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Sunday
Nov302008

Collectibles

From the WSJ

 

A Rough Ride in Collectible Cars

For some, the first sign of trouble was a Daytona Spyder.

When one of these rare early-1970s Ferrari sports cars turns up at an auction, high-end collectors typically bid aggressively, even fiercely, to acquire it. But at a recent sale in California, one Spyder failed to fetch the minimum bid.

In recent years, the vintage car market has soared, led by the priciest European models. But now, as the economy worsens to the point where even the wealthiest collectors feel pinched, demand for million-dollar sports cars is starting to skid.

[SB122756427131254233] Sean Smith, Courtesy of Gooding & Company

1956 Mercedes-Benz 300SL coupe

Dealers, auction-company executives and others in the business acknowledge the downturn but say that, until recently, it has mainly affected the low end of the market: cars costing up to about $100,000, many of them American models. And while some insist that Ferraris, Mercedes-Benzes and Alfa Romeos are still holding their value, an increasing number of sellers are looking to unload their cars in a hurry to raise cash after losing their jobs, or a large chunk of their wealth in the stock-market plunge, say car auctioneers and others.

Recently, two of Michael Sheehan's clients came to him looking to sell their Ferraris in a hurry -- an unusual request. "They needed cash now," says Mr. Sheehan, a longtime Ferrari broker in Newport Beach, Calif. The cars, a $110,000 1982 Berlinetta Boxer and a $950,000 1972 Daytona Spyder, wound up selling for about 25% less than they would have sold for just a few months ago.

Both sellers themselves were in hammered industries: One was a home builder from Chicago, and the other a former Lehman Bros. executive from New York.

Mr. Sheehan says he and others saw it as a bad omen when the Daytona Spyder failed to sell during an annual weekend of car shows, auctions and racing events on California's Monterey Peninsula in August. The event attracts some of the most sought-after cars and well-to-do collectors, and sales this year included several record prices.

Surprisingly, though, there were four Daytona Spyders -- which are sleek, shapely two-seat convertibles -- up for sale this year by three auction companies. That's considered too many for a car of which only about 120 were made. While one sold for about $1.5 million, two others sold for between $1 million and $1.1 million. The fourth failed to sell because bids fell short of the reserve price.

"Monterey was the swan song," Mr. Sheehan says. "Since then the Ferrari market has fallen 20% to 30%."

[A Rough Ride in Collectible Cars]

There were other signs of trouble at the summer auto auctions. Mike Regalia was at an auction in Pebble Beach, Calif., in August when bidding began for a Porsche that once belonged to actor Steve McQueen. The auction house's estimate was $125,000 to $175,000, though Mr. Regalia, a Sun Valley, Calif., collector who also restores vintage cars, says he thought it would fetch at least $200,000. After all, collectors have paid outlandish sums recently for the late actor's property.

Bidding on the Porsche slowed just above $100,000.

"I realized that the car wasn't going to get anywhere near the number I expected," he says. So he wound up bidding $125,000 and taking the car home. "I hadn't planned on bidding, but I kept thinking, 'These people must be asleep,' " says Mr. Regalia.

Or maybe they just ran out of money. Amid the broad economic deterioration of recent months, spending on extravagances like antique cars has slowed. In many cases, people can no longer afford even to keep their collections, says David Gooding, president of Gooding & Co., a Los Angeles car auction house.

In the past year, many collectors who used home-equity loans or other credit to buy the vintage convertible or muscle car of their dreams have had to sell as the housing and credit markets have declined. The same factors have kept new collectors from entering the market. As a result, many staple collector cars like 1957 Chevrolets, 1940 Fords and 1960s Pontiac GTOs are selling for half what they commanded two or three years ago.

According to industry tracker CNW Research, long-established classic cars are also suffering. The price of a 1934 Packard Touring is down 17% on average, compared with two years ago. The 1957 Ford Thunderbird is down 15%, and the 1940 Ford DeLuxe Coupe is down 40%.

