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Scottsdale 2019 Auction Preview

 

 

CBA Previews Scottsdale 2019 Auctions

The Inventory Tells the Story

Change is Here

 

2019 is here and the market trends which began in 2017 are beginning to turn to hard crystal. It’s now a buyer’s market not a seller’s market. Auction houses have absolutely been experiencing the effects of the transition. And it is evidenced by the nature of the inventory on offer at Scottsdale 2019.

We have been preaching for some time what seemed obvious to us. Auction houses cannot readily sell at the unrealistic estimates they need to offer sellers in order entice their business. This has led to a shortage of the best inventory and more ‘no sales’ of that inventory. The impact on profits has caused them to demand a ‘no reserve’ on an increasing amount of the better quality inventory in order to ensure minimum profits. However, this results in lower quality examples and less of anything really interesting coming their way as the owners of the better stuff don’t want to play in that game. And what remains of true high quality product – whose owners can only be enticed by price and who will not go for ‘no reserve’ – continues to disappoint as auction houses cannot deliver the hammer.

And the cycle deepens.

Dealers (and not just Porsche dealers) are in the same cycle as evidenced by the high volume of long term unsold inventory on the market. Cars are priced too high, they sit, the prices are dropped, but the cars still don’t clear and the answer is to continue to chase the market down. We are at the point where dealers will not take price risk and long carry costs for high value cars – only consignment is welcome and they are not writing checks. The market remains saturated and buyers are increasingly unimpressed. For example there are so many 991.1 GT3 RS on the market that we quit counting.

Auction results since the turn began in 2017 reveal the problem and sales/no sales data reinforces our hypotheses. For example, here is what you need to know from Scottsdale.

Gooding 2015 2018 Delta
Sales $46m $44m Down 5%
No Sales1 $11m $24m Up 116%
Avg Sale $408k $408k
Avg No Sale $945k $1.29m
CBA Ratio2 235% 315%

 

RM 2015 2018 Delta
Sales $54m $32m Down 40%
No Sales1 $16m $17m Up 5%
Avg Sale $533k $289k
Avg No Sale $866k $1.1m
CBA Ratio2 162% 350%

 

Bonhams 2015 2018 Delta
Sales $23m $23m Unchanged
No Sales1 none $6m Up $6m
Avg Sale $295k $244k
Avg No Sale n/a $514k
CBA Ratio2 n/a 213%


1no sales measured by high bid.  
2CBA Ratio = (average unit value of no sales lots/average unit value of sold lots). The CBA Ratio illustrates the relative value of the no sale inventory compared to the sold inventory. It combines the effects of the dollar amount of no sales v. sales with the average value per lot of no sales v. sales. As the total dollar amount of no sales increases v. the total dollar amount of sales and/or the average last bid price of no sale lots increases v. the average hammer price of sold lots – the ratio increases. A higher ratio generally means that relatively more lots remain unsold and those lots are of higher value compared to the rest of the auction’s lots.

The increase in no sales v. hammer sales and the increase in average no sale high bids v. hammer prices indicates that an increasing amount of lower priced inventory is being sold and the higher priced inventory is not. Requiring more inventory to be ‘no reserve’ is causing an increase in lower valued inventory to be what’s offered. A decreasing amount of quality inventory combined with artificial pricing on ‘reserve’ lots means that more expensive cars are fewer to market and when they get there they are hammering less often. The CBA Ratio – which looks at hammer prices v. failed reserve bids reinforces that the better, higher quality, reserve product is what is not selling.

More ‘no reserve’ lots is not the answer. To break the cycle one needs to lower estimate ranges (and the actual reserve) on reserve lots with promise of liquidity over price. And for smart sellers this is what it will increasingly be about – liquidity over price. This needs to be the new grail for auction houses – the promise of real liquidity over unreal prices. Auction houses need to change the dialogue from “how much can you get?” to “can you sell my car?”. This will improve performance and result in more satisfied customers on both sides of the block.

We ring in the start of the 2019 auction year with Scottsdale and really little of interest to cover. Much of it either dealer owned – which they have been unable to sell on their own – or privately owned cars that have been on the market, cannot sell and are unrealistically looking for an auction house to be their savior. Not much fresh stuff. We can predict that more reserves will be waived than ever before.

On that note … later this year we will be putting out a blog post on the ’State of the Auction Markets’. We will discuss current market dynamics, strategy in a changing environment, and how it all affects buyers and sellers and of course auction houses. To get the most out of what we have to offer become a PORS9 Member. PORS9 membership is simple and it’s free … join the thousands of Porsche owners already in our database!

 

Gooding and Company

Lot 054 – 2011 Porsche 997 GT2 RS – 3.8k M – Guards Red/Black Red – estimate $425k – $475k – Reserve.

