Closing the bid on exotic and collector cars

Auctions as a means of bringing buyers and sellers together have been around for centuries. So it was only a matter of time before exotic and collector vehicles entered this surge in demand.

We have seen these vehicles immortalised in Hollywood blockbusters and have always wanted to own one ourselves. The top guns currently being listed include a 1957 Ferrari 250 Testa Rosta starting at $17 million, a 1954 Mercedes Benz from $29.9 million and a 1962 Ferrari 250 GTO from $38 million.

Retaining demand

Buyers see these vehicles as an investment they can drive and enjoy, and as long as it’s rare, unique, desirable and in a good condition, vehicles like these will remain high in demand; particularly amongst high net worth individuals who appreciate the history and aesthetics of exotic and collector vehicles.

With that being said, it is interesting to note that although South Africa has followed the above-mentioned global trend, it is at a notable lower scale in numbers and values.

The request for the adjustment of prices at agreed values happens more frequently over here than internationally, especially when international spikes for certain models such as pre-1973 Porsche 911s or 356 models, are seen.

Each to his own

Currently, vehicle auctions in South Africa are more driven by volume and commercial-interest, e.g. batches of cars that have been repossessed by finance houses.

As such, venues are often large warehouses geared for traders rather than individual buyers with a need for the following, amongst others:

• Auctions to be held at more desirable venues; not large warehouses in backstreets of industrial areas but rather upmarket resorts with an ambience that enhances the aesthetics and nostalgia of collectibles.
• A carefully selected mix; true classics supplemented by more modern exotic vehicles.
• Preferably an experienced auctioneer with some knowledge of the classic and exotic vehicle world. This could be a major challenge as we currently do not have the wealth of choices such as the Europeans or Americans, which means that we may have to acquire someone of this status from somewhere else in the world at high cost.
• Quality brochures providing accurate detail of each vehicle with history, condition and expected price range. It would be great if the quality and style of the brochure portrays the look and feel of the event itself. The brochure may even become a collectible memorabilia itself.

Own set of risks

Auctions such as these are not without risks though. There is much that can go wrong when you have both high value vehicles and people in the same room. Therefore, venues should be carefully selected according to the security, fire and peril risks they pose.

The following should also be considered:

• Combined/Accumulated Risk: seeing that the values of individual cars can be very high, the combined value exposed at a single venue can be a major factor needing the involvement of global re-insurers.
• Organisers Liability: even if contracts and displays clearly states messages such as At the Owner’s Risk, no-one can contract oneself out of gross negligence.
• Storage facilities: these are often needed for pre-inspection by serious buyers and usually at least up to a week before the actual event.
• Event cancellation: this is always a possibility, but with good planning, committed numbers and a venue catering for most weather conditions, this should minimise the exposure.

Have the right partner

These risks, however, can be effectively mitigated and managed by partnering with the right insurers.

So for those who are interested in creating an auction platform for exotic and collector vehicles in South Africa; go for it, you will be meeting a huge need, especially if you have sellers who are genuinely interested in selling at minimum prices that are reserved at reasonable levels.