#44 - Vegas Baby!

Love or hate it, even a modest curiosity in motorcars last week would have had you following the events that unfolded both on track and off as the F1 circus rolled into Las Vegas for the 1st time in 41 years. A perfect concoction of sport, money, ego and more money found itself marooned in the Mojave Desert for the week.

In many ways a true juxtaposition to the awkward and unsettled socio-economic climate we currently find ourselves parked in, Liberty Media’s north of $500mm bet on the Vegas race was always going to be under scrutiny. Assembling a who’s who list of the rich and wretched, eye watering tickets prices and an unfathomable set of events laid on throughout the week, this was an F1 race like no other……and it got off to a bumpy start.

An awkward and dare I say slightly pointless Netflix x F1 collab at the beginning of the week saw drivers such as Lando Norris and Carlos Sainz competing in a “hybrid” 8 hole golf tournament with PGA pros including Justin Thomas and Rickie Fowler. Desperately named the Netflix Cup, it left F1 and Golf fans underwhelmed as the try hard event was more than anything proof that some things are best left in their original, untampered form. The eventual victor Sainz dropping the trophy a fitting conclusion to the proceedings that day.

Lady Luck continued to evade the Ferrari driver as a rogue manhole cover did huge damaged to the chassis and drivetrain of his car just 8 minutes into the first practice session of the weekend and handed him a ridiculous 10 place grid penalty for the race on Saturday night.

That said, with the initial teething problems out the way early doors, the weekend went from strength to strength. Unpredictable track conditions combined with limited data and running proved a great equalizer for the pack on the fast and exciting track through the centre of Sin City and the Saturday night race really did live up to its lofty expectations.

Unsurprisingly, bringing the worlds 0.01 percenters to the gambling capital of the world created the perfect backdrop to get them spending money and the good people at RM Sotheby’s had that covered. 39 carefully curated auction lots bringing some of the finest classic and contemporary automobiles together in the desert. Skimming through the catalogue, it became clear that RM were shooting for the stars. Yes, the estimates were punchy but so were the cars being offered for sale and the backdrop in which they were being displayed.

First however we must make reference to the amuse bouche that RM Sotheby’s laid on earlier in the week on the other side of the country. A single lot auction dedicated to the automotive “capo di tutti capi”….the Ferrari 330 LM/250 GTO. Now valuing a car of this nature is a minefield for several reasons. Price points from previous sales are few and far between with many changing hands behind closed doors and out of the public eye. What’s more, one example of a 250 GTO can be challenging to derive a value against compared to another as they are all slightly different…. these were after all hand built racing cars. You then also have situations where a car can start its racing life in one specification and then be modified by the factory for a different guise……which is the case for chassis #3765.

Initially built in 1962 as a 330 LM to comply with changing FIA regulations, the easiest way to think about this car is as the first born twin brother to the 250 GTO. Same chassis, almost identical bodywork, the only major difference being the larger 4 litre V12 and 4 speed gearbox fitted instead of the later 3 litre V12/5 speed combo used in the GTO. Its period factory racing history well documented, the car would in 1963 be sold to a VIP customer of Enzo Ferrari who agreed to have the 4 litre engine and gearbox retained by the factory and took delivery of the car in 250 GTO spec with a new 3 litre engine fitted.

At the final down of the hammer, Chassis #3765 sold for $51.7mm inclusive of fees in New York. An auction record for a Ferrari (even if other 250 GTOs have reportedly sold for more in private sales) and the second most expensive car sold at auction ever.

While an unequivocally impressive result, the more interesting takeaway for me from that auction was that it failed to meet its carefully deduced “in excess of $60mm” estimate. Has the market soften I hear you thinking…..

Back to the desert and with champagne flutes charged, the lots started rolling. First to catch my attention was a 2005 Mercedes Benz CLK DTM AMG. 1 of the 100 Coupes produced and sporting just 270 kilometres on the odometer. Front bumper scuffs aside this close to delivery mileage car sold for a seismic $720k. To put that into context, Bonhams sold an 11k mile example earlier in the year for ~$500k and a 187km car in mid 2022 for ~$450k…..the S&P 500 didn’t match that return over the same period I can assure you! That said, it did sell at the lower end of its $700-800k estimate.

Next up a pair of near delivery mileage Lexus LFA’s; one in standard form and the other sporting the ultra rare Nurburgring Package. Now we have long championed these screaming V10 beauties as a Carrera GT alternative (head to Market Musings #43 – LMFAO to read the full article). What’s more, RM Sotheby’s have had good form with them achieving just over $1.1mm at their Monterey sale earlier in the year for a similar ultra low mileage white standard car. With the hammer dropping at $940k for the yellow base car and a record $1.87mm for the Nurburging car, both were still at the lower end of their respective estimates ($900k-$1.2mm & $1.8mm-$2.4mm). That said, the LFA’s desirability continues to gather steam and particularly in the US. What’s more, with a US spec 8k mile Yellow Porsche Carrera GT making $1.545mm on the same night, the LFA still has much further to run in my opinion.

Now it wouldn’t be an auction without a couple of special prancing ponies in the mix. A bellwether for the collectible car market, RM had 3 examples of the “Big Five” in attendance and given their recent success in New York earlier that week with the 330 LM/250 GTO, the odds seemed firmly in their favour. 2 LaFerrari’s (1x Coupe and 1x Aperta) and an intriguing Ferrari F40 “GT” built to compete in the Italian GT Championship during the early 90s. First to the ex McIlroy Coupe, finished in the lesser seen hue of Grigio Silverstone and with just shy of 1k miles on the odometer, the guide of $3.9mm-4.4mm felt optimistic given the car had failed to make $3.6mm at auction just over a year ago. It was a similar story for the Aperta whose $5.3mm-5.8mm estimate felt equally punchy given where other cars had traded recently. In the end, neither LaF managed to find a new home (at time of writing).

Sadly, the outcome was similar for the F40 “GT”. A challenging car to value given it started out life as a standard road going F40 before being converted by Michelotto to GT spec, in my eyes it falls in the awkward gap between the purpose-built factory racing cars like the LM and a modified road car. I think the purists would prefer to spend the money on a mint road car or LM race car meaning the $3.25-4mm estimate was hard to digest and the car remained unsold.

So what if anything can be deduced from the Las Vegas results in terms of the current state of the collectable market? Well as I alluded to at the start, in my opinion RM Sotheby’s had the perfect storm of the right cars in the right setting and with the right audience to go out hunting for records. That said, I’m sure many of the lots and reserves were locked in 6 months prior to the auction and in a very different market backdrop. In addition, a hope/naivety that broader economic sentiment and the resulting buying lethargy would have been more muted or distilled by the occasion. The reality is, even the 0.01 percenters have a cost of capital and the rates move we have seen over the past 12 months has meant that opportunity cost is more important than ever.

Ironically, the 330LM/250 GTO result that kick started the week in New York acted as a perfect synopsis for the events that played out. A record auction result, just below expectations.

For me it is clear that unique examples of modern and classic cars with the right provenance are still well desired and bid by the market. That said, the failed LaFerrari lots indicated 1 of 2 things. Firstly, that the relative value versus comparables such as the Porsche 918 and McLaren P1 is too wide or secondly, that the number of modern special Ferrari’s now being sold has diminished the USP of the LaFerrari….possibly it’s a combination of both.

The bottom line is that the broader collectable market remains in strong health. A small correction was always due and if anything, now is the perfect time to be buying/adding to collections as I foresee the start of 2024 bringing renewed confidence back to the market and with that, values continuing to appreciate.

Happy Motoring,

Greg