Classic car prices: can we explain the irrational?

On May 5, the producer Mercedes Benz has sold for 135 million euros, a Mercedes 300 SLR Uhlenhaut, named after the engineer driver Rudolf Uhlenhaut, who joined Mercedes in 1931, designer of the brand’s competition carsand responsible in the 1950s for the development of the race models 300 SL (which won at 24 Hours of Mans in 1952) and 300 SLR (World Sportscar Champion in 1955), this version in itself being extrapolated from Formula 1 W196 dominated the world championship in 1954 and 1955 with Jean-Manuel and Stirling Moss. It has therefore become the most expensive car in the world! The pinnacle of privilege, L’Automobile Magazine had the opportunity to take the helm before this extraordinary fate …

Record smashed

The results (public), auctions states that a year earlier, in early June 2021, a 1964 Ferrari 250 GTO had already made headlines by reaching 54 million euros during a sale, thus breaking the record for RM Sotheby’s, which had also sold in August 2018, a 1962 GTO for $ 44 million (excluding fees), and even erased the score for another 1963 GTO sold over the counter for 38.5 million euros ( source Bloomberg 1) / 10/2013). Another GTO from 1963 was reportedly sold privately in June 2018 for 70 million euros, but there is no official confirmation of this.

In any case, this does not call into question the new record set by the Mercedes 300 SLR, ending Ferrari’s hegemony in stratospheric pricing. For behind the GTO, other Ferraris have regularly crossed the 10 million mark over the past ten years. We remember, for example, 1957 335S sold by Artcurial in Paris in 2016 for more than 32 million euros, and 250 California 1961, ex Alain Delon, sold by the same house in Paris the year before in February 2015. A couple of “uninvited guests” interfere in this elite, such as Bugatti, Jaguar, Aston Martin or racer-Porsche; or prestigious classics from the 1930s such as Duesenberg, Alfa Romeo or Bugatti; but Ferrari undoubtedly dominates, regardless of the manufacturing period.

Also read: is it an accessible pleasure to drive a luxury car?

Listed market

The rating exactly, let’s talk about it! Like the art market, collector cars are traded in a market owned by specialists, even experts, after known transactions (results of auctions) ; or relatively transparent (price announced by a professional seller or an individual); or even more discreetly within the framework of a network of amateurs who meet and negotiate with each other. The results of the auctions alone, which sell thousands of old vehicles a year, highlight the level of transaction and thus establish a benchmark. Admittedly, sales are over 1 million rarer, but there is enough to establish a kind of mapping of the market, its health and its trends.. It is clear that the capital gains recorded over the last ten years have been spectacular (sometimes in the hundreds of percent), giving this market great appeal. This inevitably results in speculative behavior, but the lack of car culture among some buyers has in the past caused “speculative bubble explosions” that deter passionate investors in favor of true enthusiasts.

The Mercedes 300 SLR is the most expensive car in the world today.
The Mercedes 300 SLR is the most expensive car in the world today.© Bernard Asset

A global market

In fact, the market is priced for models, even expensive, available in significant quantities. Visible or known transactions make it possible to place a price order, which professional journals publish and with which sellers and buyers consult. Thus, magazines like Retrovisor or AutoRetro list the price of most models each month, and LVA (La Vie de l’Auto) publishes a guide and a price each year based on the worldwide auction results. Because the classic car collection is a hobby, and an activity, international. There may be price differences from one country to another for national brands or models, but beyond 50,000 euros, the overall level will again be homogeneous.

The same car, in comparable condition, will be sold at the same price in Europe or the United States. Only its rarity locally can cause discrepancies (eg a DS Citroën is sold for more in Los Angeles than in Paris, and vice versa for a Chevrolet Corvette C3), but not for the “big parts” that the buyer is not holding back of borders. The largest collectors can be found in London, Monaco, Paris or California. Therefore, a Porsche 356 or a Series 1 E-Type Jaguar has the same rating or whatever. On the other hand, the exceptional models escape any evaluation logic because there is none, if not the last known result …

The extraordinary is priceless

The absence of transactions on a work or object makes it impossible to establish an offer due to its extreme rarity. The estimates communicated in auction house catalogs are also often far from the auction price, which is often much higher. When a vehicle is coveted by a few connoisseurs, it is their desire to own it and their financial ability that determines the price. It only takes two people for a sale … Not only are potential buyers able to measure the scarcity of the opportunity they do not want to overlook, but they are also driven by the competitive nature of a sale, their ego and the adrenaline of the moment. them sometimes to go beyond the most reasonable limits.

It is the combination of several criteria that gives a car an exceptional character:

  • its rarity: in the case of the Ferrari GTO, only 36 were produced; for the Mercedes 300 SLR there are only two, never sold, still owned by the manufacturer, the other is on display in its museum in Stuttgart. The lower the supply in relation to the demand, the higher the price may be; it is an economic law that applies to all goods and services.
  • its features and performance: a luxury brand, the most powerful or fastest model of its time, an innovative style, are all factors that affect the price. The 300 SLR, which exceeded 300 km / h at a time when the fastest button exceeded 200, is de facto above average. Thus, some cars have marked their era with their performance and style, such as the Lamborghini Miura in the 60s or the MacLaren F1 in the 90s, which almost immediately became coveted collectors.
  • its condition: whether original or carefully restored by reputable specialists. A file consisting of all invoices since the first order can generate a surcharge of 10 to 20%. It is also important that the car retains its original main components (especially chassis, engine, gearbox) and that their numbers match the vehicle’s papers. If this is not the case, the value can drop by well over a third, even if everything is new; yes, but not original … (extensive debate).
  • its origin: if it has been owned for a long time by one or very few fully identified owners; and if one of the owners is a celebrity (actor, singer, politician, pope …), then the price can be doubled, tripled and more. The cars and motorcycles that belonged to Johnny Halliday are sold completely off-rating, like Steve McQueens or John Lennons.
  • its position in the production continuum: the very first or last of a series, even widely used, is highly sought after by some collectors (mostly Americans), who do not hesitate to pay for them far beyond their usual price level. Similarly, the first Jaguar E to be marketed may require a premium of 30 to 50%. Most brands are also familiar with this bonus phenomenon for the pre-series or the first issues.
  • its track record if it is a competition car. A Jaguar D or a Porsche 917 that won 24 Hours of Le Mans could be worth two to five times the same car that became number 3. The more the vehicle has a traceable, well-documented history, enriched with racing results achieved by famous drivers , the more desirable and therefore expensive it is.

A car that crosses all the boxes, like the Mercedes 300 SLR, inevitably arouses the desire of the biggest collectors. The offer is extremely rare, there are only two, one of which will never be for sale, and it embodies the best of Mercedes. It was enough for the German manufacturer to invite the biggest collectors on the planet to this private sale to trigger a process that culminated in 135 million. It could have earned 50 million, like 100 or 200 … It’s irrational, and at the same time it’s still cheaper than some paintings by Master. Of course, few collectors have enough money to afford such items, but those who belong to this very limited circle do not really set limits. Whoever really wants it can afford it.

Sheer madness?

Not sure when you see that the Ferrari 250 GTOs, which have been sold for tens of thousands in recent years, traded for less than 10 million 20 years ago and less than 1 in the 80s. A “simple” Mercedes 300 SL Papillon (produced in 1400 copies), which can easily be found at dealers or at auctions, currently sells between 1 and 1.5 million. depending on the pedigree. It was worth ten times less 30 years ago. We understand then that passion is not completely blind and that if you have the funds, it can be a good investment to spend your savings on a beautiful old car.

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