If you in any way consider yourself to be a serious car person, you know the feeling. The hangover of Christmas and New Years have passed, and although the rest of the world has moved beyond the holiday mentality, you still feel anxious, energetic and ready to go. For us, there is still one holiday left on the horizon, and you can feel the desert air in your lungs just thinking about it. “The Epicenter” is calling!
The fact is, Scottsdale sets the yearly bar for the collector car universe, not only due to its location on the calendar, but also due to the fact it isn’t surrounded with additional hoopla (if you don’t count whatever all that stuff you have to walk through on your way to the block at Barrett-Jackson is). It’s not so much about concours, parties and outside events. Scottsdale in January is about one thing and one thing only: Buying and selling cars.
As with Monterey 2017, the general consensus going into Scottsdale this year, was largely gloom and doom. With the stock market, cryptocurrency and other alternative investment options largely exploding, the political wackiness currently going on in this country (thanks for that government shutdown in the middle of the week you idiots – I’m not posturing or picking sides here, so please afford me the same respect. They are all fools at this point…..), the arrival of the generational shift still largely questionable, the recent grand exits/liquidations of many established collectors and the simple fact that A LOT of notable cars have changed hands in the last couple years, Scottsdale 2018 certainly provided a more than reasonable degree of warranted concerns. However, as Arizona (and for the sake of argument Kissimmee) catalogs began to reveal themselves, it was clear that the auction houses nearly across the boards had stepped up to the plate and delivered some of the best selection of offerings in recent years. For me, walking into January, the success of Scottsdale boiled down to one main factor: sell through rate.
Arizona 2018 by the Numbers
Once again, as mirrored nearly by the results in Monterey, Scottsdale in 2018 closed in nearly identical from an overall perspective as in 2017. In 2018, Arizona car week generated sales of just under $250 million. Although down approximately 5% overall, this is largely due to a decrease in total offerings of just over 300 cars. Average sale price was up slightly and most importantly, sell through rate remained exactly the same, which again, was likely the most important factor in the overall success in Scottsdale this year.
Although the song in Arizona largely remained unchanged, the instruments playing it were very different. Cars on the more affordable end of the spectrum ruled the desert. With more registered bidders and higher attendance virtually everywhere, this is an extremely positive sign for the market overall. This signals new buyers entering the arena and that the long anticipated generational shift is in fact, finally on track. I’ve long had a theory that when the economy is good, muscle cars, generationally appealing Corvettes and Camaros (currently C3’s and 2nd generation cars), trucks and entry level later model offerings (think 80’s and 90’s – IE Fox bodies, etc) are strong. This was definitely demonstrated in Arizona this year and is nothing short of a highly positive indicator as to the strength of the marketplace. The hypothesis that investors are abandoning collector cars as a commodity has been proven overwhelmingly false by the results in Arizona. In fact, it’s clear that a new group of investors is (finally) just getting started. This is incredibly positive for the hobby moving into the future.
Unfortunately, it wasn’t all puppies and cupcakes this year. Cars above $250,000 didn’t fare so well. Although these examples garnered interest, sellers were hesitant to let them go at correct market prices. This for me appears to be a symptom of the virtually market wide roll-over that has occurred towards the higher end since roughly 2014. Current sellers are trying to recoup recirculated investments made at the top of the market and that may be a tough pill to swallow for many in this segment for some time to come. Cars over $2 million fared even worse, but this may be attributed to the growth of the Amelia Island events in March and their focus on the high end of the hobby. I don’t think it’s up for dispute that Scottsdale, despite still setting the bar for the upcoming year has become more of an “every man” series of events. I believe that Amelia Island has certainly contributed to this and it would be inappropriate to gauge this segment until late March as a result.
