Shows Canceled, Auctions Postponed: What Does Coronavirus Mean for the Classic Car World?
We’ve already seen the impact of coronavirus on car manufacturing and sales, and we’ve seen it in racing; it’s no surprise that the ongoing pandemic is turning the old-car world upside down as well. Though the extent of the pandemic’s reach is impossible to gauge at this point, it’s not a matter of whether the 2020 vintage-car calendar is going to be affected—it’s how much is going to be left when things settle down.
It doesn’t help that we’re moving into car show and event season just as states and countries are going into lockdown. Indeed, a growing slate of shows large and small have already been canceled or postponed. The most high-profile event in the United States that has been called off, at least at the time of writing, is likely the Greenwich Concours d’Elegance; originally planned for May 30-31, this would have been the Connecticut event’s 25th anniversary—and its first year operating under the ownership of Hagerty, which acquired the show last year.
Classic car auctions have not been able to escape coronavirus, either. Gooding & Co.’s “Passion of a Lifetime” sale, scheduled to take place in London on April 1, has been postponed “until further notice”; no new date for the sale has been announced. Barrett-Jackson’s Palm Beach sale was a little further out, being originally scheduled for April 16-18; it was able to push it back to Oct. 15-17, with ticket sales being either refunded or transferred to later in the year. Mecum Auction’s March and April events have been pushed back; its big mid-May Indianapolis sale, like the Indy 500, presumably hangs in the balance.
Interestingly, Bonhams has announced that two of its U.K. automotive sales (along with its nonautomotive sales), one that took place March 21 and another scheduled for March 29, were to continue as scheduled—behind closed doors. Bidding via phone or online sales will continue as normal, but you won’t be raising your hand in the room. Bonhams does say, however, that you will be able to view lots prior to the sale by appointment only.
RM Sotheby’s, meanwhile, was able to shift its upcoming 225-car Palm Beach auction to an online-only sale; this required a format change, from the traditional live auction approach to a time-based sale. It will now run from March 20-27.
So what does all of this mean for the values of classic cars? We simply don’t know—but at the same time, don’t expect a fire sale.
“It really is too soon to tell, to draw any conclusions about what this will do both near-term and long term,” says Jonathan Klinger, Hagerty VP of public relations. “But if you want to look at what can we draw from recent experience, you can go back to the recession several years ago and how the collector car world fared relative to the larger economy. Yes, there was a correction in certain aspects of it, and in those that saw the steepest correction, you were probably looking at no more than 30%.
“But those were also the aspects that had gone up the highest before the housing crash. Muscle cars, Corvettes … there were factors that contributed to a perfect storm for those, because a lot of the very reasons that led to the crash in the housing market is also what fueled some of the superheated prices,” Klinger says. “You had a generation that was cashing in on what we could probably now characterize as inflated housing values to buy the cars of their youth, and there was just this feeding frenzy for a while. So those saw the most correction.” At this point, the financial chaos triggered by coronavirus seems to be spread across all sectors—and potentially, all corners of the collector car market—rather than focused on a small handful.
“What really happened during the worst moments of the recession is, activity and volumes of transactions went down significantly.” Aside from that sharp correction in a few parts of the market, “People just sat on their hands for a while. They didn’t buy, they didn’t sell—transactions just slowed. What we did not see in the last recession was mass panic-selling.”
While there may have been cases where some individuals had to sell cars to free up much-needed resources, “You didn’t see that in large quantities. You didn’t see the auction companies all of a sudden dumping these large collections at wholesale prices because someone needed to all of a sudden raise cash. The car world overall was fairly resilient. Will that be the case this time around? We don’t know yet.”
It’s worth noting that, though cars have increasingly been viewed as investments (for better or for worse), they’re far less liquid than cash, stocks or financial instruments—especially in an environment where auction activity is curtailed for health and safety reasons.
In any event, this won’t exactly be a case of slamming the brakes on a hot market at its peak. While the sales around the recent Amelia Island Concours d’Elegance were promising, the Monterey Car Week auctions last year were fairly soft; Klinger suggests that the feedback cycle that led to the stretch of record-breaking prices and sale totals a few years back—wherein big prices tantalized owners of highly desirable cars enough to bring them to market, fueling more headline-making big-ticket transactions—had been paused even before coronavirus arrived on the scene.
As well-known names in the auction world pivot (temporarily or not) to online sales, watching the results roll in will be illuminating. What these companies learn from their experiences in tele-auctioneering may well shape the car market landscape for years to come, just as this present collective work-from-home experiment may change employment practices in the long run.
What is going to be tough to replicate online, whether you’re dealing with a time-based sale or a live behind-closed-doors auction, is the energy in a room during a a stint of heated bidding; auctions are, for bidders and spectators alike, a form of entertainment, and excitement can help propel lots to record-breaking hammer prices.
If there’s one auction service that’s come close to replicating that buzz in a virtual format—or maybe more accurately, given the concept its own unique spin—it’s the online-only Bring a Trailer. We spoke to BaT CEO Randy Nonnenberg to learn about how the site is faring in an age of pandemic. On the one hand, everyone is operating under a cloud of uncertainty. On the other, time previously wasted commuting can be spent perusing the site … and there’s no boss to look over your shoulder as you browse.
“We are seeing a lot of traffic, as well as comments and engagement,” Nonnenberg says. “And there’s multiple factors there—there’s some people that are hurting from this … that may need to sell a car as a result. And obviously the internet right now is a great place to do that. Local transactions and big, public-gathering auction environments, or even car dealers—the traditional brick-and-mortar opportunities—are certainly limited for the next couple of weeks, if not months. But if you can leverage the internet and use a site like ours, it’s the perfect moment to do that.”
But people listing cars, and commenters commenting, doesn’t necessarily translate into sales. Except in BaT’s case, it has thus far. Says Nonnenberg, “We’ve been watching it closely since February, with the last couple of days being the craziest part, with the stock market shift and coronavirus concern. Yesterday (March 19) we had our standard 70-plus% sale rate on the site, and the average number of bids, and average number of comments, are the same as the same as they’ve been—which, honestly, is kind of amazing.
“People are buying. I mean, I don’t think we’re in the same world that we were in a month or two ago, and that makes sense. And I think that people are going to be more careful about how they purchase.”
Here, Nonnenburg cites BaT’s relatively modest fee structure and quick turnaround for sales, in contrast to the higher fees and relatively longer lead time for most traditional on-location events—to so say nothing about the transportation costs for a car that might not even sell. “People want to find an efficient market,” he says, and that’s what makes BaT attractive.
Moreover, the site’s lively comment section is a place where people—bidders and window-shoppers, know-it-alls and bona-fide make/model experts—gather. It’s the closest anyone has come to simulating live-auction energy online.
“The community is a big part of BaT,” Nonnenberg explains. “It’s what makes the auctions viable both from a credibility perspective, but also enjoyable. The old way of doing online auctions, with no community … it feels like an empty room. There’s no excitement whatsoever. But also, the expertise in the room on BaT is what gives people confidence in the vehicle. Online auctions where it’s a four-sentence description and a couple of rosy photographs that don’t show the underside of the car or any of the details that may be sub-perfect … I don’t think that’s very trustworthy. And I don’t think bidders think that’s very trustworthy.
“So just taking other auctions and enabling online bidding like it’s going to solve everything … I think the community point is being missed.”
Before this all blows over, it seems that community—in all its forms—is what we’re going to miss more than anything else. In the meantime, it seems like you’ll have more options than ever before to hunt for potential additions to your fleet from the (hopefully) pathogen-free confines of your domicile. Just not during work-from-home hours, right?
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