Monday, 23 December 2013

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

Previously, investment-auto-motives described the historical background to the contemporary top-tier classic car arena, highlighting the various marques; across chassis constructors, body-builders and complete car producers.

Names which through degrees of motor-sport victory, rarity, beauty, luxury and prestige came to form the “crème de la crème” amongst the many automotive icons; the majority being French, German, Italian and British given their primary early roles in motor-sport and satisfying a 'well to do' clientèle.

It also highlighted the global wealth shift in late 19th century and early to mid 20th century Europe that occurred. Money flowed out of the Old World, especially so Eastern Europe, and gravitated toward the USA, so arguably exiting a region of diminished rates of return and entering the New World, matched by the transatlantic migration of labour and technologies.

As seen in Part 1, this movement saw some premium American made marques created – though set against a primary indigenous focus on economies of scale and standardisation. Yet for that all important 'old money' appeal amongst the relatively newly made American industrial barons, it was the European made cars that maintained distinction.

The USA's combination of population growth leveraged within its free-market economy created a 'wealth engine'. One which could afford a strong global military presence which in turn assisted the effective capture of international business and consumer markets, those regions baked into the 'American Model'. This reach made for the “American Century”, to the enormous financial benefit of those either born fortunate or applied their intelligence; those who gained the most able to deploy both advantages.

As time passed so much of the banking and industrial wealth base created by the Morgans, Rockerfellers, Carnegies, Vanderbilts, Mellons etc sought ever wider global opportunities by the descendents, so participating in the wealth creation of Japan, S.Korea and China; all facing the West coast of the US.

So whereas the European facing north-eastern US seaboard has been the natural centre of gravity for America's uber-wealthy, so increasingly with ever greater Asian focus, so the West Coast gained ever greater favour. And with it a gravitation of all things cultural, including the likes of Pebble Beach 'Concours d'Elegance'

Hence the 'Californiacation' of Europe's Masterpieces.

[NB a well intended note to American enthusiasts: the term “concours d'elegance” is pronounced without the 's', by fully conjoining “d'elegance”, extending the 'a' and light on the 'ce'; so not pronounced “concourz de eleganze”, but “concour d'elegaans”

This mentioned so that those children and adults who must admire from a distance, or indeed those who actually repair such cars – and so create the atmosphere and beauty - are not intellectually sneered upon by a small faction of the more wealthy; usually those who have gained but not earned their lifestyle].

Part 2 provided a summary of the cultural backdrop to those revered top-tier cars, it highlighted: the major concours d'elegance events around the world and increasingly so in the USA, the major dynamic driving events that mirror the static concours and demonstrated the importance of marque specific clubs as guardians of the vehicular history and as promoters of shared knowledge and as hubs for locating components and repair know-how.

This was followed by a call for vigilance amongst collectors given the temptation by some to lean toward less than honest activities which may corrupt the automotive bloodlines in an effort to profiteer.

A long list of the highest auction sale values was provided to demonstrate just how rarefied the most expensive of the classic cars have become; very likely because a true 'apples for apples' approach which would provide consistency is not available. Prices also boosted by various factors ranging from the 'must have' attitude amongst some uber-wealthy, to the FX advantage of a weakened US $, to the fact that such cars have been promoted as safe stores of wealth when perceived as an 'alternative asset class'; especially pertinent during the financial crisis. This all the more important given the ever increasing global flow of semi-latent and active finances created by EM growth and global QE.

Thus Part 2 sought to demonstrate that the top-tier of the classic car 'market' should be viewed very differently compared to normal markets (financial and otherwise) because of its lack of liquidity and given plethora of factors involved. All of which leads to greater perceptional pricing and indeed externally influenced 'pricing', rather than more rationally objective pricing methods.

Precisely because such product scarcity is indeed being chased by global wealth it seems unlikely that the top-tier will suffer to any great extend the greater volatility seen within the lower orders of the classic car world. Herein valuations are more rationally governed by a sliding scale of greater availability across more distinct condition categories set against a regional economic climate.

Part 2 ended on an important investment-auto-motives' thesis.

That the ability to own and deploy such automotive masterworks as items of cultural significance - and very probably traded artefacts - as part the US's now necessary soft-power approach to the EM and global macro picture.

Part 3 will show how the USA with substantial Californian input, has and is re-forming itself so as to supplanted Europe as the cultural heartland of the automotive world.

[NB investment-auto-motives believes that in doing so it seeks to legitimise its role as the perceived global leader in green-tech cars].

Hence today in what may be described as the 'neo-industrial age' – such as hand-crafted watch-making in Detroit, which is set to percolate hand-made skills into its cars - there is in parallel the guided conveyance of not just the auto-industry but the very fabric of American auto-culture led by California. One in which Europe's finest cars are set into a new context relative to the 'Great American Auto Story', and where California is able to in auto terms cross-fertilise the cultural image akin to the Napa Valley wine region with the technology image of Silicon Valley.

The seeming agenda to stretch from the high echelons of Pebble Beach, and its subtle influence upon global high finance, industry and politics, to via popular media, throughout the world to poorest albeit slowly improving neighbourhoods of South America, China, SE Asia and Sub-Saharan Africa.

Previously investment-auuto-motives highlighted the topics to be covered in Parts 2 and 3. The remaining aspects to be explored are the following points:
- list of some important museums and collections
- a renowned 'garage'
- an increased rise in imitation
- broadened 'market' (original vs 'homage')
- a continued 'American Grasp'
- the commercial future of 'Californiacation'.
- use of collectors' models to engage foreign business interests.

Now, the web-log returns to the topic of the 'rare breed cars' and the watershed that is 'Californiacation', but set within the broader regional and global socio-economic context.

This section begins with a view of the major top-tier automotive collections.

Vehicle Museums and Collections -

Though fascination is a central theme, different yet often inter-woven imperatives tend to underpin the motivation for collecting and expansion: commercial, public and private. But in all cases the outcome forms part of the automotive time-line, an historical record.

Following are some of the better known museums and collections, outside of the USA, yet hardly a comprehensive list.

Recent decades have seen the major automotive manufacturers rightly seek to embrace and celebrate their growth story via the creation of in-house museums.

Volkswagen “Zeithaus” Museum - Wolfsburg:
Part of its Autostadt (car-town), which juxtaposes the company’s brand and product milestones alongside those of other deserved marques and models – so aiding the perception of VW's even-handed stewardship of auto-history.

Audi Museum “Mobile” (VW Group) – Ingolstadt:
Held within a circular glass building, the museum displays various models which represent the sector consolidation process by which Audi was formed. These include the brands of: Horsche, DKW, Wanderer, NSU, Auto Union and Audi. Its exit includes new model showroom.

Skoda Museum (VW Group) – Mlada Boleslav:
The initial collection started in the mid 1960s, with move to its first dedicated location in the mid 1970s. Upon the marque's centenary in 1995 a new facility was inaugurated, intended as a museum, conference centre and cultural interface between the factory and the public city centre. It houses the wide variety of Skoda vehicles produced. As part of its desire to educate about classic repair methods, it unusually showcases the same model in different stages of repair, aswell as wholly original condition cars.

Porsche Museum (VW Group) – Zuffenhausen, Stuttgart:
Founded in 1976 as a 'works' museum with changing vehicle displays, the facility grew sizably with a new building in 2009

Daimler Museum – Stuttgart:
Previously housed as part of the general factory, the new facility was opened 2006. The collection spans from Benz's first 'modern automobile' to the latest F1 cars, and the collection is effectively operated and maintained by the Mercedes-Benz Classic Centre, which has run an historical collection with external enthusiast participation since 1993 in Stuttgart, opening a second dedicated centre in Irvine, California, which operates as a satellite location to the homeland museum.

BMW 'Welt' Museum – Munich:
Opened in 2007 it was created upon similar thinking to “Zeithaus” (above). “BMW World” functions as a new car distribution/release centre for private and business buyers alike. Yet instead of offering a public entertainment face, die Welt instead offers a business face; promoting the use of events space and conference space.

