Market and auctions

Pre wars: fixed income investments. Or better

Cliff Goodall’s view

Photo credit: Bonhams, RM Sotheby’s

In a world obsessed with algorithms, likes and NFTs it is nothing short of courageous to organize an auction almost exclusively reserved for the pre-war period. Putting on two of them sounds borderline crazy.

Instead, both RM on 7th October and Bonhams on 5th November relaunched their “classics” dedicated to veteran automobiles. The Canadians chose Hershey, Pennsylvania, the world’s largest pre-war car market. Bonhams instead settled for their headquarters in New Bond Street.

Just like being behind the wheel: everything you need to know to fully understand the situation

And almost as if to prove wrong those who turn their noses up at the models, the success of both events made it feel like they were selling hypercars or youngtimers: RM sold 95.35% of the lots on offer and, even more staggering, that percentage increased in terms of value: 99.70%. In absolute terms, we are talking about 129 cars offered, 123 sold, an estimated value of $12,488,500 (€11,066,247) and $12,450,900 (€11,091,012) in takings.

Just like being behind the wheel: everything you need to know to fully understand the situation

At Bonhams, the results were slightly lower but still more than satisfactory: 15 cars sold out of 18 on offer (83.33%) and $1,884,080 (£1,413,350) in takings compared to the initial estimate of $1,889,245 (£1,417,000) (99.74%). And we are talking about an auction in which every single lot had a reserve price.

Just like being behind the wheel: everything you need to know to fully understand the situation

It’s quite legitimate at this point to ask ourselves why we speak about a declining market when the best auctions produce numbers like these? The answer we propose is that the pre-war market is so mature, it is practically immune to any bubble or pandemic. 

Just like being behind the wheel: everything you need to know to fully understand the situation

One example to back this theory up is the 1939 Buick Special Sport Coupé. A beautiful example of Art Deco applied to the automobile, with a somewhat dated restoration was sold for $20,900  (€18,542) compared to its estimate of $15,000-$20,000. Purchased by its current owner in February 2013 for $22,000 in eight and a half years, its value decreased by just 5%. An acceptable cost such for a long period of use. Looking at the results we have seen other similar cases: a 1937 Cord 812SC Phaeton obtained, after 11 years, an offer that was roughly 4% higher than the price paid back then.

1939 Buick Special Sport Coupe sold for $20,900 (€18,542)

However, there is a threshold beyond which revaluations start getting serious.

In the two-year period between 2012 and 2013, you could have bought an Auburn 851SC Boat-tail Speedster for somewhere between $510,000 and $610,000, despite already rising by 25% since 2008. The second most expensive lot of the sale was one of these examples, built in 1935. Purchased by the collector Robert Thayer in 2008 (obviously the purchase price was not specified, but it was probably somewhere between $380,000 and $450,000), it was immediately exhibited at the major Concours d’Elegance events but, with its last appearance dating back to 2011, it’s ready to be shown in public once again. The estimate of $700,000-$900,000 was spot on and it changed hands for $891,000 (€790,504), meaning it increased in value by somewhere between 46% and 74% over the past 10 years.

1935 Auburn Eight Supercharged Speedster sold for $891,000 (€790,504)

The news was even better for the 1931 Duesenberg Model J Roadster belonging to the same collector, which sold for $1.65m or €1,46m (estimated $1.4m-$1.8m). In January 2009, the car went unsold for $600,000 against an estimate of $900,0000-$1,200,000 and, since the description stated that the car had been purchased by its current owner at that time, it would not surprise me that immediately after the auction a deal was made with the price somewhere between the maximum offer and the minimum estimate. If we assume the price paid was around $800,000, the collector doubled his investment. But, beware, in the meantime it was restored by RM and interventions like these don’t come cheap. However, we need to be careful not to make mistakes when writing new rules. Call me idealistic but I still believe that passion should always come first in a purchase. And for the cars of this era, that is pretty much a certainty since they tend to hold their value, like investments in fixed income, with the most important ones also capable of turning a handsome profit. It’s worthwhile remembering that with the $900,000 paid for the 1931 Duesenberg Model J Roadster at the same auction in 2009, you could have taken home the equivalent of three Lamborghini Miura S ($308,000) or two Ferrari F40 ($429,000) which, if you sold them today, would easily return a figure north of $3.5 million.

1931 Duesenberg Model J Roadster “Green Hornet” sold for $1,650,000 (€1,463,896)

Coming from across the Atlantic, from Bonhams, here is my favourite car and even though she was 83 years old, in my book she was the youngtimer of the group. The 1938 Bentley 4 1/4 Litre Sedanca Coupé bodied by James Young, one of the 3 examples equipped with this particular bodywork. Even with the £110,000-£160,000 estimate it was a beautiful piece to put in your garage but at £87,400 (€103,683 or $116,520) it was an absolute steal. This is also an old acquaintance of ours: in 2017, this very car went unsold at £180,000-£220,000 but in our database we found another auction dating back to March 1989 at which it was sold for £33,000. Our comment: 32 years to double your “investment” seems more than consistent with the concept of “fixed income”!

1938 Bentley 4¼-Litre Sedanca Coupé sold for £87,400 (€103,683 or $116,520)

The most expensive lot at the Bonhams sale was the 1904 Peugeot Type 67A 10/12hp Twin Cylinder Swing-Seat Tonneau, already entered for the London-to-Brighton Run due that same weekend, which sold for £264,500 (€313,778 or $352,627), a figure that was far higher than the £140,000-£170,000 of the pre-auction estimate. Why such a high gap? The most realistic answer is that these cars are so rare they are difficult to estimate. Worth keeping an eye on, and this says a lot about the peculiarity of the niche of fans of the oldest cars: Bonhams, despite not organizing the auction during the London-to-Brighton on this occasion, preferring to leave those honours to RM, was able to take advantage of the personal relationships it has nurtured over the years or even decades with collectors who hold the oldest race in the world dear to their hearts.

1904 Peugeot Type 67A 10/12hp Twin Cylinder Swing-Seat Tonneau sold for £264,500 (€313,778 or $352,627)