Monterey Car Week Auction Sales Slow Down, Signaling a Shift in Collector Preferences
Monterey Car Week, a renowned annual event for classic car enthusiasts, witnessed a 3% drop in auction sales compared to last year, marking the second consecutive year of decline. The shift in collector preferences, with younger generations favoring newer cars, contributed significantly to this trend.
Key Takeaways:
- A New Generation Drives the Market: Gen X and millennial collectors are increasingly interested in cars from the 1980s, 1990s, and 2000s, leaving older classics from the 1950s and 1960s struggling to find buyers.
- Older Classics Face Saturation: The abundance of similar classic cars from the 1950s and 1960s at various auctions led to a saturated market, making it harder to generate strong prices and sales.
- High Interest Rates Play a Role: Rising interest rates may be deterring some buyers, particularly those using financing. The higher cost of borrowing makes classic car purchases less attractive as an investment.
The Changing Landscape of Classic Car Collecting
Hagerty, the classic car insurance company, reported that the total sales at the five main auctioneers in Monterey — RM Sotheby’s, Broad Arrow, Gooding & Company, Mecum, and Bonhams — fell to $391.6 million this year from $403 million in 2023. This decline follows a 14% drop in sales from the peak in 2022.
The sell-through rate, or the percentage of cars sold at auction, paints a stark picture of the market shift. Only 72% of the 1,143 cars up for sale found buyers, with a slightly lower average sale price of $476,965 compared to last year.
The data reveals a significant divergence in collector preferences. The sell-through rate for pre-1981 cars priced at $1 million or more was a meager 52%, highlighting the dwindling demand for older classics. Conversely, the sell-through rate for cars less than 4 years old was a robust 73%, underscoring the dominance of the younger generation of collectors who are more inclined towards modern supercars.
The Rise of Modern Supercars
The Hagerty Supercar Index, tracking sports cars from the 1980s through the 2000s, has seen a phenomenal rise of over 60% since 2019. Meanwhile, the Blue Chip Index, which tracks 1950s and 1960s Corvettes, Ferraris, Jaguars, and other legendary classics, is down 3%.
This disparity highlights the growing appeal of newer, high-performance cars among younger collectors. These cars often feature cutting-edge technology, innovative design, and a modern appeal that resonates with this demographic.
The Impact on Prices
The changing landscape of classic car collecting is poised to impact prices for years to come. While rare and exceptional masterpieces like the 1960 Ferrari 250 GT SWB California Spider, which sold for $17 million at RM Sotheby’s, continue to fetch astronomical prices, the overall market for older cars is likely to face downward pressure.
"From an auction perspective, the market continues to take a breath while we transition from what was hot, think Enzo-era Ferraris, the so-called full classics as well as ’50s and ’60s sports racers, to the ascendant modern supercar class," said McKeel Hagerty, CEO of Hagerty. "The divergence between older and newer cars has accelerated."
Beyond Collector Preferences: The Role of Interest Rates
The changing market dynamics are not solely driven by generational preferences. The impact of high interest rates further exacerbates the situation.
“People think, ‘Instead of that million-dollar car, I could be earning 5% maybe 10%’ if you’ve got a great manager,” Simon Kidston, a leading advisor to wealthy car collectors, said. “That, more than anything else, makes people think twice. A collector car is partially investment. There’s no other single reason for the increase in the value of collector cars over the last 40 years than the investment angle.”
In conclusion, Monterey Car Week highlights a dynamic shift in the classic car market, marked by a decline in sales fueled by changing collector tastes, particularly among younger generations, and the influence of high interest rates. While rare classics will continue to attract top dollar, the broader market is likely to see a significant impact on prices of older cars. This shift will likely continue to shape the future of classic car collecting for years to come.
