#34 - Auctionitis

Taking a petrolhead to a car auction is akin to going to a wedding with an open bar or giving a toddler a bag of Haribo…..it doesn’t typically end well for them or those associated with them. The sugar crazed, inebriated yahoo they become is inevitably completely sober and of sound thought in their own mind…..just no one else’s.

Yes combining high end motors with the opportunity to purchase them in a hand raising, phone bashing, battle royale is the stuff of dreams. Channelling your inner Jordan Belfort, best laid plans go out the window, emotions take over and the brief elation of swooping the deal of the day is swiftly replaced by a queasy sensation as the reality dawns on you that you will now have to explain to your partner why you thought it necessary to plough that “essential extra” £5k into your new pride and joy.

Yes auction season is upon us albeit in a rather different format this year to the one we have conventionally come to love. Our good old friend COVID has done away with crowded auction halls which allowed us to be absorbed in all the visceral senses of the occasion…..beads of perspiration dripping off your bidding rival’s forehead, that exotic mix of sweat and unleaded fuel. No, instead you sit in the comfort of your own home in front of a computer (mouse in one hand, cold libation in the other) as some of the world’s finest motor cars changed hands right before your eyes.

Now aside from drooling over incredible machinery, one of the great features of a car auction (especially the big ones) is that they provide a great bellwether for the general sentiment of the market. You see its one thing having £20mm worth of cars for sale, it’s a completely different animal to actually see them all trade and more importantly, at or around their expected prices. Back in December last year in pre-Brexit Britain (a distant memory right?!), I commented on the state of the car market in reference to the intimate albeit well renowned Bonham’s Bond Street Sale (#20 - BORIS, BREXIT & BUGATTI'S). Principally, I believed that the low sales rate (28%) was less a function of inappropriately priced lots but instead more to do with the general buying paralysis plaguing the entire market in the run up to our departure from the EU. In fact, I honestly believed you could have lowered reserves by 10% and you would still have struggled to see the sales rate rise above 50%.

The other great aspect of an auction is that by acting as a completely transparent transaction venue, if something does sell, everybody knows the price. “I heard of one car that sold off market for X”, “apparently they were able to get Y for it”……all the smoke and mirrors disappear which allows the market to properly adjust and reset….for better or worse.

So onto the auction in question….The Silverstone Classic took place from Friday 31st July through to Saturday 1st August and the headline figures were impressive to say the least. £15.5mm in cars sold with a sale rate of 75%.....on the surface it’s fair to say that the market is shrugging off the current COVID pandemic a little better than Brexit but what traded well and what surprised to the downside?

First up a blue 3 door Subaru. Now I have long marvelled at the engineering prowess of sports cars to come out of Japan. They have politely and modestly embarrassed far more expensive European exotica for many decades now. However, a lightly modified, 30k mile, non Type-UK 22B STI trading for over £130k inc buyer’s premium is completely ludicrous. That’s 997.1 GT3 RS money for goodness sake and £50k over its top estimate. In short, over hyped and overpriced.

Next up a Jaaggg (cue Jeremy Clarkson). Lot 333 for me is almost worth framing and sticking in the toilet for posterity. Do you remember back in 2004 when you could still have snapped up a Porsche 911 2.7 RS for comfortably less than someone just paid for the aforementioned Japanese blue Tardis above and still have change for a nice dinner……well the same can be said right now of the Jaguar XJ220. Yes it shared its rear lights with a Rover 200 but the true market value of these cars in my opinion is being grossly underappreciated. Anyway, back to Lot 333; a European supplied Silverstone green car with beige interior (THE colour scheme to have on one of these). It has covered a mere 14,ooo miles from new and although it will inevitably need a bit of money thrown at it to clear off the cobwebs, it sold for a mind-blowingly low figure of £210k versus an already very conservative estimate of £250k-275k. In a world where Ferrari F40s change hands for just shy of £1mm you could have nearly 5 XJ220s for the same money……that spread just seems wrong to me. So to the lucky lady/gentleman who snapped up that lovely example congrats……you have bought yourself a TWR icon.

Now naturally no car auction is complete without the appearance of a smorgasbord of Stuttgart’s finest and of course Silverstone didn’t disappoint with 2 collections coming under the hammer (one of which made up entirely of expensive Beetles). Don’t get me wrong, I am a diehard Porsche fan but there is simply too much hype and speculation surrounding the marque (and has been for some time). This has obviously been enhanced in recent years by the company’s purposeful shift towards Hybrid and EV technology as a focus for the future. My general rule of thumb is don’t touch anything with an “RS” in its name or an air-cooled version…..if you manage to combine both god help you. Why? Principally because I feel/hope they are due a small correction to the downside but secondly because I think there are much more interesting investment opportunities within the product catalogue.

Lot 572 was the Porsche of the auction in my opinion. A UK C16 supplied 996 GT2 with 8.5k miles from new. Firstly, when/how did the 996 start looking good again?! I mean seriously, 5 years ago it was the ugly duckling of the range and now….well I can’t help but think the 997.1 has been past that baton. Anyway, the philistines will cry and say that this particular GT2 is not the Clubsport but I honestly couldn’t give 2 monkeys. There are a handful of cars that earned their nickname and the 996 GT2 was in a lot of ways the daddy…..The Widow Maker. It’s not the type of car you see being blasted up and down the Kings Road in first gear before, clutch cooking it is parked in front of an overpriced restaurant. No, The Widow Maker is taken out on an early Sunday morning, when everyone is asleep including hopefully the police. But 996 GT2 prices have always perplexed me. In the model hierarchy they sit above the GT3 RS but in terms of current valuations they sit below and this beautiful Basalt Black car is no exception having sold for £112,500, barely above the lower end of its £110-130k estimate. Let us not forget this was 1 of just 129 C16 examples to ever be made (much less if you think how many are now left on the road) and made use of the monumental twin turbo 3.6 litre flat six found in the GT1 race car. What made me chuckle even more was seeing the lot that followed; a black C16 UK 1995 993 RS which sold for £315k at the top of its estimate……now you know what I mean about RS air-cooled cars!

So to conclude…..yes the market seems to be bouncing back from where we were 12 months ago. I would refrain from using the phrase “buoyant” just yet as we still have a long way to go but there is a renewed confidence from both investors and collectors a like which is reassuring. Like all major asset classes, following the herd especially in times of higher volatility is not the best course of action. Instead, locating those mispriced opportunities is more advantageous in unlocking future value…..so buy XJ220s and 996 GT2s and you can thank me later!

Happy Motoring,

Greg