Sotheby’s acquisition of a 25 percent stake in RM Auctions is big news for high-end car collectors, but what does it mean to the hobby in general?
First of all, this is a deal that has been long in the making. RM and Sotheby’s have partnered in a limited capacity for a number of years. The high point of this evolving partnership until Wednesday was their combined sale in New York City in 2013.
I had the pleasure of attending the New York Art of the Automobile sale and was simply blown away by the presentation. The cars were treated as the art objects that they were, and that translated into almost $63 million in sales within two hours. This was an astounding result and something we in the hobby had never seen before.
This formal partnership of the two companies, now known as RM Sotheby’s, also is something that we in the hobby have not seen previously. It combines one of the greatest collector-car auction companies with one of the oldest and most well-respected traditional auction companies. That creates a tour de force in the collectibles marketplace.
“The partnership with Sotheby’s takes what we do and expands it to its full potential, adding Sotheby’s more than 300 years of experience in the auction business to ours,” Alain Squindo, vice president of RM Auctions, told me. “It offers cross-promotional opportunities that effectively let the company become a consolidated collecting conduit for the high-dollar collector market in general.”
Now that the partnership between these two companies is official, what can we expect to see for the broader car hobby?
Well, first and foremost, I think that this partnership is likely to mean that the slowdown or correction in the classic car hobby is not likely to happen any time soon. This partnership adds an additional level of legitimacy to the idea of cars as art. and that is a market that tends not to correct. In fact, I think we are getting closer to seeing our first 100-million-dollar car sell at auction than we were a few years ago, and we definitely will see more world-record prices and big sales totals next month at Amelia Island and in August at Monterey.
Of course, I am talking largely about top-tier collector cars – think Ferrari 250 Testarossas, Bugattis, L88 Corvettes and Jaguar D-types. But this will not exclude the lower end of the market.
In the fine-art world, some artwork fetches as much as hundreds of millions of dollars, but there also is artwork that sells in the thousand-dollar range, and even such less-rare pieces that are considered significant continue to increase in value along with the top tier of the market.
Historically, this correlation has not always worked in the car hobby, but I think this is about to change. We already have seen hints of it happening in the past few years. I think that now we will see a broader effect on collector cars that are a bit more ordinary as well, with cars such as the Triumph TR4, classic Ford Mustang and even the MGB affected in a positive way as far as values are concerned.
Second, this partnership has the potential to expand and broaden the entire collector-car market to a much larger audience then ever before.
Finally, this partnership sets up RM as the world leader of collector-car auction companies. While many people, including me, have said that RM was the leader for years, this new partnership solidifies the idea. With the worldwide reach and exposure that the partnership offers, the new RM Sotheby’s company will be hard to beat.
Is this good for the collector-car hobby or will it be “ruined” for the average collector?
I think that in the longer term, it will prove to be beneficial for the hobby. While the cars we love will become increasing more valuable and more difficult for some to purchase, we also will see many desirable cars with needs being saved and brought up to the next level simply because doing so is much less of a losing proposition than it had been in the past.
This will mean that there will be more really good examples available of the cars we love, making finding and purchasing a really good MGTD, 1957 Chevy Bel Air or other more-affordable classic an easier thing to do.
The more negative voices in the hobby will bemoan this trend with such comments as, “I used to be in the car hobby but have been priced out of it.” While there is some truth in that, the reality is that this always has been the case with anything that is rare or collectible.
The solution for collectors of modest means is to target cars that are significant while still being affordable. So if you cannot buy a Jaguar E-type Series 1, then maybe you could consider a Datsun 240Z. These cars are still quite affordable, and there are many other similar opportunities out there if you look around.
This translates into dollars as the perception solidifies. People looking to sell the best cars will go to RM Sotheby’s first, and buyers looking for the best cars available also will look there first.
So what should you do if you are a part of the greater and more-affordable segments of the hobby? Well, you should continue to buy the cars you love and enjoy them as much as possible while they continue to increase in value.
We will see the beginnings of what’s next for our hobby at the first sale from the new partnered company at the RM Sotheby’s Amelia Island auction March 14. The star lot is a 1960 Ferrari 400 Superamerica SWB Cabriolet by Pinin Farina. The pre-auction estimate is from $6 million to $7 million dollars. We would not be surprised at all if the car surpasses the estimate.