Renault Classic – Paris:
As understood, although with a large collection of historic vehicles, only a small number is displayed for public view at the Boulogne-Billancourt site. This may be because of a corporate desire to reduce costs and for people to visit L'Atelier Renault on Champs Elysee, where old and new sit side by side. Also possibly of little need given the coverage of another non-Renault museum named Le Manoir d'Automobil, though far from Paris in Rennes.

Jaguar Cars Museum – Coventry:
Unlike other manufacturers substantial museum rebuild efforts, the 'leaping cat's' museum is still sited within Browns Lane, the marque's original home, on which the new vehicle pilot build workshop stands and the wood veneer workshop. Instead, over preceding years the HQ, design and development and production have been relocated to other plants. The museum is small by counterpart standards, so with the TATA backed growth of JLR plus its own cash generation, a larger, more imposing museum facility is expected.

Ferrari Museum – Maranello:
Initiated in 1990 and close to the car factory, a new wing was added in 2004. It houses both motor-sport and road cars, some seemingly borrowed, the voracious collector's appetite for Ferrari means the full lineage cannot be displayed. But an expectedly strong line-up of F1 and prime F2 cars and associated victory silverware.

Toyota Automobile Museum – Nagakute, Aichi Prefecture:
The initial 1989 facility was designed to place its own vehicles in a broader historical context with the display of many other non-Toyota and non-Japanese vehicles from throughout the decades. It appears to hold many vehicles borrowed from private Japanese collectors, aswell as having acquired many in its own right, but of course showcases the most prominent of its own creations. In 1999 the domestic vehicles were re-sited in a new annex building and likewise contextualised relative to the social fabric of Japan's 20th century. Another satellite museum is located in the USA

Abarth Works Museum – Lear, Belgium:
Though neither FIAT owned nor in Italy, a dedicated collection of Abarth specials and Abarth enhanced FIAT cars are displayed in this facility and adjoining warehouse and workshop. The owners of the facility keen to commercially service the public and private Abarth passions.

Classic Remise – Berlin:
Effectively a free to enter museum-like sales space set within a large yesteryear tram shed. An assorted collection of classic cars, from E5,000 to E100,000 sit awaiting sale, accompanied by views into the craft workshops which support the restoration process.

Publicly Owned:
These have tended to be within the remit of local authorities, places such as the UK's Coventry Transport Museum, but the typical free-entry philosophy set against public funding cuts means that those remaining within this sphere may well be dissolved.

This was the case with Australia's Sydney Motor Museum, whose own public interest small fee entry charge was insufficient to cover costs. Thus such unfortunately unworkable business structures tend to see their vehicles go to commercial collections, private collections or charitable trust collections.

One still seemingly healthy museum is situated in Italy. Presumably much subsidised by the state is the “Museo dell Automobile di Torino”, now also known as Italy's National Auto Museum. It displays a wide selection of domestic and foreign vehicles, obviously highlighting the history of FIAT and its previously consolidated associated brands (Alfa Romeo, Lancia, etc). With this dedicated site, it was deemed unnecessary to house a museum in the converted iconic Lingotto Factory.

Private to Public:
One most interesting story is that of the now reallocated Schlumf Brothers collection; primarily devoted to Bugatti. They secretly amassed a store of many, many cars, buying other's whole collections from the Bugatti family, from owners on the Bugatti Club Register itself and other renowned collectors through the 1960s. Over 105 Bugatti cars vehicles were amassed amongst an inventory of over large 400 items. The 1970s slowdown of the French textile sector vs Asian production costs led to the shut-down of their various factories and unpaid employees, causing worker anger.

The brothers fled to Switzerland to escape the authorities and 'mob', at which time the employees found the startling collection. To reimburse staff earnings the union took control of the collection and subsequently put under the control of the state recognising its importance as a national cultural asset.

In 1981 a portion of those cars were judged as rightly repatriated to one Schlumf brother, forming part of the estate left to his wife. She sold the 'reserve stock' as it became known to other interests who in turn sold vehicles to the Mullin Auto Museum (see below). The large remainder housed in Mulhouse, France, this collection today known as 'Cité de l'Automobile'.

Charitable Trust Status:
Ongoing shifts regards the advantages of trust status over preceding decades has meant that this funding form has become a near norm for those collections dedicated to 'public interest'.

Here in the UK, morphing from private to charitable basis has been that of Lord Montagu's collection on the Beaulieu Estate, taking the name National Motor Museum to reflect its grown stature. Latterly, the Heritage Motor Centre (or “Gaydon Museum”) adopted similar standing, as did the Brooklands Museum (housing cars, motorcycles, bicycles, buses and planes given the circuit's airfield history) whilst also seeking corporate sponsorship.

Thus it seems the public interest type of collection will be reliant on a mix of the charitable trust meets sponsorship model to survive and prosper.

Private Passions -

Wealthy individuals have always been a major force regards the collecting, conservation and repair of notable vehicles. These have tended to be relatively personal projects though undoubtedly greatly assisted by staff and contacts, formed for either personal enjoyment or public image or status versus similar peers, often a mix of all.

People such as: the Sultan of Brunei, clothing magnate Ralph Lauren, musicians Nick Mason, Jay Kay and Brian Johnson, film actor Nicholas Cage, comedians Tim Allen and Jerry Seinfeld, TV chef James Martin and of course the publicised efforts of Jay Leno.

There are others, especially so in the US and related to the entertainment industry, but who's 'collections' cannot be considered truly so; often temporary recipients of the cars (many of which are simply new luxo-cars) whilst their public image and earning power lasts, this lifestyle critically at the behest/mercy of their 'record label' or similar.

However, in direct contrast, in the case of Ralph Lauren there appears an appreciation of the aesthetic syntax between apparel and automotive creation.

[NB Although ostensibly a private collection, it should also be recognised that his car collection was publicly exhibited in Europe in 2011]

These then the popularly known classic car collections.

But others are held by (often intentionally) far lower profile names, who have gained from industry and commerce. One such being the Louwman Collection in The Netherlands, with what the Dutch call “Old Timers”.

American Private Collections -

However, as noted in Part 1 the 'American 20th Century' enabled a greater propensity for private collections to be created in the USA, likewise by those more distant from immediate public glare. Less well known past and present individuals include:

- Otis Chandler to Peter Mullin – (see below)
- Robert Lee Collection – Virginia (since long dissolved)
- John W. 'Jack' Rich (JWR) Collection – Frackville, Pennsylvania
- John Mozart Collection – Mountain View, California
- Bruce Meyer Collection, Beverly Hills, California
- Culver and Pitt Collection - unknown
- Harold LeMay – (see below)
- Michael Dezer Collection – (see below)
- Frederick Simeone Collection – (see below)

As can be seen, some have been seen to be taken from apparent private status and put into those of an associated charitable foundation or similar; though they are ostensibly still pseudo-private but with a public-facing entertainment and educational remit.

Such collections include:

- America's Car Museum (nee LeMay Collection) – Tacoma, Washington
[the world's largest vehicle collection]
- America on Wheels – Allentown, Pennsylvania
- National Auto Museum (nee Hurrah Collection) – Reno, Nevada
- Peterson Automotive Museum – Los Angeles, California
- Simeone Foundation Auto Museum - Philadelphia, Pennsylvania
- Mullin Automotive Museum Foundation - (ex Chandler)

Creme de la Creme -

Whilst other collections have a number of European masterpieces The Mullin Collection is specifically dedicated to the stewardship of 'the best of the best', so is of specific interest here given its raison d'etre.

To quote the website an “homage to art deco and the machine age – eras that produced exquisite art and magnificent automobiles. The museum is home to the finest historic French automobiles from the Bugatti to the Voison as well as significant and representative decorative art from the 1920s and 1930s”....[it] “will serve as a legacy”....[it] “supports non-profit public charities that are dedicated to the study, preservation and public display of classic automobiles”.

As seen with the Toyota Museum, in contrast to The Mullin Museum's narrow focus on the epitome of “drivable sculpture, kinetic art, poetry in motion”, very often more commonplace and so more socially relevant, vehicles exist as the counter-balance of larger collections.

Jay Leno's Garage -

This the case with what is perhaps now the western world's best know car collection.

Whilst this weblog intentionally seeks to highlight the arguable problems of the Californiacation trend, one notable caveat must be this collection and its deserved special mention; given its public reach and intrinsic subtle agenda.