Winners and Losers
I have to hand it to Barrett-Jackson’s consignment team in 2018. I’ll admit, I am in no way a fan of anything Barrett-Jackson. Due to the type of offerings they generally specialize in (things sporting chrome “dubs” and LS swaps and celebrity/charity lots), their shotgun “no reserve only” approach to generating numbers, their complete and total inability to deliver on anything European and the fact that they organize their events more around selling alcohol, waterbeds, helicopter lessons and giant barnyard animals made out of rusty nails (art?) with cars being somewhat secondary when attending the event in person, Barrett-Jackson is a place to be seen for television audience fan boys and local society types that still buy Affliction shirts and think shiny stuff stitched into the ass of your jeans is cool. As such, for me Barrett largely resemble Disneyland more than a serious collector car event. Of course, they are the draw in Arizona and always will be, but let’s be honest, as far as amusement parks go, Disneyland sucks. It is however, something everybody must do at least once (because hey, its Disneyland), and Barrett-Jackson is basically no different. Point is, I generally don’t consider them a real indicator of the overall health of the marketplace. The real action is seen elsewhere. This year was different though. In 2018, they stepped up to the plate and presented their best catalog in at least a decade (publicity stunts not withstanding) and overall, they performed very well (not on European as usual, but whatever), posting a $10+ million dollar increase over 2017 and increasing their average sale by more than $15,000. The simple fact is that Barrett-Jackson’s type of offering was the primary target this year, and they delivered great cars for the deserts most active type of buyers in return.
Barrett was not the only winner in Scottsdale this year, but clearly the lines between winners and losers were far more defined than in previous years. Gooding & Co had a fantastic sale, posted a considerable increase of nearly $16 million dollars over 2017’s effort and they logged 5 of the 10 tops sales in Arizona. Unfortunately, this is primarily where the victory dances stopped. The normally remarkably consistent RM Sotheby’s struggled, Russo and Steele who went into their 2nd year in their much-improved new venue and Worldwide Auctions entering their 2nd year in Arizona with a controversial lead offering (more on this later) both suffered a somewhat expected case of the sophomore blues. Although Bonhams was successful on a handful of their featured offerings (most notably their 1958 Porsche 550A Spyder) their Arizona results rollercoaster continued with a major decrease over 2017’s much improved results. This is despite an increase in sell through percentage. An interesting mention is Silver Auctions, who despite an influx of cash via their newly formed ownership and a much-improved catalog remained nearly flat. The lingering challenge there will be attracting increasingly qualified buyers off the beaten path to their (albeit very plesent) auction location, who are interested in spending the money required to keep up with their improving list of offerings. Silver certainly faces a bevy of obstacles, but the future does seem bright at the Fort McDowell Resort.
Advice for Sellers
From a seller’s perspective, Scottsdale 2018 wasn’t terribly dramatic. On the plus side, European bread and butter cars like E-types, early air-cooled Porsches and 190/280 SL’s seemed to have largely reached a comfortable resting place, Shelby’s of most kinds and quality Mopar examples preformed reasonably well and Barrett-Jackson types of things mostly did better than average Barrett-Jackson types of things. C3’s, Gen 1 and 2 Camaros and things like Fox Bodies, NSX/Japanese and IROCs are obviously beginning or continuing their climbs on schedule and despite there being a million Testarossas, 308/328s and other 1980’s poster type cars crossing the block this year, most did basically what they were supposed to do based on their conditions, varying degrees of maintenance and documentation. Another shining spot was trucks restored to original specifications with both Russo and Steele and Barrett-Jackson successfully flipping things like Dodge Power Wagons near or above the six-figure mark. There also seems to be a bit of a sellers’ market currently surrounding mid 1960’s Buick Rivieras. On the other end of the spectrum 1950’s Americana continued to struggle and rare and/or special supercar examples from the late 90’s and early 2000’s (think Ferrari 550/575 Barchetta/Super America and special edition Porsches from a similar era) had a tough time finding new homes. The top of the market was also largely absent, but again, I feel like this has more to do with location than market strength. If you are sitting on a Ferrari California or a D-type, your best bet is probably still going to reside in Amelia Island in March, or Monterey in August. But of course, if you are playing at that altitude, you already knew that.
So, where’s the beef? For consignors placing their bets on the lower/entry level end of the hobby, Scottsdale 2018 was a good week. Expect this to continue. Same can be said for those offering the best of the best examples of basically everything. This is really where the Porterhouse meets the plate. The trick for sellers in the current market is once again, going to be to buy smart, buy the best most thoroughly documented examples available and add the correct touches (correct tires, radios, books, tools, etc) that produce the most eyeball for the most discerning buyers. In a largely flat market, this is absolutely where the money is currently and those that do this correctly and then most thoroughly take advantage of auction house marketing will largely fair the best. Buy the right car, present it correctly, get it seen, get it sold. This is how you win the game right now. It’s all about the basics.
