Market Intelligence
Red line risks
This article discusses the recent online classic car auction by RM in the UK, which failed to reach expected sales figures. The author suggests that the auction house should reduce the number of cars on offer to maintain the quality and reset bargaining power. The article provides examples of three cars that illustrate the difficulties faced by the auction, including a 1961 Jaguar E-Type that failed to sell despite a colossal estimate, Gerhard Berger’s Ferrari F40 that received no bids beyond £840,000, and a 1965 Aston Martin DB5 that was in need of restoration and was located in Dubai. The author also emphasizes that online auctions have the advantage of indicating the location of cars on offer, which can influence the final purchase decision.
This auction, for those who are truly interested in the world of Classic cars, can teach us many things. In my work, the analysis of each auction starts long before the magic happens. I study the main parameters well in advance, such as the value of the cars on offer (compared with previous years), the most interesting cars, the cars with and those without reserve with particular attention to the estimates of the latter, and the delivery times of the cars to the auction house. This is a detail hidden in the “legal terms” that clearly illustrates, if those times are protracted, that the experts were unable to assemble a decent selection of cars. In the case of this auction, delivery times arrived at almost a month. There is little need for further comment.
This approach, in the case of the RM auction, a physical event in London originally scheduled for the 31st October and subsequently moved online due to the lockdown in the United Kingdom, made me realize straight away that it would not be a success.
The market isn’t easily fooled and in this case it was merciless. The numbers prove it: just 29 out of 64 cars on offer were sold (45.3%) but more importantly £3,015,550 in sales (last year they tripled that) against an estimated value of £14,825,000 (20.3%). Out of 14 editions, only once – in 2009 – did no lot exceed one million pounds, and this year the top lot changed hands for £407,000. Not only that, the 12 most expensive cars at the auction all went unsold.