Through Leno (and his probable 'sleeping partners') a massive external exposure has been generated, the span of private and commercial guests invited provides not only a chronological connection from the past to today and into the future; but the commercial guests - often relatively small-time, and perhaps intentionally conveyed as 'mom and pop' - is intended to assist America's socio-economic reinvigouration.

His chat show host fame undoubtedly enabled a strong launch-pad for the web-video series, and so capturing large and diverse audience. However, the show's innate propulsion is Leno's true enthusiasm, his accrued knowledge and constant learning. Whereas other collections tend to be inevitably 'static' in their real-world presentation, 'Leno's Garage is not – and not simply because of the drive around the block, through the hills or down the freeway – his persona like any true enthusiast adding much dynamism.

Comprehensive knowledge spanning history and technologies and an appreciation for all types of car provides for true 'auto-egalitarianism'; the mark of a true connoisseur who can recognise not only the inherent mechanical magic of a specific design or engineering solution, but of critical importance the resultant industrial and social impact.

Whether spotlighting an early era horseless carriage, a Communist Russian GAZ sedan with polit-bureau overtones, a 'dropped and chopped' SoCal Hot Road, a once humdrum van or pick-up, or indeed a multi-million dollar Pebble Beach car, the auto-enthusiasm created in turn assists the local auto-parts store (whether listed or independent), repair shops, car dealers (corporate or franchised) and so all vehicle manufacturers that sell in the US; though with obvious Detroit bias.

Some collectors do so for prestige and personal self-promotion, others because they admire the inherent artistry, and others with an obsession for a single marque or era type. But, as with Leno, to be absorbed by everything and understand its detail is the sign of a child's wonderment and old person's acumen.

[NB to be so bold, one small negative aspect was Leno's previous tendency to cut across his guests in conversation. Seemingly not done from any sense of inter-personal power-play, as some people do to command a conversation, but because his mind was already reaching for the next observation point or conversational topic].

Ultimately, the fact that his garage consists of some very precious vehicles but also an unprepossessing attitude, has formed a variant of 'autopia' accessible to many millions.


Increasing Imitation -

“Imitation” it is said “is the sincerest form of flattery”, but as per Adam Smith's quote regards the self interests of the “butcher, brewer and banker”, an expanding world of automotive imitation has formed because of commercialism behind the Replica, Resto-Mod and Clone.

As the sales prices of rare exotica has sky-rocketed over the last twenty years, so a new market has emerged for very close copies of the original machines.

Though it must be noted that these high input, high cost machines are far greater creations than many of the modern so called replica cars that have been promoted in recent years; usually Ferrari, Lamborghini, Rolls-Royce, Bentley etc. Those are little more than 'body copies' placed over donor cars or self-fabricated frames and with mismatched proportions and poor detailing are little more than bad interpretations. Such outfits offering such cut-price facsimiles also appear as little more than confidence trick 'businesses'; taking deposits for car-builds supposedly located at one workshop location, then 'skipping town' and re-running the scam elsewhere under a new name at a new location.

Equally, the new realm of replicas is far from that of the once dreaded, but now much improved, 'kit car' arena. Necessarily adapting low cost donor vehicle systems, into what were previously generally considered poor interpretations of classic motorcars – especially 1930s roadsters.

However, this sector of the 'everyman's replica' invariably involves inherent engineering and cost limitations. There have been some accomplished cars in their own right, from intended low cost beach buggys and track cars to replica AC Cobras and Porsche 356s. But all too often given the problematic business formulas, the high priced classics appear never truly repeatable; many design details proving problematic (donor chassis engineering hard-points, exacting scale, the wheel-arch 'sit' and paint quality over plastic skin).

However, that improving sector, should have assisted the emergence of true craft-based players.

In the mid 1990s a new level of professionalism entered, seeking to create as close as feasible “like for like” vehicles worthy of collection in their own right; usually portrayed as 'homage' vehicles. Such entrepreneurial re-creators seeking to achieve a sustainable business model by using lower cost crafts-people residing in countries with unreformed and so challenged national economics. Thus providing a positive 'tailwind' FX differential between the national currency and the US Dollar , British Pound, German Deutschmark, French Franc, Italian Lira and latterly the Euro.

Pursang of Argentina is recognised as perhaps the most competent 'neo-creator', having become reputed for its 'atelier replica' of the Bugatti Type 35, Type 43 and later the Alfa Romeo 8C-2300 Monza. It also produces early era motorcycles such as the Indian. In addition Pursang will create wholly new client commissioned cars which reflect the golden age by drawing upon marque various cues, but not dedicated to anything specific; so 'theme cars'. Lastly it creates children's pedal cars in the manner of miniature Bugatti T-35, Bugatti T-576 (“Tank Car”) and Ferrari 250 Testa Rossa.

However, it seems with that the risen auction prices of original cars, so the ceiling price of replicas has been able to rise, and has thus allowed other regions to enter the high value replica arena.

This the story of Motorima Coach-building of based in (much higher cost) Sweden. Building upon its restoration business to develop a 'recreation' arm. (Interestingly the workshop was spawned from the initial car and 'social artefacts' collection). Thus far beyond repair work on various yesteryear cars, it has designed and produced 'homages' to the Alfa Romeo Disco Volante and the Abarth Special racer.

'Resto-Mod' -
This genre is essentially a cross-fertilisation of old and new vehicle parts. It is a portmanteau of “restoration and modification” and typically involves retaining but strengthening the original structure, maintaining the classic appearance of a car externally and often internally, but altering the 'invisible' under-body systems: engine, transmission, rear axle, suspension and brakes and an electrical re-wiring. This then gives improved performance and notional reliability set into a romantic wrapping.

Whilst in fashion the number of truly unmolested original cars of a specific model and year will inevitably decline, presumably leaving the remaining unaltered cars as at some future point in time yet more desirable vehicles, thus boosting ever higher 'per original' valuations and so prices.

The term 'clone' in automotive circles is typically used in one of two forms. Firstly regards the legitimate mimicking of specific classics (without intent to deceive) Secondly regards illegitimate vehicle identity theft (with intent to deceive).

Specially prepared 'clone cars' have appeared ever since certain models gained sporting repute, but perhaps been more apparent on the broad classic car scene over the last 30 years so. Ever since factory-team performance versions of standard saloons and coupes have been in motor-sport, so enthusiasts have sought to build their own copied versions: ranging from '60s Mini Cooper to '70s Dodge R/T cars to 80's Ford Cosworth powered variants; and many, many others.

The term's other use, initially adopted by police forces, is whereby the external registration plate befitting one specific vehicle is copied and applied to another car of similar appearance, done so to commit an offence ranging from avoidance of a road-camera related fine through to use of vehicle in a more serious offence (robbery, murder etc).

A Broadening of the Top-Tier 'Market' -

To re-state the beginning of Part 1, as with the world of furniture, ceramics, artworks, antiques, etc etc, as an item becomes revered, in its own right or by association of the owner, so the innate value of an item increases; whether slowly, quickly or otherwise.

Inevitably, and especially so in societal realms where taste-makers reign and followers seek approval, a demand arises for exact or similar items. Historically a reactionary process begins to create a range of select objects d'art created 'in homage', perhaps the best known examples within the antiquities world that of Josiah Wedgwood’s 18th century facsimile of a very early AD Roman vase, re-christened the 'Portland Vase'.

As seen previously in automotive terms similar efforts have been undertaken, especially when the original article in question reaches new valuation levels; hence the less than convincing copycat versions of originals. From the aesthetic effrontery of the late 1970s Excalibur (using of all things a BL Mini's windscreen and doors) to the better but still 'incomplete' mid 1980s interpretation of a Ferrari 250 GTO (using a Datsun 240Z/260Z structure).

Thus seemingly in whatever sphere, as long as there are unique artistic pieces priced out of the reach of most, a demand is perceived and satisfied, or not, depending upon the aesthetic and technical credibility of any recreated item.

As seen, where as once a small band of wealthy collectors unable to purchase the real thing had only poor imitations as an option, today with the growth of the collector-base, a wide array of increasingly convincing machinery is being hand-crafted, from the 'Peterson' 1930 Blower Bentley to a 1970s Porsche 917 LMP car in obligatory Gulf Oil colours.

