Auctions in the Middle East
A difficult terrain if the event is not adapted to the customs and constraints of a market that cannot rely on memory and myths. We have analyzed the results of Riyadh and Abu Dhabi and reached some conclusions…
‘Future shaper’ is the expression used when we talk about Asia, so the collector car market could not help but discuss this subject.
In recent weeks three auction houses have offered their different approaches to this challenge by competing in the Arab market, with different but challenging results. The Asian collector’s market is much younger than the European or American one and the offer has to be tailored accordingly; therefore, many recent supercars and hypercars (which, incidentally, is also happening at the American events) and racing cars have joined the classic ones. The first pair of auctions was organised during the Riyadh Car Show, the most important historic car event on the Arabian peninsula.
The start was given by the English Silverstone Auctions that on the 21st of November organized an auction of 65 relatively recent lots, on average the year of production was 2004. The poor result (just 16 cars or 24.6%) is due more to high reserve prices than to the lack of interest for the cars themselves.
For the British house, however, it was not a disaster: with over 14 million dollars sold it was their best auction ever, having also awarded the most expensive car ever gone through their auction: the 2017 Pagani Zonda Riviera, worth 5.5 million dollars. If Silverstone could count on no fewer than six cars offered without reserve (excluding cars without reserve, sales would fall to about 16% of the offers), the same could not be done by the American Worldwide.
The mix of American muscle cars (many), classic cars (enough, even some pre-war ones) and recent supercars (few) disappointed the participants of the show, and at the end of the day only 4 cars out of 120 were sold (a paltry 3%). Again, the problem could be found in too high reserves or, being on average older cars (49 years), the strict regulations for registrations in these countries may have discouraged even the most fervent enthusiast.
The following week, RM Sotheby’s in Abu Dhabi attempted to succeed in the venture that the other two had failed. First of all, it radically changed the backdrop, taking advantage of the agreement with Liberty Media, the organizer of the Formula One Grand Prix, and using the Abu Dhabi track as an auction venue.
Then it presented his typical parterre of high level cars (recent, however, from 2000, on average) but, above all, it played its cards with reserve prices, which were definitely more reasonable than the other two. Moreover, it was able to count on the powerful ‘Sotheby’s battleship’, well known among Middle Eastern collectors (we must not forget that the most expensive painting ever sold at an auction, the Salvador Mundi, is owned by a Saudi prince). And the results were not long in coming. With 50% of cars awarded (20 out of 40, without taking into account the memorabilia), it ‘destroyed’ the numbers of the previous auctions. Not only that, but it alone awarded more cars than the other two put together which, moreover, had brought a number of cars almost 5 times higher than that of RM Sotheby’s. Also in Abu Dhabi, however, the reserve had an important role. In fact, 13 cars were awarded under the estimate (including commissions!) and just the top lot, the 2017 Pagani Zonda Aether, was awarded above the estimate ($ 4.5-5.5 million) for $ 6,812,500.
Some hypothetical conclusions can be drawn from these facts:
- The Middle East is a prosperous market for Supercars and much more difficult for collectors. The symbolic and cultural values of cars from the 20th century still need to be promoted and established.
- Too high reserve prices discourage any desire to buy and grow a collection.
- Relying on Supercars is a relative opportunity: either they are really desirable because they are unique or rare, or those who, in those countries, can afford a car of this type, prefer to buy it new and customize it for themselves, which is very common here.
- In most Asian countries, to avoid the import of polluting used cars. This rule does not distinguish collector cars (certified as such) from normal used cars. This is an obstacle that should be brought to the attention of the countries concerned and removed.
- The trend towards finding strange and different vehicles is confirmed. Worldwide got the most sensational price when it awarded ‘Thor24’, a big-rig (large custom truck) with two V12 engines and a jet engine with a total of almost 4000 bhp. The price shook the market because with $13,200,000 – you read it right! – one can put in the garage the best Ferrari 250 SWB Berlinetta or two Alfa Romeo 8C 2300. Moreover, in a ‘sluggish’ market like this year’s, this ‘strange object’ has become the third most expensive vehicle of the year.
- The market for ‘special’ Formula 1s remains lively: the Ferrari F2002 with Michael Schumacher, which the auction house, in a stroke of marketing, had driven by Mick Schumacher shortly before the sale, was awarded by RM for $6,643,750. A 1982 Ferrari 126 C2 performed very well, because its sale at $2,143,750 is a much higher figure than it could get in equivalent European auctions (experts estimated that it would not reach half).
- Reserve prices blocked sales that could have been interesting in this market phase: both RM and Worldwide offered a Ferrari F40 and the level of offer was, unexpectedly, that of the second auction house. RM’s F40 with just 1141 km reached a maximum bid of $1.3 million, while Worldwide reached $1.45 million despite having 3263 miles. On the other hand, RM reached $700,000 for the Porsche 911 2.7 Carrera RS, compared to $600,000 for the last offer for Silverstone. Again, both remained unsold. Same fate for the two Mercedes-Benz 300SL Gullwing: Silverstone reached an offer of 1.6 with $1.0 million of Worldwide.
- It is hard to predict upcoming auctions in the Middle East: Worldwide has already stated, in a far from polite way, that it will not repeat the experience, and Silverstone will probably do the same.
- RM Sothebi’s has the strength and experience to insist. These are high-risk bets but the pairing with Formula 1 could be the right approach: there are no fewer than eight Grand Prix in Asia in 2020 between major countries such as China and newcomers such as Vietnam. It would be great to find out what could happen.
Photo Courtesy by Remi Dargegen and Rm Sotheby’s