Car Collecting, Art Collecting, & The Power of "Patina"

Car Collecting, Art Collecting, & The Power of "Patina"

News broke in May 2010 that a 1936 Bugatti Type 57SC Atlantic, one of four examples built with only two known survivors, had been privately sold by the Gooding & Company auction house for an undisclosed sum widely estimated to be between $25 and $35 million. In addition to setting the record for the highest price ever paid for a car, its new owner – Peter Mullin and The Mullin Automotive Museum – joined Mr. Ralph Lauren at an exclusive table for two in the 57SC owners’ clubhouse, and sounded a bellwether for the climate of growth and optimism that has permeated the collector car market since.

Combined sales from the five major auctions held in August during the annual Monterey Car Week – which, economically speaking, is the most significant classic car event in the United States – grew 30% to over $258 million in 2012, which improves upon the near 15% growth set in 2011 at  $198 million (previously the all-time high). The trend is similar at the auctions held every January in Scottsdale, AZ, where sales grew 20% to over $225 million in 2013, following a 15% growth to over $159 million in 2012. Sales volume is actually coming down year-to-year, while the average price paid per vehicle going up.

Editors Note: Sports Car Market magazine is the source for all sales data used to compute the percentages above. All prices include dealer's premium unless otherwise noted.

 1936 Bugatti Type 57SC Atlantic. (Main Image and above, Michael Furman Photography) 

1936 Bugatti Type 57SC Atlantic. (Main Image and above, Michael Furman Photography) 

While bold-faced names spending millions is sensational stuff, between these headlines lies a question with broader ramifications: is car collecting gaining the sort of credibility and respect enjoyed by art collecting? Picasso-like prices provide one quantitative measure, and the emergence of originality and patina as criteria that determine a car’s value provides compelling evidence of the qualitative kind. Up until the early 2000s, classic car shows and Concours events almost exclusively recognized cars that had been highly restored, often to standards literally “better than new.” Among many collectors, taste is shifting from restoration to preservation, and prices realized at auction for highly original cars showing natural signs of aging gracefully –  and “barn finds” of rare cars inexplicably left out to pasture and later rediscovered in varying states of decay – frequently outpace those of their artfully Botoxed kin.

Leveraging originality helps to clear one of the inherent hurdles that, while serving as the basis for their fame and mass appeal, separates automobiles from art as collectibles: they are produced in multiples. Originality, patina, and unique owner history conspire to create a category for one-of-a-kind cars that cannot be reproduced at any price – no matter how many were built in the first place.

Down here on Earth, does this really mean anything to those who don’t have – or intend – to spend millions of dollars on a car? More than you might expect, as it’s not just in the automotive stratosphere where prices are rising. The Car Crush sat down with David Gooding, Founder and President of Gooding & Company, to chat about why the collector car market is booming, how it may be evolving, and why he loves cars in the first place.

More and more people relate to automobiles in a visceral way than ever before, and I think they do so ahead of many other art forms and collectibles.
— David Gooding, Gooding & Company

What excites you about cars?

Everything about them. Especially with older cars, they are animate objects that come to life. They are three-dimensional, they make sounds, they make noises. Getting them started, they have personalities of their own. Driving them, the noise, the experience, the smell of the leather, the wood. It creates such a strong emotion and impression that can last for years and years and years. I can’t tell you how many times I will be thrust back – I’m forty-six years old, I’ve been doing this all my life – thrust back forty years to a car memory from when I was a kid from something I’ll see, from some small thing on a car, and it will trigger a memory. And I see that with a lot of our clients, too. They will get so nostalgic about it because these cars create such strong impressions and connections. And these strong connections make people emotionally connected to other car people. So the great thing about our car world is that I can travel anywhere - I can be in the Southernmost part of South America, I can be in remote parts of Europe or Asia - and people will open their homes for me. Not talking business, we’ll just talk cars, not whether or not they want to buy or sell a car. They just want to share their cars. We have that common bond, and that’s fantastic. It’s a passport around the world that’s just amazing.

The collector car market is on the rise. Why?

We have turned the point where the automobile is now seen as an art form, and as an important historical object. We really saw that change when we sold the Bugatti Atlantic. People appreciated that as just pure art, not as an automobile, but just as pure art. And as sculptural art. We’re now in that era. I know many non-car people who say they are not into cars but they know they are significant historical objects that should be of significant value. And if a Picasso is worth two hundred million then a great car should be worth how ever many millions. So there’s a global acceptance of the automobile as an art form that we didn’t have before. More and more people relate to automobiles in a visceral way than ever before, and I think they do so ahead of many other art forms and collectibles. So they relate to cars to begin with. They are car enthusiasts, they have car memories to begin with. They may not have art triggers automatically, they may not have been brought up and exposed to art or jewelry, or coins or whatever it is. But most everybody has some sort of car memory. It could be riding in the back of a Ford Country Squire Station Wagon but still that evokes some sort of positive or maybe negative memory, there’s something there. Everybody has those memories. And what we’re seeing is that the car world, the hobby, our market – it just keeps growing. And as people come into spare wealth -- it doesn’t have to be significant wealth – they are thinking, “hmmm, I’d like to get a car, I’m attracted to cars, I’d like to dabble in cars.” Lately with the volatility in everything else, the car market has proved to be so stable ever the last few years. And I don’t promote doing this as an investment. However, it has been a really good investment!