Thus, the increasing availability of credible imitation vehicles, the trend much boosted and accepted by the Peterson cars, means that an ever wider spectrum of 'homage' cars are being built either to order or as ventured initiatives destined for the auctioneer's stage.

Thus it may be argued that the original piece by default becomes first and foremost of what is latterly viewed as a series of artworks, though unintended and unforeseen by the original's creator.

Whilst positive in the short and medium terms for those collectors happy to have an imitation – and may are given the usability of such a machine – the homage production of such vehicles also heightens the potential for problems regards authenticity and provenance in the distant future.

Especially so when vendors use phrases such as “believed to be” with apparently convincing back stories and hard-copy evidence regards originality. What has occurred in the worlds of fine arts, furniture, ceramics etc, will undoubtedly occur in generations to come regards the classic cars of the 20thy century. “Caveat Emptor” the necessary phrase of late 21st century sales.

But more likely is that these replica recreations, still in small numbers, when dispersed widely over the globe, will because of even their relative rarity, become treated with near the same reverence as that for the original cars.

What is clear is the USA's leading role in managing and perhaps massaging this 'market', an almost expected occurrence given its heavy cultural commercialisation of the art market since the late 1950s.

However it must be said that seemingly thus far, the central players and power-brokers of art vs cars do appear to have differing sensibilities. The broader art world - especially post-modern art with its plethora of celebrity content - often interpreted via PR spin rather than actual intellectual substance. Whilst at least the precious items of the car world, because of their socio-industrial meaning, can be said to contain substance on par with style.

However, exactly how long this essential difference remains is debatable given pricing dynamics, particularly the former's super-charged 'money mentality' apparent seep into the latter.

America's Past Grasp -

It is undeniable that the USA has enjoyed broad swathes of worldwide hegemony throughout late 19th, 20th and now 21st centuries, initially with the provision of weaponry to the likes of Feudal Japan. In the 1920s the provision of industrial equipment to create new economies for both devastated and emergent foreign economies. In the 1930s deployment of Detroit's finest to aid foreign policy, from Buicks to Indian Maharajahs to the consolidation and re-financing of Germany's and Australia's local players.

Post WW2 in the mid-late 1940s along with remaining Jeeps, many other US cars often driven by the officers of its victorious forces both provided the American dream for often dissolute populations. In the 1950s those cars reverse engineered as inspirational engineering benchmarks, with the help of Deming's teachings, to create high quality indigenous industries. By the the mid 1960s politicians saw the advantages of opening the US market to increasing imports – the majority from Japan vs poorer quality mass-European cars – and coming into their own as cost-effective vehicles during the 1970s. The early 1980s saw the beginning of the trend for 'trans-plants' such as the initial NUMMI factory, whilst that same decade also saw a break-through in US-China relations with Beijing Jeep. With the early 1990s came increasing co-creation of S.Korea's modern auto-sector. And the first decade of the 2000s, after the dot-com collapse, saw the NYSE as deployed as a powerful global-reach investment channel for both domestic and foreign producers.

Thus, to date any discussion regards the global automotive arena inevitably involves the soft-power interaction of the USA; today moved on from the application of basic engineering knowledge and hardware onto provision of exotic lightweight materials and increasingly intelligent software.

However, the other very important soft-power topic is the manner in which the US is able to leverage its global media reach, so able to partly mould mass mindsets regards auto-culture. From the output of Disney-Pixar's animation suites in Emeryville Northern-California directed toward youngsters but also influencing parents, to that of the physical production capabilities of Burbank Mid-California, directed at the “17 to 75” age range.

The Commercial Imperative of 'Californiacation' -

As seen in Part 2, it appears that an ever strengthening centre of financial gravity has surfaced within California regards acquisitions of 'the best of the best', from both previous European owners and those from the USA's Eastern Seaboard.

And as stated, this trend – whether intended or not – echoes the spiralling of prices across other art-forms. There are very probably those who partake as a vainglorious exercise, to a small coterie of collectors who value the kudos over the actual art-form.

However, whilst this may true for some, as also shown, investment-auto-motives believes this Californian collector centricism to also actually be much more, with a far bigger macrocosm agenda assisting the West Coast economy, yet delivered through the microcosm of the HNW individual and/or their created Trusts and Foundations.

It is theorised that the 'best of the best' Bugatti's, Voisin's, Ferrari's etc will be made increasingly visible as 'objects d'art' and ultimately treated as sculpted demi-gods, sat at the pinnacle of a culturally inter-connected, multi-level 'hyper-realistic' automotive experience that spans much of the length of California.

A created experience that not only turns the wheels of commerce in its own right, but creates tentacles which promote economic activity vertically and laterally across the broad automotive American value chain.

[NB this will be reviewed in the next web-log]

California's International 'Soft Power' -

It seems inevitable that presently the collections amassed, retained, restored and indeed re-created to sell to possibly create a four part process of value creation:

The reasons investment-auto-motives believes is three-fold.

1. Creation of California as an additional “car-centric” tourist destination for the increasing number of Chinese, Indians, Asians and South Americans.

The state obviously presently operates as as both single tourist destination in its own right and as a gateway to Nevada. State attractions span the 'high brow' highland vineyards of Napa Valley to the 'low culture' low-lands of Anaheim; whilst an inter-state experience can be had in Las Vegas, including the mixed 'delights' of a miniaturised mock Europe, general entertainment and gambling.

But since more than any other state, California was evolved around the motor-car, with its sprawling suburbs and freeways, it perhaps sees itself as the 21st century spiritual home of the car, so would choose to create a broad auto-cultural international visitor attraction base, served by the mega-jumbo aeroplanes of today.

2. The seeds of such a policy is evidenced by the corporate actions of various major global auto-companies (see museums list) whereby they have sought to place their own historic car collection footprint in California, by way of satellite museums.

Thus 'transplanting' consumer-centric “brand centres”, and effectively replaying the “lift and shift” initiative seen before with manufacturing. All adding to the aspirational element of such brands, reaching potential buyers whilst they themselves are relaxed within in a seemingly exotic and pleasant aspirational setting.
3. The 'Californiacation' of European masterpieces allows private, corporate and public collections to more easily display and eventually dispose of the cars; to the increasing number of uber-wealthy people located in China, Asia and Latin America; possibly in the late 2020s and beyond, having first engaged a generation of HNW young adults.

4. The 'Californiacation; of global auto-culture creates a centre-point by which – now slowly being commercially revitalised in a 'neo' idiom– the state creates an intelligent auto-cultural network in which the once defined limits of Main Street (commercial) reality mixes with the hyper-realism of (commercial) theme-parks assisted by the social glue that is now cyber-space and the internet.

Vitally, the emergent 'Cali-Car' economic model will be recognised by EM academia, businesses and governments who themselves might well wish to replicate for their own needs.
So where as from the Californian Port of Long Beach the US once shipped-out Model T Fords, Buicks, Cadillacs and Jeeps to throughout the world, it could now seek to replicate and transplant an yet arrived but evolving 21st century auto-cultural commercial model.

The Pyramidal Market: Top vs Middle vs Bottom -

As seen, the rare breed classics will inevitably retain their seemingly sky-high valuations, as they become increasingly considered masterpieces in their own right.

The high prices of the highest echelon set to be retained even when auction sales slow, as an indirect result of increased demand perpetuated by US, UK and Japanese 'easy-money' policies.

This possibly also set to be seen elsewhere, though in smaller proportion, by EM central banks at in response. To intentionally devalue EM currencies to regain international competitiveness as a ploy to re-flate their own economies. Critically, even the to date hawkish ECB – itself thus far engaging necessary structural reform over prolific QE – possibly having to likewise accommodate with moderate QE if such an dovish EM environment occurs.

Hence, unlike middle and mass classic car markets, themselves far truer markets in their own right, the very limited top-tier may well have been doubly boosted by the western financial crisis, first as a store for wealth, second a beneficiary of QE formulated cash; thus creating conditions for new high-figure 'market floors' under 'the best of the best'.