Advice for Buyers
If Arizona 2018 proved anything, it’s that now is the time rely on a diverse portfolio, rather than putting all your eggs in one basket. Although things like Speedsters did do reasonably well this year, a more successful strategy most certainly would have been buying a bunch of less expensive cars with a similar investment and looking forward. From a buyer’s frame of mind, it’s time to party like its 2005. Think about it. Several bedrocks of the current marketplace were still available, with room to improve for a very reasonable investment, but yet they weren’t at a point that required you to sit on them until you die. So, what are the next 246 Dinos, Boss 429 Mustangs and Ferrari 275 GTBs? It’s certainly tough to say, but you can unquestionably look at cars currently in a similar place in their cycle with the same criteria and make a calculated risk. Obviously, production factors are different (for example they made like 4 times as many 308s as they made Dinos), but additional forces do exist. We are coming into an era of cars that were at the beginning at of a technological revolution and largely those cars are very fragile and were additionally very poorly manufactured. This means you need to look at surviving examples vs those originally produced. Also keep in mind, that many cars from this era were highly unloved for a long time and thus suffered an untimely demise simply due to sheer neglect. Am I guaranteeing that a Ferrari 308 will someday be a $400,000 investable commodity? I’m not, but I’m certainly not ruling out the possibility (remember, Dinos were once quite unloved too). What I am saying is the same as I stated above. Buy the best cars, with the most historical/cultural upsides, get them to the next level and wait and see. In the meantime, there are currently very stable cars available that are in a position to be improved for the short term. Point is, we are definitely in the midst of a buyers’ market and there are a lot of things to be excited about.
Morality and History Collide in Scottsdale
Certainly, one of the most talked about lots in Scottsdale this year was an offering by relative newcomer to the desert, Worldwide Auctioneers. Dubbed by the houses marketing team as “The Most Historically Significant Public Offering of All Time”, there’s no question that based on rarity and from an engineering and technological standpoint for the era, a 1939 Mercedes-Benz 770 Grosser Offener Tourenwagen is definitely important. However, as we all know, the real reason this car elicited so much attention was that it was the personal car of Adolf Hitler.
One of the nice things about not being chained directly to a major auction event, was my ability to somewhat experience Arizona Car Week like a civilian for the first time in a long time. Although, if you did manage to turn on the TV before 10: 00 AM, you probably did see my smiling face (as I again acted as the primary spokesperson for Russo and Steele in local media), I was actually able to go out and wander around a little bit. One of my stops this year included a quick client meeting at Worldwide’s event on Wednesday morning. My original intention when I arrived was to meet with my people, shake a couple of hands, say hi to a friend of mine that works there and be on my way. This is definitely not what transpired. What I got for my time was one of the most thought provoking automotive encounters I’ll likely ever experience.
By the time I arrived at Worldwide, I was pretty shot. I had spent nearly 6 hours ping ponging between TV interviews already that morning and was basically planning to just pop in and pop out before trying to catch a quick nap and returning back to Russo to handle additional business later that afternoon. As I arrived in the parking lot, my clients were ringing my phone to unfortunately inform me that they were running hours behind and they would meet back at Russo later that evening. Seeing as I was already there, I decided to head in, check out their offerings and briefly visit my friend.
As I entered the main registration tent, I was met with serene waves of blue and white and modern jazz covers of pop songs, broken up by a Ferrari Enzo that was on offer that evening, during Worldwide’s Wednesday event. Just beyond the strategically placed streak of low slung Rosso Corsa was the outreached hand of my friend and an invitation to tour the houses offerings. I accepted, and we began to work our way through their rows of mid-level European, collectible muscle and big body, chrome covered American chariots in the series of tents that covered the retired Volvo dealers parking lot turned event site. It was mostly a very pleasant layout, but throughout the event however, there was a clearly present feeling of uneasiness and it soon became clear as to why.
We entered the final tent of the tour and were greeted by an array of my favorite types of cars, set up nicely in a row. An early Series I E-type, Austin Healey BN1 and a small handful of Alfas served as a cheerful smoke screen for wait lay in waiting in the back corner. As we ventured further, you could feel the lights getting a little less bright and anxiety heighten. Something very bad was very close and despite virtually zero public visibility, everybody there knew it.
