Bangers and Cash
Back in May, at car sales held in Monaco, enthusiasts and investors were
more eloquent than extravagant following a year in which most classic
cars had risen by at least 150% in value. "Very few automobiles were
ever endowed with so much harmony, balance, poise, potential and sex
appeal," said one authority about a 1962 Ferrari which made a
much-trumpeted record of more than $10m. It was conveniently forgotten
that the estimate for the sale have been around $15m. In some classes
three-quarters of the cars remained unsold. The cars have stayed
put---all revved up and nowhere to go.
Car-freaks face other problems. Though they never complained when the
market was booming, they are now suspicious of price manipulation and
false reporting from auctions in a market with no code of practice. One
London dealer cites a recent auction at which two Ferrari Daytonas were
claimed by the auctioneers to have been sold at around $500,000 each.
The market was taken for a ride--- in fact the cars were offered to
another auction house the next morning, having never been sold in the
first place.
Some retain their optimism. Coys of Kensington, a London auction house,
is backing an investment fund, Automotive Classics, which invites
minimum investments of $25,000. In September 1989 the fund paid $5m for
a pre-war 2.9 litre Alfa Romeo. Coys now values it at over $7m. This
is a figure viewed with some scepticism by other dealers, who suggest
that $2.5m is more realistic.
The past few years of heady growth in both the classic-car and art
markets may soon be a distant memory. Buyers do not want to be made
mugs of, and nor do auctioneers want any more crashes. It was a nice
little runner, but not all the owners were careful.
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