Further-down, into the middle-tier of largely 1960s Aston Martin, Jaguar, Porsche, Mercedes (et al) coupes and convertibles there seems likely to be maintained pricing volatility. Partially because of regional variation in demand and supply relative to any one the local economy, but also because of what my be increased differentiation between 'A1' original vs well restored vs average vs poor condition vehicles. Thus the “buy, buy” mentality that had arisen looks set to dissipate.

[NB However, wealthy current owners of poorer conditions cars may be tempted to have their vehicles restored by the original company – this service offered by Mercedes-Benz's 'Classic Centre ' in Irvine California, as previously seen at Aston-Martin in Newport Pagnell and Ferrari in Modena, so seeing the enlargement of in-house restoration serves].

But it is toward the more everyday 'mass' of classic cars that pricing might be argued as more proportionately over-blown. When items such as “clone” motorsport Ford Escort Mexicos and RS Capris are UK advertised at £30,000, not far off the values of original cars, then perhaps there are signals of caution, perhaps the whole mass classic market over-valued by 20--25%% in the current climate.

The reason being that as the western world re-enters a more optimistic period of economic growth, many of the alternative asset classes which were viewed and used as cash safe havens will themselves be increasing liquidated as owners seek to deploy that stored reserve into newly those conventional economically correlated arenas, typically corporate stocks and property.

This natural 'rotation' will be of greater proportionate relevance and impact upon the general classic car market than the other publicised supposed rotation, that of institutions selling bonds for stocks.
Simply because the origins of that classic car derived liquidity and bond and stock liquidity is so different.

The stored value in general classic cars is vitally dependent on auction price dynamics and once these have shifted – as economically literate owners recognise better cash deployment elsewhere (ie stocks) and any large sell off has begun (which seems the case in the USA with no-reserve good condition Muscle Cars) the market quickly reacts as other owners seek to sell speedily, old hands recognising the snap dynamic.

Whereas the liquidity for bonds and stocks has in this recent era been QE derived with less incentive to rotate out of bonds into stocks as 'cheap' Central Bank money helped inflate both arenas. Investors awaiting economic new growth – as now appears the case – recognise that new stability as so divest out of what have been popular alternative asset classes (such as classic cars) back into the conventional mainstream so as to enjoy western growth and renewed EM expansion.

California's “Best of the Best” -

However, of importance here, with reference to “Californiacation”, the fact is that “the best of the best” is typically owned by high net worth people who have reached a mature age and often fortunate to enjoy a life-space consisting of freedom/choice.

They recognise that additional happiness cannot be bought from additional funds, and may seek to avoid the usual stresses generated from chasing yet more money. So quite naturally preferring instead to enjoy their cars in whatever form; privately or publicly, with recognition that their cars still proffer themselves as nest-eggs, heirlooms and/or philanthropic possibilities.

And the ultimate motivation?

Beyond the inevitable price increases which secure their interests, it would be good to believe that such 'fortunate folk' foster an alternate viewpoint. Whereby via such a purchase, money itself - and the often grubby personal and corporate battles it may represent - is almost immediately transformed into something of far greater meaning: a piece of historical significance from an apex of when of where industry met art.

Thus there may be something in the wealthy collector's mindset by which they can act as modern-day alchemists.

Conclusion -

It must be first stated that whilst it may be viewed that the 'loss' of such cars from Europe may well be a cultural concern, the fact is that the cars purchased by US citizen collectors and shipped there – often decades ago - were (presumably in most instances) done so completely legitimately.

Hence this is not a call for any sort of artefact repatriation, so no political head-butting over what may be described as cultural relics. The collectors are able to as they wish with their possessions, and should not be pressured otherwise.

Instead it is a call for those 'stewards of yesteryear' to follow the lead of Ralph Lauren; inasmuch as the willingness to further share such collection with others in the world, to move beyond the collection's local confines; as seen by the Lauren exhibition held in Paris in 2011. That event will no doubt be seen as semi-commercial, as a synergistic ploy between the fashion capital and the fashion house seeking ever greater profile; but it at least highlighted the importance of such entwined initiatives, which both adds glamour to a locale and importantly draws the attention of the broader public, promotes the cross-fertilisation of industries and importantly enthuses not just the older generation, the eldest of whom might reminisce, but young people too, who themselves are inspired.

Such arrangements regard the similar wider availability of access to all important collections would not only serve the educational interests of numerous generations, but also serve to better knit together European-US relations at this critical juncture of economic history. A time when EM new luxury car production capabilities, though still today ill-formed, are inevitably set to mature as such countries deploy both their own hand-crafted capabilities and newly absorbed technological competencies. Whilst mass manufacture will be endemic to the BRICs and CIVETS, they will also not wish to follow the Iranian course of remaining permanently stuck within a yesteryear technology sphere with an ever slipping quality differential. Those countries and others will wish to replicate leap-frog in the manner similar to that of Hispano-Suiza achievement, in the then largely industrial back-waters of Spain and Switzerland.

Thus, a time when the creation of new forms of automotive beauty and technical excellence are vitally necessary in order to ensure strengthened foundations of a stronger and larger European and American luxury vehicle sectors.

One which may export new creations described as “the best of the best”.

Moreover, and very critically, such efforts will possibly dissuade current US collectors from being tempted to sell-off the European master-pieces to the new and diverse set of potential EM collectors. Which in turn would disperse what are presently united collections. The result, consequentially reduced cultural connections between the 'old worlds', and very fragmented connections with the 'new worlds'.

This obviously not to create a commercial iron curtain, with EM tours of such classics also encouraged, simply to retain the cultural heritage, much in the same way that EM countries are re-capturing their own artistic legacies.

But as a last word...

...if fortunate enough to be able to purchase such cars, it should be done for the pleasure they bring as not just artistic wonderments set in a museum or travelling gallery, but as driven cars in their own right, on tours and classic rallies; as inspiration for tomorrow's luxury goods. So inspiration and not direct template, which does little to advance wider industry, looking forward as some of the the early creators did, followed by the masterpiece efforts of Ettore Bugatti, Gabriele Voisin et al (and their forgotten artisans).

Presumably this is the likewise mind-set seemingly evident in the creation of the Automotive Foundations which describe the promotion of education and stewardship. So great expectations to come.

For it is when such cars are properly showcased, not just as an on-line image or video drive that they bear the most relevance, and certainly not simply stored-away as variant of financial financial instrument, awaiting latter-day disposal.

Sunday, 8 December 2013

Micro Level Trends – Classic Cars (Part 2 of 3)– The 'Californiacation' of Europe's Masterpieces.

In order to better contextualise this topic and provide more easily absorbed distinct sections of coverage, what was an overly lengthy Part 2 has itself been divided so as to create a further Part 3, to follow.

This allows for an informed and importantly separate, distinct coverage of both the summit of the classic car auction market, as well as latterly viewing the important issue of the wide 'cultural backdrop' such cars represent, and their critical role in forming the continued revival of all new European and American luxury automobiles that can form substantial corners for both regions' industrial renaissance.

Concours d'Elegance -

A highlight for many classic car collectors and general enthusiasts are those more cultured meetings which take place throughout the year, though most, and have formed a part of the social calender.

What were once small, purist meetings have, with the association of wealth, evolved into more socially orientated and indulgent events. Machines to be admired and examined, with often an informal or formal competition marking out the most original or best reconditioned. In the rarefied atmosphere of notable cars worth triple digit thousands and often multi-million figures, the process has long been termed Concours d'Elegance, quite apt given the level of quality expected, and the aura of exclusivity sought by promoters and attendees.

The term re-appropriated from the 17th and 18th century summer-weekend carriage parades – upmarket promenades – seen in the Bois de Boulogne in Paris, the parks of Vienna and elsewhere. The typically exotic and 'high-cultural' French phrase itself adding to the perception of a modern-day event. All the more alluring in more conservative and Francophile areas, which sought and seek to maintain social separation from other wealthy yet typically more socially crass locales.

[NB given the associated prestige, both niche car producers and large manufacturers marketing niche vehicles have sought to showcase concept, prototype and new models at such events].

