Wednesday, 27 November 2013

Micro Level Trends – Classic Cars (Part 1 of 3) – The 'Californiacation' of Europe's Masterpieces.

The provision of the 'Coupled Ratios' weblog, expected here, has been purposefully deferred.

Firstly to raise the topic here-in, of vital interest to those who have commercial and political influence as the cultural guardians of European history, and secondly to continue to appraise the inferred 'between the lines' details of the global 11's Q3 earnings reports.

[NB the previously increasingly transparent nature of certain reports have seemingly become more opaque. This the apparent corporate reaction to the recent transitory period regards global demand-shift conditions as experienced over the last 3-6 months].

Thus a different weblog is furnished - given its depth, over Parts 1, 2 and 3 - regards the micro-dynamics of the ever more valuable, and so theoretically market-driven, pinnacle of the classic car arena.

Given usual focus on investor interest into the automotive future, the subject matter of classic cars is rarely mentioned by investment-auto-motives; only previously referred to in two ways.

Initially, as a metaphor for the careful re-building of the western banking system - by reconfiguring and re-conditioning the old parts into a new whole (inspired by the 'barn-find' Bugatti Atalanté). And secondly, relative to the adoration vehicles hold within EM countries, which boosts both local old classic car restoration, and generates an impetus to rework vehicles into 'new classics'. Both encompassing the necessary trend for educationally minded, indigenously orientated specialist workshops.

But of course today and into tomorrow the commercial imperative of the classic car arena grows year on year, as the collectors' collective demand rises given the slim but enlarging top-tier percentile of the global uber-wealthy who seek-out those prestigeous, rare, luxury goods that have become artwork “masterpieces”. Either in their own right, or as a catapulted product from the now firmly established world of 'cultural commercialisation'.

A prizing of the very best has always been with mankind, ever since early rulers sought to affirm their status, from the Renaissance onward such commissioned items deployed to create a wider economic effect, through the fabrication of aesthetically similar pieces. As a short edition run or otherwise, which themselves are consumed by those within the upper and middle classes of the domestic 'social trickle-down', and likewise to add to the trading and export economy; an early form of climbing to the senior levels of the value-chain.

Hence from the earliest days rare materials were treasured, all the more after near countless hours of toil morphed said materials into something 'other worldly', by which to entrance the owner's associates and followers. Ironically, over the centuries the adorned and adored non-functional but symbolic (usually jewellery), typically came to be more highly valued than basic but functional items upon which a society turned. (See Thomas More's novel 'Utopia' for a wonderfully rendered reality-check). Yet, from Ancient Egyptian rulers head-wear and neck-wear, through to Russia's Imperial Fabergé Eggs, and far beyond, the ability to have something created for, or latterly collected for, its social symbolism initiated the commission and antique aspects of the prestige goods market.

Over the centuries as worldwide cultures grew, it was typically the 'high-culture' appreciation of Europe's learned 'Grand Tourers' with their Anglo-Germanic rooted preference for Egyptian, Persian, Greek, Roman and Renaissance items. Items which took hold – authentic or otherwise - along with those produced items to cater for such tourists: paintings the most evocative, transportable and 'viewable'. Such near Eastern artefacts, displayed in stately homes, private collections, public view private collections and later national museums.

Far more recently of course the global wealth effect of capitalism has meant that more and more the Chinese, Indian, Russian and South American dynasties are being collected by rich nationals to recapture and represent homeland histories; aswell as boost the ego and grow – or at least hedge - personal net worth.
Over the last century or so the very world of 'high value collectables' has expanded as the culture industry itself has swollen; propagated by the press, radio, television and the internet. Collectables ranging from 17th century heurology to 18th century engraved shotguns to 19th century wallpapers to even include 20th century “star-architect” dwellings. They are often broadly referred generically as “art-works” - partially to ratify their origination but also often to ratify their social worth - and obviously come in many forms. So, across the full spectrum of luxury goods, with obviously original cost and rarity a marked distinction of current and future value.

However, as per conventional 'art' (painting and sculpture), investment-auto-motives must echo Brian Sewell's perspective. Within the painterly realms the achievement of truly good, intellectual and socially meaningful art has unfortunately become swamped by “bad art”, typically derived and thematic art, this as a direct consequence commercialised 'artistry'. Art which although often carrying famous names holds absolutely no artistic merit; the items sold for their branded association rather than an innately powerful soulful insight.