 Your writer with David Gooding in 2008  

Your writer with David Gooding in 2008  

Are new collectors driving the market?

There are new collectors, and all the old ones are still active, but some are getting out-priced by the new ones. In their mind they’ll say, “I’ve always wanted a Ferrari 246 Dino, and I remember when they were fifty thousand, and then seventy five thousand, and then a hundred and fifty thousand, but I can’t pay five hundred thousand for it.  I’ve got the money but I can’t mentally get to half a million dollars.” So they’re getting outpaced by the new people who come in and say, “three fifty then four, four fifty then five hundred thousand, I’ll pay that.” The new buyers are not people who are buying on speculation, but buying because they want to build collections. They are coming to us and saying,  “I’m going to build a garage, and we’re going to hire a collection manager,” and they want to build a long-term collection. At every auction for the last four years we’ve seen new people coming in. There’s a “new guy” at every sale.

Who is this “new guy”? What’s their age and typical demographic?

Between 45 and 50 years old. About 75% of our clients are American, and by American I mean the whole of the Americas, North and South. Our clients are into primarily post-war European cars. They are beginning to get some pre-war cars, but if they are going to stick their toe in the water, it’s typically for Ferrari or Mercedes of the fifties, sixties or seventies.

You were talking before about how the market is evolving partly because classic cars are increasingly appreciated as an art form. But even with the 1936 Bugatti Type 57SC Atlantic, which was sold privately by Gooding and Company and is the most valuable car ever for sold, there are two known examples. Does originality and patina help to define one-of-a-kind automotive originals?

Definitely. It’s the fingerprints of the manufacturers there, and the owner’s. You look at a car with great patina and you know it has character like nothing else. It’s got a personality, a unique personality, and when you see those cars get restored – they just totally loose it. It all gets cleansed and cleaned off and buffed and then it’s just like everything else, and back down to a level. The sale at Scottsdale was a good example, where two Lancia B24 Spiders –  one car was nicely restored, and the car we sold definitely needed some money spent on it – but the two cars went basically for the same money. Two years ago, that wouldn’t have happened. Five years ago, the car that we had would have brought half the price. Now they are equivalent, and pretty soon, it wouldn’t surprise me if it’s going to be worth a lot more.

 1956 Lancia B24S Spider America, a highly original "barn find" sold by Gooding & Company in January for $803,000. (image courtesy Gooding & Company) 

1956 Lancia B24S Spider America, a highly original "barn find" sold by Gooding & Company in January for $803,000. (image courtesy Gooding & Company) 

Do you think this focus on patina and originality is here to stay, or is it a trend which will to come and go?

No, I don’t think it’s a trend that’s going to come and go. I don’t think everybody understands it yet. Even a lot of really sophisticated car people don’t get it, and I can understand why they don’t. They look the barn find cars and they go, “they need all this money spent on them, that doesn’t add up.” And I say but it’s not about that, it’s about the emotion, the story and knowing exactly what you’ve got and what you’re looking at. You can see layers of paint. And they say, “but it’s been repainted, it doesn’t have factory original paint, so therefore that’s awful.” And I say hold on, just because it has got layers of paint and dirt and dust and there’s rust just popping through the chrome, it’s not a negative. And that car just says a lot more than the restored cars. We all love restored cars, but usually the barn find cars are more interesting to look at. They speak more.  You lift the hood and there’s all this stuff. You sit in the driver’s compartment and there are stories to be told. People will say, “oh c’mon that’s awful! They smell terrible, they’re rotting, they smell of dead mice!” But there’s history in there, it just talks to you.

Is America late to appreciating originality and patina, or has it been a global shift?

The US has been a little behind but now I think it is embracing it as much as anybody. There’s a misnomer that – certainly Europeans think that – Americans like everything over-restored, over-shiny, over-chromed, but I do not find that to be the case. The majority of our clients for super original cars are American.

In the past, Concours events have tended to focus on cars that have often been restored to the point where they are of higher quality than when they were new.

And some cars have to be restored. Some cars need to be restored. And some cars are beautifully restored. The Pebble Beach Concours d’Elegance has really pushed the Preservation Class, and there are a lot of cars that are being preserved and not restored because of the preservation class, which is great.

Editor’s Note: In 2001, The Pebble Beach Concours d’Elegance created its first Preservation Class for cars built before WWII. In 2007, it added another for post-war cars.

 Part 2 of The Car Crush interview with David Gooding coming soon!