The most reputed are held at:
- Pebble Beach (Monterey, CA, USA since 1950)
- St Johns (Plymouth, previously Meadow Brook, Michigan, USA, since 1979)
- Louis Vuitton Classic 'at Bagatelle' (Paris, France, since 1988)
- Villa d'Este (Lake Como, Italy, [1929] since 1995)
- Amelia Island (Florida, USA, since 1996)

As can be seen, the USA endeavours to be the 'kingmaker' of the concours d'elegance, and as such a high degree inter-regional competitiveness to gain the American crown.

Other such premium meetings have of course been present, some with and without the 'concours' aspect. These include events such as:

- Retromobile (Paris, France)
- The Cavallino Classic (West Palm Beach, Florida, USA)
- The Quail (Monterey, California, USA)
- Goodwood FoS and Revival (W.Sussex, UK, since 1993)
- Salon Privé (Syon Park, previously Hurlingham Club, UK, since 2007)
- St James's Concours of Elegance (Central London, UK)
- Regent Street Show (prior to Brighton Run, Central London, UK)
- Chantilly Arts and Elegance Concours (Oise, NW France)

Given the present and potential 'wealth-effect' within India, China, Russia, Asia and S.America classic car events are being cultivated, no doubt leading to eventually what will become well established concours d'elegance gatherings.

This is recognised by Louis Vuitton since in 2006 it has offered an award for the 'best of the best' previous concours winners.

Marque Specific Clubs -

The above relies upon the ability for an owner to purchase a specific type of car, the enabling of historical comprehension regards the brand of a certain marque, and the ability to engage a knowledgeable eye when comparing showcased vehicles. This is invariably greatly assisted by long running brand relative owner's clubs.

Throughout the decades, from first appreciation of a vehicle type, owner's clubs have allowed for a snowball effect of enthusiasm, shared historical appreciation (often of the 'marque minutia') and so the collation of general automobilia: from cars themselves to spare parts to specialist crafts-people, to literature and beyond.

These clubs, assisted by specialist publishing efforts, book vendors, the connectivity of the internet and sales of associated paraphernalia, then tend to act as natural centre-points for enthusiasts or fom promotion efforts themselves.

Driving Events -

The motor tour or 'run' has long been the preserve of true enthusiasts, possibly enduring the general discomfort to either mark a historical anniversary or maintain a tradition. Such historic tours have become increasingly popular as older cars of all eras (Veteran, Vintage and Post WW2) are appreciated.

The most pertinent being the Veteran Car Club's London to Brighton drive in early November; accompanied by grey skies, cold winds and often rain; horrible to driver and passengers, but good conditions for engine cooling and combustion horse-power. This one amongst various VCC tours.

However, typical other events are less arduous given more robust machines and better weather, and though arguably less sophisticated, often more glamorous.

Perhaps the best known and publicised of these glamour runs is the present Mille Miglia in Italy. It originally lasted between 1927 to 1957, itself a longer distance spin-off race from the earlier Targa Floria. So, initially a true and often highly dangerous competition for factory teams and privateers. The modern era re-run named 'Mille Miglia Storica' (Historic) is undertaken as a tribute tour; using original and era specific collector's vehicles, with a degree of light competition, but with the central aim of completing the Brescia to Rome and return looped course.

Given the American (especially Californian) 'Europhilia', the 'MMS' inspired the 'Mille Miglia California' has existed since 1991. Its administrators select 65 interesting cars which pre-date 1957 for the occasion, which unlike the Italian run alters its route each year to take in alternative gastronomic 'refueling stops' and scenary.

One of the more exotic efforts is the Louis Vuitton Classic Run, which has variously held the event from Singapore to Kuala Lumpur, Dalian to Beijing, Budapest to Prague.

It is believed by investment-auto-motives that the more recent initiatives to create modern-day 'high octane' runs, such as the 'Gumball 3000' and 'Bull Run' are partly directed at younger, less wealthy but more excitable auto-fans, so as to create a synergistic bridge to the upper tier as their sensibilities mature and wealth increases; so morphing a new generation of 'owner-stewards'.

[NB in contrast with its somewhat narcissistic image, the Gumball 3000 operates a charitable Foundation for less privileged children].

The Sale of Automotive Icons -

Private Treaties:

Private treaties between different parties are the 'dark pools' of the classic car world, one collector seeking to obtain a venerable vehicle without the gaze of the world upon them, and by doing so hoping to limit the cost of the purchase.

It would be logical to assume that the trend for such private deals rises during lean economic times when certain collectors may be forced to let-go of their prized possessions, in doing so seeking a 'fair price' for the item, in the knowledge that the 'open' auction market is deflated.

Though note that the major auction houses tend to act as the intermediary agents to connect both parties and to provide advice on “fair value”.

Auction Events:

Likewise, during improving and boom times, sellers will seek to maximise sales value from an open sale, hoping to draw interest from a broader audience.

The well known auctioneers of the classic car world include:
- Sotheby's
- Christie's
- Bonhams
- Gooding and Co,
- RM
- H&H
- Barrett Jackson.

Sales take place both at an auction house's own facilities, and at the 'hallowed grounds' of Concours d'Elegance events and at other suitable up-market locations.

In order to comprise as many top-notch cars for sale as possible, and compete for sector standing, auctioneers are willing to join forces. To create strongly populated, so price elevating and so memorable auctions; as was the case with RM and Sotheby's.

Determinants of Valuation -

The primary drivers of valuation relate to: original production volumes, current rarity, level of pent-up demand, body-style (racer vs roadster vs coupe vs saloon...limousines retaining prestige), aesthetic consideration (relative to original context), condition (wholly original vs degrees of alteration and/or refurbishment; from basic conservation to complete 'ground-up' rebuild), associated documentation (relating to originality or refurbishment costs), “barn-finds” (whereby a precious car has been usually unwittingly removed from general circulation and re-discovered), peer review (whereby a vehicle has won concours d'elegance awards), event eligibility (so as to be able to run the car on renowned auto-runs, the 'nostalgia effect' (whereby older wealthier buyers seek out their youthful associations)

Lastly, of major influence regards price paid is the general health of regional and global economies, with critically any specific major strength of a certain country and its currency. As seen by the great strengthening of the Japanese Yen vs the US Dollar during the late 1980s, which drove Japanese collectors to pay all time high prices.

Comparative Sector Valuations -

Of these things, it is perhaps the car which has garnered the greatest public attention, especially over the last 25 years, given the seemingly sky-high auction prices paid for the best of breed.

The Economist publishes a 'valuables index' in which the 2012 edition highlighted the marked out-performance of classic cars versus guitars, violins, coins, stamps, art and wine. From a 2002 baseline cars rose 5.4x versus 3.4x for coins/stamps, violins and wine 2.8x, guitars 2.1x and general art 1.5x.

It should also be stated that the aforementioned comparative valuations table itself states that the underlying data for cars was not to be published, so inferring that only the most expensive examples were surveyed. Thus the chart itself arguably contributing to the 'culture commercialisation' and perhaps over-emphasising the real rate of high-end classic car price appreciation.

However, according to HAGI index (Historic Automotive Group International) which records transactions both on a brand basis and en mass, between 2005 and 2010 vintage cars saw valuations grow by an average of 21% annually. However, when the price of record-breaking 'star' lots have been extracted, and when viewed on a broad marque by marque basis the growth figures diminish.
HAGI points to its Mercedes Benz index as being more indicative given its broader model exposure, and states that this saw a 15.5% gain Year to November.

It is noted that with the use of tracked indices within this 'alternative asset class' that, like the trading data of stock, bond and other classes, sellers, intermediaries and buyers are trying to create greater visibility to the 'market'; presumably to even-out the previous volatility of wide-spread transaction prices and avoid the 'boom and bust' of the past.

The Need for Vigilance -

It seems then that fortunately, of all the collectable items available, the mechanised complexity of the car and its typically recorded provenance by manufacturers, dealers, owners and government agencies, makes it arguably harder an artefact to criminalise. So presumably harder to deal dishonestly.

Hence why the tracked authenticity, in conjunction with a car's innate being, plays such an important role for top-end cars. But, as with any artefact the supporting evidence that helps prop-up prices can and no doubt has been criminally created. Whilst to a lesser degree a vehicle's true condition – its wear and tear history - may be misrepresented.