So the terms 'collectable' and 'art' are themselves central terms of an inflationary debased currency within an industry which must itself, for survival and growth, promote 'value' as an end unto itself by itself creating auras of appeal.

An intelligent person might believe that the critical difference between good and bad art will inevitably stand on its own merit, but in an ever blurring age promoted by the cult of personality rather than cult of the work, the quieter closed-quarter yet high-minded taste-makers of old, for all their faults of traditionalism, may well be over-taken by the louder socially-connected yet low-minded taste-agents of today and tomorrow.

Let us hope that in all fields, from cars to carriage clocks, that intelligence prevails regards the innate 'value' and so 'valuation' of an item – as imbued by its original context – rather than giving way to the adoration of falsely created old and new idols.

Automotive Icons -

Fact is that the car was originally adopted only by those who could afford the petrol, steam and electrically powered “contraptions”, given their combined attributes of status and function. But even with 'automotive democratisation' of the masses, the car still represents everything from the greatest socialite prestige, through to a modicum of suburbanite envy. As general trade and industry improved worker income and so bettered people's lives throughout the 20th century so the auto industry expanded, based upon an ever greater tendency to segment by user and product type whilst feeding and delivering both the consumer's life-improvement dream.

Of course, the 'best' remained throughout from beginning to now; either because of engineering integrity or bodywork beauty, ideally the combination of the two to form 'the best of best'. Over nearly 100 years these range from the 1907 Rolls-Royce 40/50 'Silver Ghost' through to today's Bugatti Veyron.

Exactly what determines 'the best' is a question of subject understanding, a necessary start-point for the fortunate car collector who also combines his/her own personal leanings leading to ultimate preference. Though the collector's reality inevitably bounded by some limit of disposable income; even if seemingly limitless to the far less fortunate.

[NB thankfully money is not the arbiter of opportunity to own something iconic. The average car enthusiast may be able to afford a remaining mass produced vehicle which displays as much, and often more design integrity. To this end the Model T, 'Topolino', Deux Chevaux, original Mini, original Cinquecento or Quatrelle have arguably more innate legitimate 'beauty' than far higher priced vehicles].

Europe's “Best of the Best” -

Nonetheless, undoubtedly within collectors' circles the most prolific of the car types were the purist marques which created whole cars in a true design idiom.

The 'best of the best' typically renowned grand prix cars, or closely related coupes and convertibles flamboyantly 'dressed' by specialist body-stylists, and those of bespoke 'coach-built' limousines (both staid and glamorous), aswell as in another distinct category those early years record breakers and latter concept cars.

The following provides a broad but limited overview of the scene:

Though the car as we know it was first developed as a lightweight singular entity by way of powered tri-cycles and quadri-cycles, early years demand by the wealthy for reliability, distance and speed soon led to a focus on the mechanical whole by producers and so the creation of dedicated high-output chassis, these married to a likewise hand-built body of whichever form (racer, tourer, sedan, limousine) was sought.

A few high-minded creator-producers sought to maintain as much complete vehicle control as possible. But given the commercial pressure to specialise in either mechanics or body, those with such a contrarian perspective were few. Yet today the most prized for not diluting their artistic intent and so individualistic spirit of their machines.

Whole Vehicle Producers include: Bugatti and Voisin with what are considered high-art limited production run cars, with later similar 'complete' efforts from Mercedes, Ferrari (whilst also partially using external styling houses), Porsche and Jaguar.

