By Bloomberg
August 17, 2017

If you’re a true vintage-car obsessive, this could be your year.

Official estimates for the Pebble Beach auctions this week have set sales totals at $290 million, down 14 percent since 2016. It’s the third consecutive drop since a record $403 million in 2014.

Not only are classic vehicles taking longer to sell in general, according to early reports by Hagerty Insurance, it’s more difficult to find highly desirable cars in the first place. Over the past 12 months, auction sell-through rates for vehicles worth more than $250,000 has fallen 8.5 percent, to a five-year low.

Though the soft market might make it more difficult for speculators and pure investors to find what they want, it’s a boon for real enthusiasts.

“It’s a much more selective market right now,” said David Brynan, senior specialist for Gooding & Co. “Over the past few years, for really exceptional cars, the sales are really strong in any price category. People are paying for quality.”

Pretty Young Things

The auctions will begin on Friday in Carmel, Calif., surrounding the Pebble Beach Concours d’Elegance, which takes place on Sunday. Million-dollar Ferraris and racing Porsches will line up on the golf club’s 18th fairway opposite classic Jaguars, Rolls-Royces, and Aston Martins. The annual show draws wealthy car-lovers to the Monterey Peninsula from all over the world—often, people attending the concours on Sunday have just purchased an expensive collectible Saturday night.

While multimillion-dollar cars such as Steve McQueen’s blue-and-orange 1970 Porsche 917K will dominate the headlines, the key spot to watch this weekend is that of a group of vehicles valued at less than $100,000: Ford Broncos from the 1970s, Chevrolet 3100 trucks from the 1950s, and the odd BMW 2002 or two.

“That group is booming,” says Jonathan Klinger, spokesman for insurer Hagerty. “That is where you’re seeing older millennials (35 years or so) get in for the first time, so from that standpoint the market is healthy. It’s not the same [older, moneyed] people churning over the same cars.”

Elsewhere, the 1954-1965 Alfa Romeo Giulietta and 1957-1970 Lancia Flaminia have increased in value over the last year, with little sign of slowing down. Likewise, the late 1980s BMW M6 and early ‘70s BMW 3.0CSL have heated up as the interest in older Porsche models has cooled. (Tellingly, the generation of 1999-2005 Porsche 911 was the only one skipped over in the 2012–2015 boom in Porsche popularity and remains strongly desired, according to Hagerty data.)

And, at last, two 1989-1994 Nissan Skylines will be offered this week. They’re expected to sell well because the strict 25-year import rule banning them in the U.S., leading to pent-up demand, has now lifted.

The Necessary Soft Landing

The downshift in overall sales isn’t for lack of funds among buyers. It’s more closely related to the fact that, without a few double-digit-million-dollar cars on offer, the overall sum will be lower. This year in Monterey, for example, 94 cars are valued at more than $1 million, down from 104. Just five cars are valued above $10 million, half last year’s figure.

The decrease comes because classic cars of this caliber are a finite resource. The market topped out in 2014, when many high-profile, high-priced cars—a 1964 Ferrari GTB/C Speciale, say—finally came out of long-term ownership and were sold. Renewed in long-term ownership, they may not return to market for at least a decade.

“The sky is not falling,” says Jonathan Klinger, the spokesman for Hagerty. “This is just a wait-and-see market favoring buyers versus sellers. And from an economic standpoint, there are a lot of people who are fairly optimistic about buying. Just look at the stock market.”

Balance their absence with the relative strength of the euro versus the dollar and the fact that this year, pure investors and speculators have other, potentially more lucrative, places to put their money: real estate, energy, commodities. It all leads to the generally cooler numbers this year.

Klinger calls it a “soft landing” from 2014.

“It goes along with what the rest of the market is right now,” he says. “We are basically back to 2013 levels, and as we had been saying at that time, this is what we needed to happen.”

If the buying momentum had continued rising after 2014, it would have become unsustainable, he says. “If it is a market driven by speculators, then you start to worry. And that’s not the case here.”

Potential Top Sellers

Not that there won’t be primo cars for sale in Carmel—by a long shot.

Although only five cars are listed for more than $10 million across the Gooding, Bonhams, Sothebys, Mecum, Russo and Steele, and Worldwide Auctioneer sales—last year, Gooding alone had four cars take more than $10 million apiece—Hagerty predicts that the top-10 expected big sellers will each take more than $5 million. And that’s just fine, auctioneers say.

“We are better off having fewer cars, or less valuable ones, without having unrealistic expectations that would hurt things,” says Gord Duff, the global head of auctions for RM Sothebys.

Three of those top 10 are from perennial blue-chip-favorite Ferrari, but a 1956 Aston Martin DBR1, offered by RM Sotheby’s, is expected to fetch $20 million and leads the group. The car is special because it was the first of five DBR1 made and won Aston Martin the 1959 title at Le Mans. That was the same year it won the 1,000-kilometer contest of Nuerburgring, Germany, piloted by the successful racing champion Stirling Moss.

“We are very bullish going into Monterey,” Duff says. “Will the numbers be down this year compared to previous years? Yes, they will. The value of a few key cars we had last year, we just don’t have this year. But we do have that $20 million Aston.”

All told, Sothebys will offer 10 Aston Martins, 18 Porsches, and 29 Ferraris over the course of the weekend. Gooding will offer 27 Porsches and 26 Ferraris. A full 12 percent of all marques offered this year among all auction houses are Ferraris this year, the largest percentage of any brand. It’s the first time in 10 years Ferrari has been the most common brand sold.

So if you love Ferrari—and who doesn’t?—this could be your year, too.

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