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Scottsdale 2019 Auction Recap

 

 

CBA Recaps Scottsdale 2019 Auctions

Good Attendance Soft Results

Scottsdale Still Viable for High End?

 

Scottsdale may no longer the place to sell your highest end collectibles. And perhaps it hasn’t been for some time. But the real story is not Scottsdale per se, it is what lies in the comparative results between houses and individual lots at Scottsdale. We believe we are starting to see some evidence leading to answers to some of the questions we have had. First, are auction houses negatively impacted by having too many auctions? And second, can auction houses change their pricing strategies in order to improve their results?

Whether Scottsdale is still a strong auction for you as a premium house may depend upon how thin you are stretched. Which goes to answering our first question. If your ability to attract premium inventory is thin because of holding too many auctions, and you are training buyers to believe that there is no reason to bid up because they can simply wait until your next auction, then an auction like Scottsdale will expose these weaknesses. Scottsdale in and of itself is not a strong enough venue to mask problems.

Gooding has maintained a strict adherence to holding a finite number of annual auctions – and this has served them well in terms of retaining their position at the top of the food chain among the premium auction houses. We can see by the numbers that Gooding has maintained, and in some respects even improved, their lot at Scottsdale while the others have slipped. RM (more so) and Bonhams (to a lesser degree) have expand their venues significantly since 2015 – and their results seem to show that this can have a negative impact on the results at a given event, such as Scottsdale.

As to our second question, it was not borne out in Scottsdale that estimate ranges have been lowered sufficiently to dovetail properly with reserve requirements so as to result in more hammers. So it seems that our prescription for lower estimate ranges for reserve lots, as spelled out on our Scottsdale 2019 Auction Preview, has not as of yet been widely adopted. However, it does seem that sellers were taking our medicine. We can see this in the number of reserve lots that hammered well below low estimate as sellers caved on their reserves. This may be typical behavior at auctions which maintain reserves on low priced lots, but it is not typical at the auctions held by high end houses – so this says something.

Looking forward there are risks here for auction houses. On the first issue, auction houses risk that buyers will become less interested in each event – hurting performance at a given auction. On the second issue, if auction houses cannot address pricing directly with sellers ‘estimate ranges’ will begin to have very little meaning and the term ‘reserve’ will cease to have any meaning at all (except perhaps for the most expensive and rarest lots).

Here are the data from Scottsdale which support our observations.

Gooding 2015 2018 Delta 15-18 2019 Delta 18-19
Sales $46m $44m Down 5% $44m Unchanged
No Sales1 $11m $24m Up 116% $13m Down 47%
Avg Sale $408k $408k $412k
Avg No Sale $945k $1.29m $725k
CBA Ratio2 235% 315% 176%

RM 2015 2018 Delta 15-18 2019 Delta 18-19
Sales $54m $32m Down 40% $33m Up 1%
No Sales1 $16m $17m Up 5% $26m Up 51%
Avg Sale $533k $289k $256K
Avg No Sale $866k $1.1m $1m
CBA Ratio2 162% 350% 408%

Bonhams 2015 2018 Delta 15-18 2019 Delta 18-19
Sales $23m $23m Unchanged $14m Down 38%
No Sales1 none $6m Up $6m $13m Up 116%
Avg Sale $295k $244k $138k
Avg No Sale n/a $514k $1.1m
CBA Ratio2 n/a 213% 803%


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.

One final note. It seems that auction houses are trying to increase their profits and/or boost their reported numbers by increasing their official buyer’s commission from 10% to 12% (note: this is the commission % they report – which may not be the negotiated % on a case by case basis – which is why we solely focus on hammer prices and last bids – and not on reported all-in numbers).

Now let’s see what happened with the Porsches we focused on at Scottsdale …

 

Gooding and Company

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

What we said: This car has been on the market – but the appetite just wasn’t there. Hammer around $390k is possible if reserve is pulled.

Hammer price: Hi Bid $360k – No Sale.

Our take: This is a nice example of the 997 GT2RS, but the market has been going away on this model for some time now. And this one has been out there too long. Maybe best to put it in long term storage and await a new day in order to get more out of it.

View this car’s build spec here.

 

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

What we said: 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.

Hammer price: $250k ($280k all-in) – Reserve Pulled.

