £350-400k over the next 5-10 years.
The appetite for the CLK DTM AMG in many ways reinvigorated Mercedes desire to build more driver focused examples of their most popular models and in 2006, a new AMG sub brand was launched, the Black Series. Starting with the SLK55, it was in 2007 when AMG gave the Black Series treatment to their CLK63 AMG. The focus for the CLK63 AMG Black Series was very much on weight reduction, chassis development and modest increases to outright performance figures in an attempt to build a sport car which rivalled the recently launched Porsche 997 GT3 RS.
The naturally aspirated 6.2-litre V8 (M156 E62) powertrain was lightly fettled with modifications to intake, exhaust and ECU systems in order to increase power to a potent 500bhp. Cooling was also improved with larger air intakes, along with several additional coolers and the introduction of a multiplate limited slip differential.
The chassis was comprehensively overhauled with bespoke spring links, wheel carriers and thrust, camber and torque-arms. In addition, the track was increased by 75mm at the front and 66mm at the rear while ride height, compression and rebound damping were all fully adjustable.
What initially was planned to be a limited production run of just 500 cars globally ended up seeing 700 cars built such was the demand.
Since 2010 the market seemingly forgot what a special and rare car the CLK63 BS really was. That said, in the last 12 months we have witnessed a huge resurgence in interest especially with the introduction of more Black Series cars to the AMG range including the AMG GT Black Series. With investment grade examples of the CLK63 BS now changing hands for £130-140k we very much believe there is scope for these cars to be worth in excess of £200k in the next 5 years. The perfect way to not only get your hands on a piece of Affalterbach history but also get hold of an iconic Merc V8 as they are soon confined to the history books.
Finally it would be rude to not mention BMW and some of their more special cars in recent years. Unsurprisingly, following the rally we saw in E46 M3 CSL prices over most of 2020-21, investors and collectors have been keen to uncover the next big thing to come out of Munich. The 1M Coupe became the heir apparent given the relative price differential versus the CSL but also because of what a rare and cracking driver’s car it truly is. Prices of 1M’s continue to steadily climb and while the lack of a “CSL” badge will always mean it sits below the Coupe Sport Lightweight M3, it continues to look a very attractive investment proposition…..but it’s not the one that really gets us going as we move into 2022.
In 2010, the brains at BMW decided that “GTS” was a more appropriate nomenclature to get people excited about their super lightweight cars with over the conventional “CSL” sticker. It was a questionable decision in my mind given the history and pedigree associated with the latter acronym but there ended up being 2 production models to sport the GTS badge. The first, a bright orange V8 powered M3 with a smorgasbord of goodies bolted on (more about this one in a later musings). They made just 150 units globally which are quite frankly rarer than unicorn poop and if you ever have the fortune of seeing, let alone driving one of these legends you are in for a real treat! But it is actually the awkward second album, the M4 GTS, which we are more interested in right now.
For some reason the M4 GTS never really worked. When it arrived in 2016 there was much hype from its creators about the clever water injection system it housed in its boot to help with intercooler efficiency and the performance of its twin turbo straight six engine. It was lighter, more powerful and could go around the Nurburgring as quickly as a Porsche Carrera GT. BUT……it wasn’t really very good compared to its contemporary peers. It was on the receiving end of a characteristically frank Jeremy Clarkson review pitting it against a Porsche 991.1 GT3 RS which it unsurprisingly lost by a country mile. The matt grey and orange pinstripe wasn’t to everyone’s liking either. However the real blow to this car’s credentials came not from the paint job they applied to the 700 units produced, but from the launch of the M4 DTM Championship Edition just months later.
Mechanically identical to the GTS, the DTM Championship Edition was a 200 unit production run rolled out to celebrate the success of Marc Wittmann in the 2016 DTM season. Not only did it massively dilute the appetite for the already floundering GTS, but by being exactly the same aside from a paint job and some small aero tweaks, the DTM also found itself not being particularly well received. BMW shot themselves in the foot in a big way and valuations of both GTS and DTM models have reflected that ever since.
However there is always light at the end of the tunnel and right now, the M4 GTS and DTM are beginning to look like rather compelling investment opportunities. Firstly you need to take a holistic look at where BMW are going as a brand. Big, electric EV’s with colour changing body panels…..sounds fun! Not only is the shift of focus to EV very apparent but with the company’s appetite for building CSL, GTS and DTM-like models dwindling, it seems unlikely we see them build cars like this again.
Low mileage GTS and DTM cars have flirted around the £80-90k area for some time now with very little love and I think this is about to change. In objective terms a similar aged 991 GT3 RS will eat the GTS/DTM for breakfast but that is somewhat missing the point of these cars. It is a limited, lightweight production run car with huge collector appeal and now is the time to start buying them….I know we want to.
2022 has all the ingredients for being another great year in the modern classic collector car market. A volatile and unpredictable global economic backdrop with still historically anaemic yields will continue to have investors looking not only for safety and tangibility in the assets they are investing in but also Alpha over the rest of the market. Please do not hesitate to give us a call if you want to talk further.
Happy Motoring,
Greg