This is less of a problem within the upper most echelons of classic cars, given their rarity connoisseurs will typically know of a specific car's past, through both official records, critically through marque club membership and through dedicated press/magazine coverage of this relatively small field.

However, very probably far greater occurrence is intentional misrepresentation amongst the mass of lesser classic cars; especially regards the ever more important topic of originality. The demand for originality from buyers has seemingly prompted a rash of vehicles over recent years claimed as wholly original: with low miles / kilometres, barely worn seats and carpet and supporting rare 'authentic' accessories.

As may be viewed on youtube etc, some of the claims made regards originality are clearly false. As with non-existent material degradation for cars that have supposedly stood in garages for decades, or non-existent wear and tear on even modicum mileage cars, or seen when a very low mileage car with pristine bodywork and interior trim has an engine bay that reflects real-world ageing and higher mileage seen by oil-engrained engine block and semi-rusty manifolds. Essentially, a mismatch of conditions so highlighting very likely refurbishment to one area or another.

When described as such, all very well, but cars are ultimately mechanical objects and can have dings and dents 'doctored' so as to be promoted as “original”.

Back to the rare breed vehicles.

Saleroom Benchmarks -

The following long list of auction sales provides a chronological overview of the prime cars sold since 1986 to date. Data is drawn from various sources, but much reliant upon Octane Magazine's very recent auction price update.

1986: (1931) Bugatti Type 41 Royal (Berlin de Voyage) - $6.5m
1987: (1931) Bugatti Type 41 Royal (Kellner Coupe) - $8.7m
1989: (1957) Aston Martin DBR2 - $4m
1989: (1962) Ferrari Dino 196 SP - $4.55m
1991: (1962) Ferrari 250 GTO - $5.5m
1999: (1937) Alfa Romeo 8C-2900B (Pinin Farina) - $4m
2000: (1964) Shelby Cobra Daytona Coupe - $4.4m
2000: (1966) Ferrari 330 P3 - $5.6m
2001: (1956) Ferrari 410 Sport Spider - $3.8m
2002: (1962) Ferrari 330 TR1/LM Testa Rossa - $6.49m
2004: (1935) Duesenberg SJ Speedster- $4.45m
2004: (1930) Bentley Speed Six (“No2 team car) - $5m
2004: (1929) Mercedes Benz SSK Roadster - $7.4m
2005: (1966) Ferrari 275 GTB/4 NART - $3.9m
2006: (1938) Talbot-Lago T150C-SS - $3.9m
2006: (1958) Ferrari 412 S - $5.61m
2007: (1959) Ferrari 250 GT LWB California - $4.45m
2007: (1933) Delage D8S by de Villars - $3.74m
2007: (1935) Duesenberg SJ - $4.4m
2007: (1931) Bentley 4.5L Supercharged - $4.51m
2007: (1959) Ferrari 250 GT LWB Spider Comp - $4.95m
2007: (1953) Ferrari 340/375 MM Berlinatta Comp - $5.8m
2007: (1904) Rolls-Royce 10hp 2 seater - $7.25m
2007: (1937) Mercedes Benz 540K Roadster - $8.05m
2007: (1962) Ferrari 330 TRI/LM Spider - $9.4m
2008: (1997) McLaren F1 - $4m
2008: (1961) Ferrari 250 GT SWB Berlinetta - $4.51m
2008: (1939) Talbot-Lago T150C-SS ('Portout') - $4.87m
2008: (1960) Jaguar E-Type Protoype E2A (“McLaren-Brabham”) - $4.95m
2008: (1938) Bugatti Type 57 SC Atalante - $7.92m
2008: (1964) Ferrari 250 LM (“Rindt”) - $6.98m
2008: (1961) Ferrari 250 GT SWB California - $10.9m
2009: (1933) Alfa Romeo 8C-2300 (Long Chassis) - $4.18m
2009: (1937) Bugatti Type 57 S Atalante - $4.37m
2009: (1960) Ferrari 250 GT SWB California - $4.95m
2009: (1962) Ferrari 250 GT SWB California - $5.1m
2009: (1965) Shelby Daytona Cobra (“Bondurant”) - $7.7m
2009: (1957) Ferrari Test Rossa - $12.4m
2010: (1955) Jaguar D-Type (“Unser”) - £3.74m
2010: (1972) Porsche 917 Spyder - $4m
2010: (1964) Aston Martin DB5 (original Bond film car) - $4.6m
2010: (1954) Ferrari 375 MM Berlinetta - $4.6m
2010: (1938) Talbot-Lago T150C 'Tear-Drop Coupe' - $4.62m
2010: (1961) Ferrari 250 GT SWB Berlinetta SEFAC - $6.1m
2010: (1933) Alfa Romeo 8C-2300 Monza - $6.71m
2010: (1959) Ferrari 250 GT LWB California - £7.26m
2011: (1958) Ferrari 250 GT LWB - $2.24m
2011: (1952) Ferrari 340 Mexico Vignale Coupe - $4.29m
2011: (1938) Talbot-Lago T150C-SS('Tear-Drop Coupe') - $4.47m
2011: (1927) Mercedes Benz S-Type - $5m
2011: (1960) Ferrari 250 GT SWB Comp - $5.28m
2011: (1935) Mercedes Benz 500K Roadster - $3.76m
2011: (1939) Mercedes Benz 540K Roadster - $4.6m
2011: (1937) Mercedes Benz 540K Roadster - $9.7m
2011: (1931): Duesenberg J - $10.34m
2011: (1957) Ferrari Testa Rossa Prototype - $16.4m
2012: (1959) Ferrari 250 GT LWB California - $3.9m
2012: (1932) Alfa Romeo 8C-2300 Spider Lungo - $4.2m
2012: (1973) Porsche 917/30 Can-Am Spyder - $4.4m
2012: (1957) Ferrari 500 TRC by Scaglietti - $4.51
2012: (1955) Mercedes Benz 300SL Gullwing (alloy) - $4.6m
2012: (1964) Ford GT40 Prototype - $5m
2012: (1972) Porsche 917/10 Spyder (“Follmer”)- $5.83m
2012: (1928) Bentley 4.5L 'Bobtail' Le Mans - $6m
2012: (1955) Ferrari 857 Sport by Scaglietti - $6.27m
2012: (1957) Ferrari 250 GT LWB California Prototype - $6.6m
2012: (1956) Ferrari 250 GT LWB Berlinetta 'TdF' - $6.7m
2012: (1912) Rolls Royce 40/50 Pullman Limousine - $7.38m
2012: (1929) Bentley 4.5L Supercharged - $7.9m
2012: (1955) Ferrari 410S Berlinetta by Scaglietti - $8.25m
2012: (1957) Ferrari 250 SWB GT California - $8.6m
2012: (1968) Ford GT40 (Gulf Oil colours) - $11m
2012: (1960) Ferrari 250 GT LWB California Comp - $11.27m
2012: (1936) Mercedes Benz 540K Roadster - $11.77m
2013: (1955) Jaguar D-Type - $3.9m
2013: (1935) Duesenberg SJ (Convertible Coupe) - $4.51m
2013: (1928) Mercedes Benz S-Type - $4.55m
2013: (1931) Bentley 4.5L Supercharged Le Mans - $4.64m
2013: (1948) Alfa Romeo 6C-2500 Comp - $4.85m
2013: (1960) Aston Martin DB4GT 'Bertone Jet' - $4.92m
2013: (1955) Maserati 300S (“Spear-Johnston”) - $5.1m
2013: (1955) Ferrari 250 GT Berlinetta Comp - $7.15m
2013: (1960) Ferrari 250 GT Berlinetta Comp - $8.14m
2013: (1928) Mercedes Benz 680S Roadster (Torpedo) - $8.25m
2013: (1958) Ferrari 250 GT LWB California - $8.25m
2013: (1997) McLaren F1 (road car) - $8.47m
2013: (1937) Bugatti Type 57 SC Atalante - $8.74m
2013: (1953) Ferrari 375 MM Spider (“Kimberley”) - $9.07m
2013: (1957) Ferrari 250 GT Berlinetta (“14”) - $9.46m
2013: (1935) Alfa Romeo 8C-35 (“Nuvolari”) - $9.42m
2013: (1953) Ferrari 340/375 MM Berlinetta Comp - $12.74m
2013: (1967) Ferrari 275 GTB/4 NART Spider - $27.5m
2013: (1954) Mercedes W196R 'Silver Arrows'- $29.6m
2013: Rumoured private sale of Ferrari GTO - $52m


Each vehicle is very specific even amongst its siblings, and collectors tend to keep their cars for long periods. So very little direct 'apples for apples' comparison exists in what is overall a relatively illiquid market; itself broadened and narrowed by external economic and financial forces and the personal fortunes of the collectors.