Market watchers are bracing themselves for the next big round of high-end auto auctions in Scottsdale, Ariz., in January -- long a collective barometer of the market's condition. Some fear that these auctions may disappoint, much like this month's New York contemporary-art sales by the Sotheby's and Christie's auction houses. The Sotheby's sale totaled $125 million, well below the low estimate. The Christie's sale brought in $113.6 million, or about half the low estimate. At both auctions, about a third of the lots failed to sell.

For some collectors, the downturn could be a good time to amass a long-coveted vehicle or two -- not just because prices are often lower, but because cars that weren't for sale before are suddenly available. John McCue of Half Moon Bay, Calif., bought a 1958 Mercury Park Lane last summer for $39,000. The 61-year-old retired software executive says it probably cost him about 5% less than the car's value a year earlier. But since he has pursued the car for years, he knows the former owner wouldn't have sold it then.

"There are those cars that you think will never be for sale, the ones the owners will take to their graves," he says. "Well, now a lot of those cars are changing hands."

While many in the collecting business say there will always be enough wealthy people who want vintage cars, others fear the market could be headed for a repeat of its last crash in 1989, when speculators who had no particular interest in vintage cars drove a steep, if fleeting, run-up in prices. Today, more of the buyers are car lovers, but speculation underpins their motives as well.

"The love of cars never outweighs the love of money," Mr. Gooding says.

Write to Jonathan Welsh at jonathan.welsh@wsj.com

 

 

Wednesday
Jan022008

2008

Subscribe to the feed for 2008...just..Click Here.

 

Don't forget to continue reading our blog for 2008...Click Here.

Or go to Dialogue...2008 on the navigation sidebar.

We will no longer update Dialogue...2007.

 

Monday
Dec312007

Champagne

Champagne.jpgOur best wishes for the New Year!

Ever wonder why a champagne bottle looks the way it does? From Portfolio (one of our links) an informative pictorial with a full explanation...Click Here.

 

 

 

 

 

 

 

 

 

 

Photo from All Posters

 

 

Saturday
Dec292007

Thank You

To all our customers...from all of us at Strada

thank-you.jpg

 

May we offer you....

Asti-Cinzano.jpg

 

Here is....

A fascinating 45 minute presentation by Chris Anderson editor of Wired, author of The Long Tail, on "Free The Past and Future of Radical Price"...Click Here.

 

Friday
Dec282007

Friday Vroom Room - Year End

Good Morning!

2007 for us was captivating, and stimulating, we are thankful for achieving most of our goals and objectives. We had memorable moments, as well as moments that were less memorable. Its all part of life and business!

We executed our strategies, developed opportunities, acted quickly, got passionate, even emotional, tried to have fun, a few times we were flat footed which is a learning process. Did we constantly come up with flawless decisions, we sure tried!

We always try to make it simple, if its not simple we try harder to make it simple.

We never forget to offer good value, and be certain that we were offering a good price.

Change, on top of more change was a constant, it was always interesting and exciting to do business. Overall the level of excitement was good.

Some days we ask ourselves why we do this? Its always a simple answer we love the car business, we love interacting with customers, we love executing new ideas. Its a passion that is challenging to translate into words. We do need to make some money to pay our expenses. Its increasingly challenging to make reasonable money to pay our bills, does it sound like you heard this before?

This blog is our way to give back, to communicate information, to share our thoughts, to exchange ideas, and best of all its free.

We did several "white papers" throughout the year relating to the automotive business, we hope that you found them informative, thought provoking, and more important that you could benefit from the knowledge.

We invite you to keep on reading and participating on our blog, the version for next year is Dialogue...2008 , if you appreciate the information please tell your friends.

The second half of 2007 has been exciting, eventful, turbulent these are times that cry out for leadership, vision, innovation...an exceptional and unique learning experience. We do hope that in your own way you have taken advantage of your experiences.

The Canadian dollar reaching parity had seismic effects on Canadian automotive retailing, on the values of cars, at Strada we expressed our opinion, and took a position regarding the pricing of vehicles it started as Wash Out on this blog and progressed as a One on One with Michael Vaughan in the Globe and Mail.

