This the first part of a two-part article on the state of the world collector car market.
We may be nearing the close of the age of the motor car as we know it. What started in 1886 when a Benz first traveled through the streets of Germany may be coming to an end.
Soon we may have the first true "auto" mobiles on our roads — driverless cars — lounge chairs on wheels where we can work on our computers while the car's computer does all the driving.
Let's take a look back at how car collecting began.
The early days
Before 1900, there were only 8,000 cars in the entire United States. This was for a population of 76 million people and 16 million horses. This was well behind the popularity of the car in France, but it still shows how few cars were in use in what would soon be the world's biggest car market.
At the time, half of all the world's cars were made in France. They made 30,000 cars in 1903, and many were exported.
In those days, the car owner had to be a true enthusiast. The vehicles broke down all the time. The rubber tyres were atrocious and might only last 50 miles. Every part of every car was individually machined by a tradesman.
Cars were also enormously expensive. In 1899, Louis Renault's first car, a single-cylinder one-and-three-quarter horsepower pram-on-wheels cost the equivalent in France of 10 years' wages for an average worker.
The rise of the motor age was like the rise of the personal computing age. In 14 years from 1886, the motor car went from an engineering toy to a plaything of the wealthy. Technology changed rapidly. Just as the first IBM PC introduced in 1981 was worthless by 1991 because superior machines had overtaken it, so the early cars were consigned to sit behind the stables on country estates.
This was even the case on the other side of the world. In Western Australia, for example, the first car (a three-wheeled Leon Bollee voiturette imported in 1898) had been dismantled by 1908, the engine being used on a puddling plant at a gold mine.
The early cars were regarded as a joke when new models, superior in every way, came along. In 1902, one of the world's most expensive cars was the four-cylinder 14 hp Renault, made famous by the dangerous intercity races. And yet, in 1909 Henry Ford released his 20 hp Model T. And a few years later, it cost a fraction of the price of the Renault.
The first collector
Nobody really had the foresight to actively collect the early machines, except a press baron of the time, Edmund Dangerfield who was owner of several magazines, including of one of the pioneering motor magazines in the world, The Motor.
He set up a motor museum in May 1912 on Oxford Street in London. He borrowed and was given 40 odd, even bizarre, early vehicles to show. Unusual and archaic relics they were — even at this time — but by collecting them Dangerfield acknowledged they had some sort on intrinsic value.
After moving the collection to Crystal Palace, World War I began and the British government commandeered the building as a military training center. He returned some of the cars to their owners, some were given to government museums and some just dumped on waste ground near Charing Cross Station.
Some of the others cars remained until 1931. Unwanted and unloved, they were sent to scrap. Incidentally, only about five cars are still on exhibition from these first 40 museum cars. That's a 1-in-8 survival rate.
Ironically, during the previous November, the Veteran Car Club of Great Britain was formed at a bar in Brighton after the car run from London to celebrate the abandoning of the red flag act in the United Kingdom.
A new world
By 1931, the motor world had changed. Henry Ford put the world on wheels. Between 1909 and 1927, Ford Motor Company built 15.5 million cars.
Just about every motoring segment we know today — from economical cars to luxury cars to sports cars and racing cars — had been covered.
The English, with their love of mechanical contraptions and nostalgia, still had an interest in the early cars, but it was a minor hobby during the midst of the Great Depression. Mostly these people were considered mad or just eccentric to want to drive around in cars that were vastly inferior to the ones running on the roads at the time.
The Antique Automobile Club of America was formed in 1935 when a bunch of enthusiastic but unappreciated old car owners who drove their cars at the Antique Automobile Derby at the Philadelphia Automobile Show for five years thought they were getting a bad deal and decided to get themselves organized as a group.
A hobby is born
Another World War came and went, and in 1953 a South African film producer decided he'd make a romantic film about an eccentric young English car owner and his girlfriend against a backdrop of the annual London to Brighton rally.