Nonetheless, to gain a very, very rudimentary understanding of the aforementioned barrage of valuations, similar model variants based upon the same 'model chassis' (whether ladder chassis, space-frame sub-structure or unibody) may be viewed over a time-line.

But to reiterate, given such a lack of even approximate product consistency – given the variables involved and weightings each may be allotted - no true and consistent guideline can exist for 'the bast of the best'.

To state otherwise would be a drastically over-simplification the notional 'market', with no doubt an endeavour to replicate the far greater consistency seen with the more prolific classics, eg 1960s coupe and convertible Porsches, Jaguars, Mercedes-Benz; though these can still vary widely depending upon condition and sales location. (see Quentin Willson's auction round-up in Classic Car magazine to help decode that sphere).

No doubt some have thought that the use of market modelling would help to formalise valuation levels. But real-world inputs might range from the validation of an original gearbox, through to heightened public profile in a popular film, through to the likelihood of an oligarch wishing to redistribute his/her domestic wealth; a very broad and complex input base].

A few examples demonstrate the dilemma:

The 1920's Mercedes Benz S series Roadster variants reached in 2004: $7.4m, 2011: $5m (so showing a notional -30% drop), in 2013: $4.55m (re-approaching 2011 valuation) and in 2013: $8.25m (showing a massive statistical growth trajectory)

The 1930's Mercedes Benz K series Roadster variants struck 2007: $8m, and three years later even within the same year of 2011: $3.76m also $4.6m and $9.7m (highlighting a major difference), then in 2012: $11.8m (demonstrating another big heave upwards).

The 1930s icon of the Bugatti Type 57 S(C) Atalante hit in 2008: $7.92m and in 2009: $4.37m, and in 2013: $8.74m

The 1960's Ferrari 250 GT California is perhaps one of the more traded cars, but is differentiated by LWB vs SWB chassis. The LWB model in 2007: $4.45m, in 2010: $7.26m, in 2012: $3.9m and $6.6m (for the prototype) and $11.27m (for a competition car) and in 2013: $8.25m. The SWB versions (excluding the eternally prized GTO) saw in 2008: $10.9m, and a year later in 2009 both $4.9m and $5.1m.

As an extreme, the 1960s Ferrari 275 GTS/4 NART struck in 2005: $3.9m, but only eight years later in 2013: $27.5m, (demonstrating an enormous 700% leap).

The 1970's Porsche 917 variants struck in 2010: $4m, 2012: $4.4m (so showing a 10% increase over the period) and also in 2012: $5.8m, (so showing nominal 40% gain over 2 years).

These examples then demonstrate the lack of a consistency which must underpin what may be termed as true investor rationality. That mindset seeks out fundamentally sound recognisable value via price rise and decline trends.

Aswell as perhaps value-driven arbitrage opportunities across different geographical markets. Yet the innate market centrism of such top-echelon vehicles means that little pricing arbitrage may exist, with wealthy collectors typically kept informed of global sales opportunities by the intermediary agents.

Instead, perhaps the greatest opportunities of recent years lay in vehicle reconditioning, refurbishment or complete rebuild. As with the the purchase of a poor or mid condition vehicle returned to an 'as new' state, or even beyond into concours condition. This all the more attractive if undertaken to match or better a previous examplar benchmark price.

Yet this process is hard to truly quantify when assessing a “fixer upper”, given the the need to source very specific locatable and extractable parts and skills, so even this notionally rational 'value-addition' approach is far from an exact science.

Whilst such undertakings undoubtedly require substantial sums, the phrase “it is not about throwing money at it” is well understood amongst enthusiasts circles.

The Rare 'Blue Moon' Find -

Previously mentioned was the 'barn find' Bugatti Atalante in 2009, for many years a reclusive doctor's car (by the name of Carr) in NE England. But perhaps the most intriguing case to date has been that of the 'lake find' Bugatti: a 1925 Type 22 Brescia Roadster, salvaged in 2009.

The story told has it that the car was won by a playboy whilst gambling in Paris, who apparently departed for his Switzerland home, but without the money to pay the car's importation tax when arriving at the Swiss border. It was garaged for a period in limbo then supposedly sought by the authorities to be destroyed. Instead of being hacked apart it was pushed into Lake Maggior, conveniently with a long length of chain attached should there be a need to retrieve the car. The chains eventually broke and the car sank further down to 173 feet.

Re-discovered in 1967 the car was 42 years later salvaged as part of an anti-youth violence charity effort; many volunteers and lifting aids bringing the car back to the surface. The rusted hulk of the car was sold for E265,500, with the monies given to the Swiss charity foundation.

The vehicle was so degraded that it was seen as unrestorable as a complete machine it its own right, then more an historical relic to be admired. Yet the purchaser (individual or consortium) either saw it as a petrified rust-laden piece of historic sculpture, but far more likely, recognised the high value innate to the originality of identity.

So presumably able to refurbish key components (engine, gearbox, axles and perhaps sections of chassis) as the 'original proprietary parts' of ostensibly a partly recreated new car – but critically with ex-factory matching VIN data.

The end result vehicle would be worth many millions, so providing profit leeway even after a time consuming costly rebuild.

Ironically, in an arena where the existence of true 'fundamentals based' investor rationality is hard to grapple, the overall rationale behind this rust-laden Bugatti drawn from the gloomy depths is one of the more obviously transparent propositions.

“Stop Press” Update -

As a final point to this valuations section, there have been press reports through specialist classic car press of one Ferrari 250 GTO being sold privately for $52m. If true, it would be a near tenfold appreciation of the car since the 1991 sale for $5.5m.

Undoubtedly with the use of such instruments as the HAGI market indices, a better market interpretation is being created, yet for the 'best of the best', the very fact that there is such per vehicle variability means that the high-end of the classic car market should not be directly compared to mainstream trading markets with more visible and direct micro and macro 'winds'.

Summary -

So far we have seen how those vehicles which are ascribe as being 'the best of the best' are indeed some of the most prominent artistic concoctions of metal, rubber, glass etc seen across the 130 years or so of the automotive age

To the true enthusiast with the means such examples may be of price worth for their position in history alone, especially when continually enjoyed as a car and not investment product or sculpture; undoubtedly the attitude of collectors such as Nick Mason.

Yet such pedigree cars have also invariably become massively symbolic as seemingly the growing band of those who purchase them,with greater top-tier liquidity amongst more international HNW people, create ever steeper auction prices and so valuations. That process then is not simply about the innate aesthetic value of the car, but a function of the greater levels of international HNW liquidity; though still heavily US related.

Thus, exempting the anonymous, the ability to purchase such a rare vehicle is not only a demonstration of wealth, but also a desire to be seen to join a rarefied cultured 'club' atmosphere, which stretches across the world, but in which California acts as the centripetal force.

The massive price/valuation rises of the Ferrari 275 NART series cars embodies the fervency of this liquidity led reality.

In an ordinary market whatever dramatically rises typically at a later date falls as the supply/demand function alters.

But as to be explained in Part 3, investment-auto-motives believes that the uber-wealthy of California are purposefully creating a rarefied classic car micro-climate for the 'best of the best'.

So that in the years to come they can take advantage of a rebalancing between the US Dollar and Chinese RMB and so gain from China's immense future (US like) wealth, and indeed deploy the vehicles as cultural 'bargaining chips' on the table of international finance; having created a virtuous circle of trans-Pacific tourism which embodies the display of European (and American) Automotive Masterpieces, set within a broader Californian auto-cultural dimension.