Rolling Chassis Manufacturers included (amongst others): Rolls-Royce, Bentley, Lagonda, Daimler (GB), Lea-Francis, Alvis, MG, Auto-Union, Mercedes Benz, Horsch, Maybach, FIAT, Alfa Romeo, Lancia, Renault, Peugeot, Delahaye, Delage, Hispano-Suiza, Issota-Fraschini, Talbot (Talbot-Lago)

'Coachbuilders' / 'Carozerria' included (amongst others): Barker, Hooper, Mulliner, Park Ward, Thrup and Maberly, Gurney Nutting, Freestone and Webb, Abbot, Hamshaw, Harrington, Tickford, van den Plas (later Vanden Plas), Corsica, Young, Graber, Franay, Saoutchik, Vanvooran, Letourneur et Marchand, Fagoni et Filaschi, Chapron, Portout, Weinberger, Kellner, Hebmuller, Karmann, Voll und Ruhrbeck, Gangloff, Castagna, Ghia, Bertone, Maggiora, Farina / Pinifarina, Scaglietti, Vignale, Touring, Zagato, Frua, Fissore

Across the Atlantic -

To provide the American comparison, the fewer chassis-makers of premium note were Mercer, Stutz, du Pont, the 'American made' Springfield Rolls-Royce, Pierce-Arrow, Duesenberg, Packard, Cunningham, Lincoln and Cadillac. Whilst equivalent body-builders included Fleetwood, Le Baron, Rollston, Earl and Murphy. However, with a lack of organised indigenous sportscar race meetings between WW1 and WW2, there was less imperative for US made Euro-style powerful lightweight racers.

Instead the US saw the populist rise of more comfortable psuedo-sporty cars like boat-tail Auburns and the rise standard sedan 'stock car' racing – leading to NASCAR. Leaving more purist racers reliant upon European import cars and the rare US-made vehicle like later Cunningham. In fact the late 1950s creation of NART (the North American Racing Team) using Ferrari, though with perhaps the unstated commercial ambition of selling more Ferrari models state-side, such as the soon to arrive 250 SWB California and later special 'NART' related cars.

Thus we see that in actuality, there has always been a close relationship between American and European commercial interests regards product supply to preferred agents and dealers, given the distinct glitterati type purchasers, most prevalent Hollywood film stars.

With the high original price of these exotics creating a ready-made 'import and collect' financial incentive for marque enthusiasts (such as Robert M. Lee), as well as those closely associated with the glamorous first purchasers, who would buy a 'second-hand' and so gain from its exposure.

Changed Technology, Changed Trends -

With the increased adoption of so called monocoque chassis engineering (actually unibody or semi-monocoque in truest sense) - effectively re-unifying mechanics and body, and first productionised on Lancia's 1922 Lambda – slowly over succeeding years, body-building companies either became operationally defunct, with the best admired absorbed into whole car manufacturers or major suppliers.

So the likes of Tickford into Aston Martin (having already absorbed Lagonda cars) and Le Baron into Briggs Pressed Metal then into Chrysler (also having integrating Dodge and Plymouth cars and having used Le Baron to help created its top-line Imperial). However, the process was not always as wholly operationally advantageous as expected as the fiscal backdrop of 1930s America and 1950s Europe sought a major overhaul of product rationalisation, and so the beginnings of the 'common platform' approach.

Few Specialists Survive -

Whilst some quasi-independent coach-builders survived, it was ironically only really in Italy that they were protected by a nationally parental FIAT, which itself had absorbed various up-scale nameplates and used the carrozzeria to maintain their high-end positioning.
Inevitably, the financially stronger craft-companies and the mainstream makers absorbed such niche producers for either specialist vehicle work, as an extended resource function or for asset re-allocation, but primarily from the public viewpoint, associative names used as top-line sub-brands such as Ford previously with Ghia and today with Vignale.

Even so, a reworking of the old carrozzeria model toward stylistic concept work, packaging and engineering development, prototyping and specific core 'module' capabilities in limited series production for whole cars and model variants (typically convertibles) did allow the 'design houses' to prosper through the 1960s, 1980s and 2000s. Indeed allowed new entities to flourish, shifting shape as their major clients sought. The flexible few able to adapt and survive into the late 20th century and just beyond, functioning as both upstream concept formulator and downstream niche builder.

But, as a consequence of the 2007/8 financial crisis VW, Valmet and Webasto acquired different sections of a bankrupted Karmann, FIAT absorbed Bertone in 2009, whilst VW's Audi-Lamborghini division took 90% of ItalDesign in 2010.

The European Fascination -

Unsurprisingly, given “Germany as the birthplace of the car, France its nursery, Britain its school and Italy its finishing school” and Europe's millennia of cultural predominance, the most admired creations during those formative years were inevitably European.