The car he used for the central character in the movie "Genevieve" was a French Darracq from 1905 (now accepted as 1904), which of course was less than 50 years old at the time, and a Dutch Spyker.
The movie was a great success, and the hobby of car collecting became accepted. The movie's influence spread around the world. The Veteran and Edwardian Car Owners' Club of Australia was formed in April 1954, and a rally was arranged to celebrate the film's opening in Sydney in July 1954.
In these days, old cars were being pulled out of sheds and put on the road again. Restoration was easy as there were a lot of old cars laying around unwanted.
In tandem with the old car movement was the organization of the hot rod movement. Started in California in the 1930s as "souped up" old cars raced by young men, the National Hot Road Association was formed in the early 1950s as well. In the 1960s, car collecting became a popular and fun hobby. The cars were cheap, like collecting a 20 year old Ford or Chevrolet today.
The passion builds
The next revolution in the collector car market occurred in the United States when casino magnate Bill Harrah decided to start collecting cars. He placed 325 cars in a museum in Sparks, Nevada. The quarter-millionth visitor passed through the museum less than four years later.
He couldn't stop his passion for accumulating cars, and his collection soon numbered 1,400 vehicles. If the cars were a little rough, Harrah would get his staff to restore them to better than new.
His collecting passion established a new market for the best-of-the-best cars and drew good cars out of the enthusiasts' market. His bold ambition was to own one example of every car ever made.
When Harrah bought the Winthrop Rockefeller collection in 1975 for a little under $1 million, the rest of the world took notice of the increasing value of old cars. This collection numbered 68 vehicles.
This was soon eclipsed by more high-profile car sales.
Big money pours in
Following the oil crisis in 1973, old car prices had stagnated at the lower end, but everything changed in the mid 1980s. Interest rates eased and the world economy boomed. Investors were now entering the market, speculating on the most desirable models.
These people weren't interested in showing the cars, they were simply stored to be placed on the market again.
In 1981, Don Williams who was the founder of the Blackhawk Collection in California claimed the status of the first person to sell a classic car for more than $1 million. The car was a 1931 Figoni-bodied "boattail" Duesenberg — European styling with American class.
Bill Harrah died of a heart attack in 1978, and Holiday Inns bought his company, including the car collection, in 1980. They began selling the cars and finally raised $100 million between 1984 and 1986 in a series of high-profile auctions, which still left enough cars to create two motor museums in Reno and Las Vegas.
The old car market was now stretching in price from a few hundred dollars for a rough but running Ford Model T to ultimate cars such as the Duesenberg. Predominantly, it was pre-World War II cars that fetched the sensational prices.
The competition begins
The old car market was becoming increasingly differentiated between the car enthusiasts who bought cars to restore themselves and would drive them to car shows and rallies, and the other end of the hobby with car collectors who often purchased near-perfect examples and placed them in private museums.
Many of these collectors enjoyed showing their cars. Since the early 1950s, a Concours d'Elegance was held around Pebble Beach near Monterrey in California.
The concept of a competition of elegance harked back to 17th century France where the most fashionable horse-drawn carriages would be displayed to potential customers. In France and Italy in the 1920s and 1930s, new coach-built cars would be matched with models dressed in the height of fashion to entice buyers.
The Pebble Beach event harked back to this age. For many years it was a local event, but more recently it has become the premier old car event in the world, operating in a symbiotic way with the major classic car auction companies and prestige car manufacturers.
Similar events are now held all over the world. The premier event in Europe is the Concorso d'Eleganza Villa d'Este held at Lake Como in Northern Italy where the fashion is just as important as the cars and far more exclusive than Pebble Beach.
The trend toward up-market car shows is spreading around the world. A concours was even recently held in India.
Events such as Pebble Beach celebrate the great coach built cars of the 1920s and 1930s — names such as Rolls-Royce and Packard, and long forgotten but magnificent brands such as Hispano-Suiza and Delage.