“Do you want to see it?”, my friend and tour guide somberly questioned. A million thoughts raced through my head. I remember being somewhat offended when initially read the press release announcing the sale of this machine and all the hypothetical scenarios that played through my brain in regard to all the bad things I’d like to see happen to it. My thoughts also returned to my nearly 25 years in the hardcore punk scene, and my bevy of broken knuckles and amateurishly repaired flesh wounds that were a direct result face to face confrontations with the modern-day disciples of what is unquestionably the most flawed ideology ever, all simultaneously began to ache. Do I really want to be in the same room as what was likely the most prized possession of the most terrible human ever to walk the earth? Reluctantly, I replied, “I think I have to.” I walked towards the makeshift secured, private room, passed by the understandably drained looking security team guarding the entrance, and took a deep breath.
Pretty much any preconceived notion I had, about how I would act around this machine pretty much completely disappeared the second I entered its presence. I would be completely dismissing the aura of it if I didn’t say it wasn’t totally surrounded with negativity, but as my friend detailed the story of its acquisition in the background of my consciousness peripheral and how it arrived where it was, and the incredible engineering that dripped from every centimeter of it, it did become clear that the rationale of the house for offering it was correct on the surface. This was an amazing car and it wasn’t its fault who originally designed and cherished it. It still didn’t change the fact that being around it, in this intimate of a fashion was still incredibly uncomfortable.
I always felt I had a reasonably decent grasp of World War II. My grandfather was a pilot and told highly detailed accounts of his experience pretty much throughout my childhood and of course I was privy to everything the Colorado Public School System could offer surrounding this time in history. I’ve seen a million different Hollywood’s cinematic renderings and spent more than my fair share of time parked in front of the History Channel, before it became all about digging though barns and pawning whatever you find there. What I never really had however, was a real, genuine frame of reference. When somebody my age paints a mental image of Adolf Hitler, what often comes to mind is a cartoon, or a black and white photo, or a piece of grainy, barely distinguishable film. While I paced around this 12,000-pound motorized carriage, what struck me most intensely was how none of that was happening. What I saw as I circled was a short man with a moustache, dressed in a military uniform, standing in the back on the built-in riser. This wasn’t a cartoon, or a sketch and it certainly wasn’t black and white. This was a real thing owned by a real person and he was right there, A LOT. This was what continues to stick with me in almost a sickening capacity. Point is, my way of processing Adolf Hitler and largely World War II as a whole changed forever. Thus, this is why this was likely one of the most important automotive experiences I’ve ever had and this is why things like this are irreplaceably important.
Now, the argument certainly could be made that this is why things like leaving Civil War monuments intact are import, but I somewhat disagree, and I feel this is part of the reason why this experience was so unique. Unlike a statue or a monument, this was not a celebration of the man or his movement. There were no swastikas draped throughout, no flags and nothing that even remotely resembled a tribute. This was just a car, sitting in a room offering no opinions or judgments. It was just a car. It doesn’t belong in parades, or displayed in a town square, but I do think it should be accessible, so that others can experience what I did. I think the same can be said for other, similar monuments, trinkets and keepsakes from humanities darkest times. No matter how awful the events surrounding something, maintaining these things in an objective, unopinionated setting that is not blatant, or arrogant (like sometimes Civil War monuments can be) is important. Good or bad, these are reminders of our mistakes and the events that contributed to humanity losing its way and its good to recognize the reality of what they represent, so if nothing else, we know not to repeat them. I sincerely hope the owner of this car (it didn’t sell by the way) eventually comes to terms with this and puts it someplace where it can remind us where we have been, and where we never want to return there. I’m still not exactly right after spending time with this thing, but I definitely walked away a better person because of the time I spent with it. Hopefully someday a larger degree of others can do the same thing.
Darin Roberge is President and CEO of Motorwerks Marketing and is a Marketing and Media Consultant in the Specialty Automotive and Live Events industries. Darin has been named a Business Trendsetter by Arizona Foothills Magazine, is a two-time nominee to Phoenix Business Journal’s 40 Under 40 list and is one of Sports Car Market Magazine’s 40 Under 40 for 2017. Learn more about Darin at www.DarinRoberge.com