At the height of the market this car was arguably $450k retail but we are not there now. And as we noted in our a RM Petersen Automotive Museum Recap on the Black 997 GT2 RS (which did not sell) .. ‘Someday a must have collectible – but that day is not today.’ This one is a very nice example of a limited series last of the Mezger engined turbos. But there are a handful on the market with similar miles and condition being offered at around $400k -$425k that are sitting (and quite a few more at ‘consignment’ prices that will never sell). High estimate on this one is from a time and place which seems long ago now.

This car has been on the market – in fact we even marketed it through our network – but the appetite just wasn’t there. Hammer around $390k is possible if reserve is pulled.

View this car’s build spec here.

 

Lot 109 – 2016 Porsche 911 R – 2.4k M – GT Silver Metallic/Black – estimate $300k – $375k – Reserve.

One owner. Must have single mass flywheel. Second most common color (per PORS9 data). Like many Porsche limited edition and/or ‘hot’ models the 911 R has fallen in price by 30%-40% from its peak – in a span of about 12-18 months. And as a victim of the VIP program – cars bought then held for the duration with intent to sell – there were and are more to hit the market than the market can absorb. In the past 90 days 20 new to market R’s have been put up for sale and at least another additional 10 have been sitting on the market unsold for 90 days or more – that’s a lot to select from and to bargain for. There is no particular reason to believe that prices have bottomed out.

With these miles (relatively high for an R) and in this color this is maybe a $290k retail car. But that means a $260k hammer … well below low estimate if the reserve is lifted.

View this car’s build spec here.

 

Lot 137 – 2008 Porsche 997 GT2 – 386 M – Black/Black – estimate $300k – $375k – Reserve.

A very nice example with low miles which could attract a collector who is missing one. With only 237 built for North America it is in perspective a fairly rare car. But we have overestimated the market for these in the recent past as does this one’s estimate range. It was for sale earlier this year for $299k at Miller Motorcars but wound up in the hands of Marshall Goldman (we never saw it offered there btw) … and now has popped up here.

If there was ever a 997 GT2 worthy of a $250k hammer this might be it … we’ll see if that pesky reserve holds.

View this car’s build spec here.

 

RM Sothebys

Lot 150 – 1992 Porsche 911 Carrera RS – 42k Km – Midnight Blue/Black – estimate $250k – $300k – No Reserve.

The 964 3.6 RS at more than 25 years old is now a check box import which makes buying and importing one from anywhere a simple proposition for U.S. residents. This one imported in 2016 has no EPA or DOT modifications (the 964 3.6 RS never made the Show or Display approved list). As the market is wide open now a buyer needs to consider all options and a scan of mobile.de and autoscout24 is in order. And there you will find dozens of them for sale. Asking prices for a similar KM example are all over the map. But for sure those priced higher than the high estimate for this one have been sitting unsold for quite some time.

This car is Japan import which comes with our usual caveat regarding history and documentation (to be fair the auction listing does not disclose what is available – but it should). It seems well sorted and in fair condition. It is not ‘investment-grade’ as the auction description claims – it has too many KM and too much wear for that.

We can compare to EU market alternatives, but this car is here and ready to go … no reserve is the right play to stimulate bidding interest and the right hammer for this car is $250k.

 

Lot 156 – 1997 Porsche 911 Turbo S – 22k M – Viola Metallic/Black – estimate $300k – $350k – Reserve.

We have mentioned how much the 993 Turbo S has fallen off its highs several times over the past year or so. Perhaps more steeply than any other low production air cooled Porsches. At every turn it seems that the while other low production 993’s (RS, RSR, GT2) were falling, the 993 Turbo S fell by far the fastest.

This one is a cool and rare color which might not be for everyone. And unfortunately it is a car that, after four owners, on closer inspection looks far more worn than 22k miles should leave it. The estimate range is not unreasonable but the presentation of the car (a few dollars spent to spiff it up would have paid off handsomely) does not help its cause.

Due to its unique color hammer at low estimate – $300k.

 

Lot 215 – 2010 Porsche 911 Sport Classic – 150 M – Sport Classic Grey/Brown – estimate $400k – $500k – Reserve.

The Sport Classic was a 997 limited series Porsche we never got … something about emissions as I recall. Which means that every one of them here has been modified (by JK Technologies) for Show or Display import. They will never go back to original unless exported. And you cant drive it much – though with these miles that’s probably irrelevant.