Tastes change
The next development in the collectors car market happened in the late 1980s when a new buyer emerged in the international car marketplace. Japanese buyers were cashed up. The Yen was strong. The Tokyo real estate market was booming, and they looked overseas for investment vehicles (if you will pardon the pun). And they looked for Ferraris.
For the first time, top-end Japanese buyers looked to the automotive heritage of the world driven by both collecting passion and collecting value.
In November 1989, Takeo Kato paid the top price ever for a car up to that time: $13.3 million plus commission. He was competing with the baby boomers in the U.S. and Europe who could afford to buy the cars they drooled over in their youth.
Bubbles, however, always burst, and so it was that Kato's car was sold in 1994 for $2.7 million to a British dealer.
The recession of the 1990s tended to halt the extraordinary gains over the mid to late 1980s, but it was only a temporary setback. Some price guides have indicated that collector car prices have risen by 200 percent in the last 20 years.
The 1990s marked a change in the collector car market. The great collectors who desired the great cars of the 1920s and 1930s were beginning to die out. The cars that made Pebble Beach the premier car show in the world were no longer so desired by the new buyers entering the market.
The market for pre-WWII cars was contracting, and cars from the 1950s and 1960s were on the march. The baby boomers wanted cars from their youth, and they could now afford them.
The rise of the prewar cars with collectors, then the decline, and then the rise in the chrome cars of the 1950s, was followed by the rise in interest in muscle cars: high horsepower large cars from the 1960s and 70s made by Detroit to satisfy the demand created by the rising middle class in America.
Enter the auction
In the last 15 years, the classic car auction market has blossomed to unprecedented levels.
Car sellers internationally like classic car auctions. In a rising market, it provides a stable platform to find out the market price for their car which they bought hoping it would increase in value.
The market internationally is now dominated by three major players:
- Gooding and Company operated by David Gooding
- RM Sotheby's under the control of Rob Myers
- Bonhams owned by Robert Brooks and Evert Louwman
And underneath these three companies are many more local auction houses such as Artcurial in France which has a car department as part of its fine art auctions portfolio.
The question of how big the classic collector car market is worldwide is the subject of much debate. In the 2014-15 auction season, the Classic Car Auction yearbook records 243 sales over the U.S. million-dollar mark.
It also makes the point that since 1993, 65,000 collector cars have come to auction. Some cars, of course, have been offered a number of times during the intervening years.
For what I have called Enthusiast Cars, the market is far bigger. Hagerty Insurance, the American classic car insurer, says there are roughly 5 million cars in this market in the U.S., and 58 percent of those cars are owned by baby boomers. The baby boomers are approaching 70 years of age and are finding their children are not as enthusiastic for these cars as they were when they were their age.
The starkest proof of this is the number of full collections of high value that have come on the market in recent years. The Pinnacle Portfolio became the most valuable single-owner car collection ever sold at auction, selling for $67 million and along the way breaking records for individual models.
Next was the $54 million Andrews Collection, the Pratte Collection ($40 million), the Milhous Collection ($38 million), the Otis Chandler Collection ($36 million) and the much acclaimed so-called "barn find" Baillion Collection in France that netted more than $28 million.
Perhaps there are 10,000 true collectors cars in the world. I think it is difficult to say as it is a constantly moving number as new cars become just a little older and are replaced by new models.
Ferraris are still the leading brand with 576 cars sold at auction with an average hammer price of $924,000. This represents a drop of 21 percent in value last year, but the average prices are highly dependent upon the stock which comes onto the market.
The question of what is now driving prices internationally can be seen in the age proportions of various cars being sold at auction. We are now seeing the emergence of the Post-Classics (cars built from 1965 to 1974) and the so-called Modern Classics (cars built from 1975 to 1999).
Within this market, we are also seeing micromarkets, such as Porsche cars being sold from America back to Europe. More were sold in America than in the home markets and Europeans are buying them back.
In the second part of this article, we'll look at the international values for cars by era as well as where the car collection market is headed.