As part of its own upward industrial trajectory, America sought to absorb and replicate all that it could learn, from the earliest runabout cars such as the Rambler and many like it through to supercar efforts such as the 1980s Vector, 1990s Raptor, 2000s SSC and recently defunct Mosler.

But the early to mid 20th century dynamics of the US meant that it would focus upon mass-production, standardisation and so parts-bin reconfiguration to create notional 'sports cars', such as the first Corvette. Instead relying upon transplant efforts – that of inserting a powerful American engine into a lightweight European body (eg Shelby et al) – to create purist sportscars.

[NB 20th century global economic development – ie the desire to spawn large consumer societies so as to propagate capitalism and so a virtuous investment cycle - meant that Japan replicating the American mass-model, so the Koreans like Japanese, and most recently Chinese learning from all.

So, as a result of Europe having been at the forefront of vehicle creation, during the crafts meets industry period of late 19th century and early 20th century – yet utilising both methods thereafter - means that it was in comparison to the US and elsewhere, always been the 'home' of the more exotic, arguably more mechanically 'intelligent' and so more alluring specialist vehicle.

Hence the “European Fascination” and attached high valuations of its products.

American Purchasing Power -

Whilst this has been the case for the last 50 years or so, the fact is that the 20th century was the “American Century”, across heavy and light industry, thereafter upstream consumer related activities such as marketing and advertising, followed by information technology and then web related enterprise – all paralleled by an ever deeper, broader and expanding financial sector.

This enabled originally by a potent mix of finance shifted from Eastern Europe, industry and initial technology drawn or replicated from the best of Europe, an aspirant, immigrant population from across the poorer regions of Europe, and a new class of entrepreneurs and industrialists and largely a politically united national mindset, itself assisted by the troubles of Europe.

This made for the golden age of prosperity, the greatest proportionate rewards of course going to those industrialists who were able to put capital and labour to work, or able to extract the money earned by workers through leisure-time entertainment; the most prolific obviously being the Hollywood film system.

[NB to paraphrase a saying that existed amongst the Polish and Italian immigrants of the time...“the Protestants grab your 'balls' during the week at the factory, the Jews in the picture-house on Saturday and the Catholics at church on Sunday”].

Beyond the social angst of some workers, the fact is that the immense wealth made by those in more fortunate positions (through being born lucky or via deployed intelligence) allowed them to commission bespoke European-made cars, or import at a heavily discounted used purchase price such cars from failing aristocrats.

But moreover, the enormous success and wealth accumulation brought about by that 'American Century' has allowed that process of 'European purchase' to continue to this day, with the impact of the 2007/8 western financial crisis lessened given a propensity toward global-span investment portfolios.

Thus, American purchasing power, whilst a smaller part of the global whole, has grown given its central role within the global whole.

Cultural artifacts have always been representative a person's social stature. Just as Grecian and Roman sculptures and architectural items were adored by the North European aristocrats in the 17th and 18th centuries, so in the late 20th century and early 21st century, the 'high-art' created at the apex of the European era – when art met industry through “industrial art” - is now collected by those with the financial means.

An automotive collection consisting of such creations, as a select group or as part of a broader vehicle set, is deemed to provide kudos and so status.

An Important Aside -

At this point, although likewise entranced by such beautiful artifacts, investment-auto-motives must obviously reiterate the fact that a person's innate worth derives from his/her innate 'being', not financial net worth. Truly good intention, higher-self behaviour, manners and modesty are 'richer' values than pure wealth; with the best outcomes from a combination of both.

To deploy an automotive example, the Toyoda family's expensive, but long serving, comfortable but austere Toyota Century, with cloth not leather seats, said much more about their responsible dynastic position than a 1920s 'Doozy Flivver' ever did about its driver.  

The Next Weblog -

To gain an insight into the price of such high culture, the following Part 2 depicts:

A. the background to the classic car set
B. the importance of related social gatherings
C. the collector's basic purchase process
D. the monetary value spent on acquiring “the best of the best”
E. the formation of improved price tracking and indices
F. the fact that the 'market' has little true consistency
G. the basic list of important museums and collections
I. the increasing rise of the replica
J. the blurring of real and 'hyper-real'
K. the broadened 'market' (original vs 'homage')
L. the commercial future of 'Californiacation'.