Are Top Shelf Collector Cars Overpriced?

Wow, 5.5 million dollars for a Super Snake Cobra; 1.1 million dollars each for a pair of 1950's Chrysler show cars; 2.8 million dollars for a Duesenberg. All of these seemingly astronomical prices were recently paid for cars that the vast majority of us can never dream of owning. Are those who are paying the really big bucks for these cars making shrewd investments, or because they appreciate their beauty, power and/or historical significance? Perhaps some mix of the two?  Are these old cars really the wise investment they claim them to be?

For some vehicles, it's easy to believe that they have lost touch with their actual market, creating, if you will, a pricing bubble that will soon burst. For some cars the signs are clearly there-the run is over. This is especially true for mass-produced muscle cars, clones, tributes, and other vehicles that are in plentiful supply. For others, those that are truly significant pieces of art or history, a strong argument can be made that they're just getting warmed up.

To underscore that last point, let's talk comparative value. Take, for example, the $2,350,000 recently paid for a 1909 Honus Wagner baseball card. Or how about the sale last year of what is believed to be the oldest hockey stick in the world, dating from the 1850's, for a staggering $1.9 million.  It's a curved piece of old wood believed to be from the 1850’s. I'd love to have the oldest puck!

Probably one of the first modern collectibles to really take off was postage stamps. Most of us have heard of the upside down airplane on an early U.S.A. airmail postage stamp being quite valuable. But how about the grand-daddy of all stamps ever offered at auction? In 1993, $3.8 million was paid for an envelope with two Mauritius British Colony postage stamps affixed to it.

Art - The Pinnacle of Collecting

A number of car collectors may think of their cars as pieces of rolling art. And some truly are.  At seven figures,  these rolling sculptures can be considered a bargain compared to hang-on-the-wall art by artists such as Monet, Van Gough or Picasso. Many of you may have heard about the multi-million dollar elbow-hole that Steve Wynn put in his Picasso, (titled "Le Reve", which is French for "The Dream" but more aptly named "A Nightmare" for Wynn) just a couple months ago. It was reportedly on its way to be sold for $139 million! That's right $139 million, about $27 million more that the official sales total from the entire 2007 Barrett-Jackson Scottsdale auction, which took months of planning and six days of non-stop work by hundreds of people. Another painting, a portrait of "Adele Bloch-Bauer I" by Gustav Klimt, was reportedly sold for $135 million in 2006. Admittedly, these are the cream of the crop in the art world, but even the most coveted of old cars bring a tiny fraction of these prices. Update 2020:  Even today, this same equation still applies, with the most expensive painting (Salvator Mundi by Leonardo da Vinci) selling for $450.3 million, and the most expensive car (a '62 Ferrari GTO, #3413GT) selling for $48 million.

So why do we think a car hitting the million-dollar mark is such a big deal? Sure, the overhead to maintain an old car is greater than other collectibles. Maintenance alone can be extremely expensive, especially if the vehicle is driven. This reality is often missed by the new collector, but is well known by the veteran. Still, this added expense doesn't even dent the value differential between most coveted cars and significant art objects. 

Many things drive people to participate in the upper echelons of any hobby, but few collectibles can make the statement of many top-shelf automobiles from any era. Once the market sorts out some of the value anomalies in today's collector car world, the truly great cars may finally break out and take their place among the other treasures of humankind.