Our take: Porsche is pretty smart. They do their best to set MSRP as high as possible but not so high as to impact the marginal sale. This maximizes production and profits. But because a vehicle production run is not released all at once speculation can creep in. In the beginning of a speculative run marginal price utility is the only restrictor as supply is low and demand is high. But as more cars become available supply overwhelms demand and relative utility of price is less a concern. Restricting resales (e.g. VIP program resale limits) is one way to manage speculation but it also can also serve as gas on the fire. Another approach is to, in effect, increase supply by introducing lower priced substitutes that are attractive at the margin. And it seems Porsche did just that … so the discussion can begin … did the ‘GT3 Touring kill the 911R’ … (with apologies to the Buggles)?

View this car’s build spec here.

 

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

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

Hammer price: $267.5k ($299k all-in) – Reserve Pulled.

Our take: This is a really great car, the 997 GT2 is an often underappreciated favorite as we have stated many times. And it’s held its value pretty well compared to other Porsches since its peak. The estimate range didn’t make much sense seeing it was on offer earlier this year for $299k. We felt that at auction it might be able to get it to that number all-in and it did.

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.

What we said: 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.

Hammer price: $225k ($252k all-in).

Our take: Claimed 1 of 3 in this color but not sure if they really know that for sure. We thought it would sell for a little bit more. But we learned some things, 1) this is a model we didn’t get here and therefore it seems there is less interest in it than we thought, 2) this is now a simple check box import so the universe of available cars is quite large, and 3) asking prices in EU are totally unrealistic for our market so cannot be used as a barometer for much of anything.

 

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

What we said: Due to its unique color hammer at low estimate – $300k.

Hammer price: $290k ($324k all-in) – Reserve Pulled.

Our take: Not much to say here other than the auctioneer keeps saying “PORSCH” instead of “PORSCHA”. Here is a link to Porsche’s YouTube video on the matter.

 

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

What we said: … 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.

Hammer price: $590k ($654k all-in).

Our take: This was the auctioneer’s ideal outcome backstopping their greatest promise – an over-the-top result (even they were surprised it seemed). To put this result in perspective – at the peak of the market – Uli Martini of Martini Garage had a 7 km – yes ‘7’ km – example on public offer for €500k (~$560k) and it took some time to sell it. Downside of this result is that it will kill the market for the Sport Classic as – contrary to popular belief – auction results do not set the market for late model cars even if built in this few a number. It is but a moment in time result. And it means that every Sport Classic owner is going to think their car is worth this money … it’s not. We like to use superlatives like “Crazy” or “Insane” to describe an outcome, or even the classic “More Dollars Than Sense” … none of those seem to be adequate descriptors here … so “Insert-Your-Thought-Here”.

 

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

What we said: It should be bought at a $360k hammer.

Hammer price: $380k ($423k all-in).

Our take: The gavel was ready to come down at $360k … it hung in the air for awhile … suddenly the bid popped to $380k and the gavel pounded the table. This is both an excellent and unique example. The buyer and the seller should be quite pleased with this outcome.

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.

What we said: … this is a no sale if the seller needs anything more than a $325k hammer … look for the reserve to be pulled.

Hammer price: $400k ($445k all-in).

Our take: The auctioneer egged two egos on “… the two bidders should keep going …”, quite the job. The losing bidder should take solace as there are ½ dozen Porsche dealers calling RM asking for his phone number. And the seller should be standing up and clapping. This is highly likely not a future classic and will probably go the way of other less than remarkable Porsche marketing cars (and knowledgeable buyers seemed to have sensed that as of the 200 allotted to North America only 120 or so were sold). They had nothing really all that special about them (a nominal power upgrade aside) even though the Porsche factory marketing catalogue likened it to a ‘Stradivarius’ and laughably tried to position it as in the same category as the 964 Turbo S Leichtbau. If it had the option code D97 6-cylinder turbo 3.8 L 515KW/700HP GT2-RS (DHNA) engine instead of the 446KW/606HP (DBCB) engine – now we’d be talkin!

 

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

What we said: … a hammer at $375k would be an outcome which reflects the real market – reserve to be pulled or no sale.

Hammer price: $415k ($461k all-in) – Reserve Pulled.

Our take: The buyer of this car must not have checked cars.com lately because this car all-in was 34% over MSRP which is around where all the other 991 GT2 RS on the market sit unsold – not only is that not a price where the market can clear today it will be lower tomorrow – they are still making and selling them at MSRP! You can’t blame Porsche for saturating the market with endless numbers of ‘special ‘cars … so fair warning to speculative profiteers. The seller may not like the outcome but given the unrealistic estimate range and what the real market is, it was ok (well for the auction house anyway).

 



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