Collector cars revved up again

By Forbes.com

Good cars can be hard to find. Good collector cars, anyhow. And great ones? Nearly impossible. Affluent collectors hold them as close as winning poker hands, buying and selling them within a small, private circle, protected from public view.

So when an exceptional car comes to auction, those who collect exceptional cars take notice. And when high-end collectors have finished battling with their paddles and their bank accounts, the result can be an impressive, multimillion-dollar sale.

Relying on a database of more than 40,000 public transactions maintained by Sports Car Market magazine, which tracks the market for collector cars bought and sold at auction, we've assembled a list of the 15 priciest auto auctions, from the 2002 sale of a 1937 Mercedes-Benz 540K Special Roadster to the record-setting transaction involving a 1931 Bugatti Royale.

The market is sizzling

While some of the top prices were achieved back in the 1980s, some 37 of the top 50 sales recorded by Sports Car Market have occurred since 2000, with 25 of those 50 taking place in the past two years. In other words, the collector-car market has never been stronger.

What gets serious collectors excited enough about a car to pay huge amounts for it can be summed up in one word: history.

Several factors make up a car's historical significance, but rarity and provenance -- a given car's chain of ownership and its achievements in the hands of those who drove it -- are generally regarded as most important when it comes to value.

Consider the Bugatti Royale. Ettore Bugatti built just six decadent Royales from 1929 to 1931. But at a cost of over $40,000 (roughly $468,000 today), even the discriminating target market found them pricey. As a result, only three cars actually sold. All six are accounted for today, and though the most recently recorded sale occurred in 1987, they are still considered the cream of the crop by many collectors.

Similarly, cars with a history from significant racing events -- and those piloted by significant people -- will command more on the block.

And in the world of racing, no event is more significant to a car's collector value than the 24 Hours of Le Mans, held each June in France. "Le Mans-winning cars assure their owners the ultimate collectors' bragging rights," says Simon Kidston, head of Kidston, a financial services consultancy that specializes in managing high-end collections. "It goes to show the value of provenance. The same car without the racing history would look identical to most people but would struggle to fetch a quarter of the price."

That 1987 Royale sale -- an $8.7 million result at a Christie's auction in London -- helped set the tone for top-tier collector cars that came after. "This was the first ever 'mega' collector-car price achieved at auction," Kidston says. "Some would argue it sparked the late 1980s boom in classic cars."

Even 'ordinary' cars sold high

That boom, a period of wild speculation in 1988 and 1989, saw collector-car prices soar, so that even "ordinary" Ferraris like the 512 BB Boxer of the early 1980s brought nearly $300,000. Today, that same car struggles to make $70,000 at auction. (Though other Ferraris, such as a 1962 Ferrari 330 TRI/LM, a 1966 330 P3, a 1967 275 GTS/4 NART Spyder and a 1956 410 Sport Spyder are still on the top 15 list.)

Collector-car prices cooled in the 1990s. But a resurgence in the world's economy over the past few years has sparked another boom, and prices on collector cars have again climbed. Those at the top of the collectibles ladder are no exception. However, what is popular is shifting somewhat.

Older, more established collectors tend to favor pre-World War II classics, grand cars like Bugattis, Bentleys and Duesenbergs that represent a long-forgotten artisanship.

European sports cars like Ferraris, Maseratis and Aston Martins are also much sought after. Built and raced during the "golden era," the period from the early 1950s to the early 1960s, these dual-purpose machines -- cars you could drive to the track, race, then drive home -- appeal to the generation of collectors who came of age with their faces pressed against race-course fences.

Of late, the American baby boomer has entered the collector-car fray. Those high-school kids who coveted muscle cars in the late 1960s and early 1970s now have the money to buy them. While no muscle cars make our top 50 list, results of $1 million to $2 million for the rarest machines have become more common.

To satisfy increasing demand, auction houses work tirelessly to find and bring these top-tier examples to market. And nowhere is the market as ripe as it is at the Monterey Sports and Classic Car Auction, Aug. 17-20 in the Northern California town. Auction houses like Bonhams, Christie's, Gooding & Company, Russo and Steele, Kruse International and RM Auctions all host sales. Last year, more than $79 million in cars changed hands.

If other sales this year are any indication of the strength of the collector-car market, this Monterey weekend promises more of the same. And those collectors looking for an old Ferrari to round out their garage would be wise to stop by the RM sale, where a 1958 412S sports racer expected to fetch $8 million might carry the weekend -- and change our top 15 list.