A series of 250 cars all the same color with manual transmission. It features an interior that hints at that of the then forthcoming 911R. And it has as standard upgrades ranging from a powerkit to PCCB’s, topping all of it off with a very cool ducktail. At the height of the market in 2015/16 this was as much as a €325k car (~$350k). Add transport, import and conversion costs and you would be in it for around $400k on the ground here … plus all your time spent and grief incurred. Many were bought for speculation so low KM is not too unusual. The euro and the market for these are both weaker than in 2015. All of this arguably makes the low estimate too high.

But if you are a collector of limited series here in the U.S then you really do need one sitting next to your much less rare 911R … and you can save all the trouble with a $415k hammer.

 

Lot 234 – 2011 Porsche 911 Speedster – 12 M – PTS Basalt Black Metallic/Black – estimate $350k – $375k – Reserve.

356 units of this limited series of 997 Speedsters were built and many were purchased on speculation and therefore have ‘low’ miles … but this one has delivery miles! Its’ ‘Paint to Sample’ color was standard on other Porsche models (Basalt Black Metallic – the listing states ‘custom black’) – but more importantly it is 1 of only 9 PTS out of the 107 built for North America (103 for the US per PORS9 – the listing states 100) and even more importantly – and this is missing in the auction description – it is the only Metallic PTS car built for North America.

Per the PORS9 search app it’s MSRP of $216,515 ties it for the fifth most expensive Speedster for North America and its option list (in addition to PTS) supports that. Most notably the DZG option package and code XXM ‘Deletion of Checkered Flag Design Front Seat Centers’. It was most recently on offer for $499,991 but did not sell – that price was just too high.

We have often underestimated buyer’s willingness to pay up for the 997 Speedster and we don’t want to make that same mistake here. It’s not a coupe but for a collector of museum quality Black cars that includes cabriolets this is the only one to own. And It has some special interest value as it was originally ordered by the late Steve Heinrichs a Porsche historian and Speedster expert – he is appropriately described in the listing as ‘a Porsche family friend’.

It should be bought at a $360k hammer … a sizeable discount to its previous outing.

View this car’s build spec here.

 

Lot 245 – 2018 Porsche 911 Turbo S Exclusive Series – 51 M – Golden Yellow Metallic/Black – estimate $375k – $450k – Reserve.

Porsche has made a tradition of celebrating its exit from the current turbo model line with a special Turbo S model. The 991 Turbo S Exclusive is no exception. A numbered series limited to 500 units (coupes that is … Porsche is producing 200 additional cabriolets) with a 27hp powerkit, a special paint option (Golden Yellow Metallic – an acquired taste), bespoke wheels and many standard carbon bits. Certainly worthy of the end of the line as we look forward to the 992. Of course all of this comes at sticker price nearing base 991 GT2 RS strata.

Initially 200 were to be allotted to North America but our data shows that number will cap out around 120 units. Whether it was the price or there are just too many other things to buy (including other GT and limted series Porsches) the demand was not there – which ironically adds to its rarity in North America. All that said there are a 1/2 dozen or more examples which can be bought in the +/- $75k over MSRP range – and they are sitting with no takers. This car is a typical example. Delivery miles, Golden Yellow (~70% were this color), few special options (like no Carbon Fiber wheels) and a slightly below average MSRP ($264k).

With all benefit of the doubt, this is a no sale if the seller needs anything more than a $325k hammer … look for the reserve to be pulled.

 

Lot 271 – 2018 Porsche 911 GT2 RS Weissach – 55 M – GT Silver Metallic/Black – estimate $450k – $550k – Reserve.

We are just seeing the start of the 991 GT2 RS hitting auction blocks and certainly more are to come. We predicted long ago that the early must havers who paid as much as $150k over MSRP for the first cars off the boat in May 2018 would need many years to recover those prices – should they care. We are now at true market value around 1/2 that markup for the right examples, for others it’s less. And the markup is falling daily.

The reality is that we will see ~1,250 units built for North America alone by the time production ends around the end of March 2019 (around 30% of production will be 2019 VIN’s). As phenomenal a performer as it is, this is not a low production car. At any given time there are 20+ units available to purchase at Porsche franchise dealers alone – priced at an average of 33% over sticker (average MSRP is ~$340k) – and they sit unsold because that is not where the buyers are at all. Plus anyone who really wanted to own one – and was willing to pay up to do so – already owns one.

This example is a not so rare Weissach package – over 90% of the ordered GT2 RS’ are Weissachs. It’s MSRP is dead on average at $340k. GT Silver Metallic is by far the most common color. Satin Black magnesium wheels are a nice option. Otherwise a Vanilla GT2 RS if a GT2 RS can be called Vanilla.

More cars are being produced, a seemingly endless supply is currently on the market and further price drops are on the horizon. Even with a low 55 miles – a hammer at $375k would be an outcome which reflects the real market – reserve to be pulled or no sale.

 



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