This past year we enjoyed doing business, and interacting with our customers that is a constant that never changes.

 

Thursday
Dec272007

Just Business - 12/27

We could not pass this thought provoking article from Fortune....

Autos' year of living dangerously

New owners entered the industry in 2007, and life will never be the same again.

By Alex Taylor III, senior editor
(Fortune) -- Deep Throat told Woodward and Bernstein to "follow the money" if they wanted to understand the Watergate break-in. If you followed the money in the auto industry in 2007 you got some clues about where the industry is headed. And the future doesn't look anything like the past.

Start with Chrysler (C, Fortune 500) going private. The money guys at Cerberus Capital who now own Detroit's Number Three automaker are turning it upside down. They brought in industry outsider, Bob Nardelli, as CEO and Nardelli is taking a fresh look at everything. Going forward, Chrysler will be eliminating models and possibly some brands, closing dealers, and laying off workers.

Nardelli's got a lot of work to do. Chrysler is expected to lose more than $1 billion in 2007. With 2008 is shaping up as an even tougher year, he's going to have keep cutting and hope that new models like the Dodge Journey crossover can stop the slide. Crosstown rivals are watching carefully because a Chrysler in distress could lead to suicidal industry-wide price-cutting.

One area where Nardelli has been particularly aggressive is in pursuing foreign partnerships. Chrysler is talking to China's Chery about building small cars, Russia's GAZ about expanding overseas production, and Japan's Nissan about a range of cooperative ventures, including a new pickup truck. Such deals are notoriously difficult to pull off - ask General Motors (GM, Fortune 500) about its now-defunct alliances with Isuzu, Suzuki, Fuji, and Fiat. But if Chrysler succeeds, it could create a new model of cross-national alliances.

Meanwhile, speculation is building about Cerberus' exit strategy from Chrysler, as well as its timing. Will it try to merge Chrysler with Ford (F, Fortune 500), or sell it to another automaker, or go to the public with an IPO? If Chrysler continues to pile up losses, investors may get anxious and Cerberus will have to bail out sooner than it wants to. In an industry used to working in four-year product cycles, fast private-equity money will likely speed things up.

For another cataclysmic change, how about minnow Porsche moving ahead with its plan to swallow whale-like Volkswagen? Porsche already owns 31% of VW and CEO Wendelin Wiedeking is champing at the bit to buy more. His ambition seem preposterous on its face: VW has 324,000 workers while Porsche has fewer than 12,000.

But under Wiedeking, Porsche has become a money machine and merging with VW could solve a lot of problems. VW gets Porsche's management expertise and a greater sense of urgency, while Porsche obtains needed access to VW's scale efficiencies and advanced technology. Competitors will have to come up with their own ambitious strategies to fight this new combine or fall by wayside.

Meanwhile, Wiedeking's place in history was assured when he became the industry's first $100 million man, snagging $116 million in annual compensation. Will any other CEOs be trying to top that?

Finally, there is the evolving adventure of India's Tata Motors pursuit of two iconic British brands, Jaguar and Land Rover. At $2 billion, the price could be a secondary concern. The larger question: is the manufacturer of a $2,500 car is capable of designing, building, and marketing luxury vehicles? Winston Churchill must be spinning in his grave.

If the Tata deal goes through, it turns the entire auto industry into a global bazaar. What's next -- a Chinese company buying Alfa-Romeo? BMW linking up with Honda? Nissan arranging a partnership with General Motors? (Well, that last idea has already been tried and found wanting. But you get the idea.)

With rivers of capital free-flowing across national boundaries, the possibilities are endless. The failed marriage of Daimler and Chrysler may have been only the beginning of a global shuffling of brands and owners. The other day, a GM executive was speculating that the auto industry was sorting itself into two categories: two super-companies, GM and Toyota, with annual production of nine million vehicles each, and all the rest. But the ability of companies to arrange deals and form ventures in ways that no one would have suspected five years ago leads one to believe that nothing is fixed any more. Even for a century-old business with enormous fixed assets, the world is becoming a fluid place.