the Revenant: Deciphering the Confusing 2014 Corvette Collector Market

Untangling the Corvette Market Mystery Mess

In a few days two prophetic auctions will take place that collectors of Corvettes will want to keep their eyes on whether they plan to bid at these auctions or not. The two biggest sellers of collector Corvettes in the country, Mecum® and Barrett-Jackson® will be holding their second important collector auctions of 2014. The reason these auctions are important is because after some mixed and difficult to interpret first quarter Corvette auction results, we should get a better read on the Corvette collector market and where it is headed for this year. After a spectacular 2013 which saw new records set on “blue chip” Corvette prices, and while the Corvette segment of the collector market was strong for most rare and well optioned cars, at this point it is difficult determine whether last year’s strong market trends will continue for 2014.

Based on the mixed results of the first quarter auction events from the several auction houses, including the most important Corvette auction companies, Mecum® and Barrett-Jackson®, it has been difficult to predict whether the strength in the Corvette market will continue throughout 2014. In January, Barrett-Jackson® had their best Scottsdale auction in history and their sales results showed an overall sales increase in the high single digits. The Corvettes at Barrett-Jackson® were impressive and enthusiasts got to see a new world’s record price for a Corvette sold at auction when a 1967 L88 Corvette was sold for $3.85M, breaking a record set just a few months prior at Mecum’s Dallas auction of $3.52M by another 1967 L88 Corvette. At the same Barrett-Jackson® auction this year enthusiasts and bidders also witnessed another record was set for a third generation Corvette when the world famous L88 racecar, “The Rebel,” was sold for $2.86M. Normally when two Corvette world’s records are shattered in the same auction it would be a pretty good indicator that the market was definitely going to have another exceptional year ahead.

A world's record price was paid for a C-3 at auction when "the Rebel" was hammered down for $2.5M at Barrett-Jackson in Scottsdale. (Photo source: Barrett-Jackson)

But only a week later that projection was put on hold after Mecum’s, the largest of all collector Corvette auction companies, results were posted. Sales and attendance at the world’s largest collector car auction in the world slipped from the prior year and more than a few of the most important featured Corvettes failed to sell. But in the volatile collector car market things are not always as they may initially appear and in fairness there were several external factors at work which impacted those results. It should be remembered that much of the country was snowed-in and as the automobile world has recently witnessed the weather has been a factor in automobile sales, new and used, throughout the country in January and February. So it could be expected that attendance and sales for Mecum’s Kissimmee event would be negatively affected. Even in light of the lagging attendance, Mecum did manage to sell almost 250 of the 400 Corvettes offered, a victory in light of the adverse weather and attendance.

Terry Michaelis' incredible concours winning Z06 was bid to a healthy $900K at Mecum's Kissimmee auction but did not meet the owner's reserve. He must have been right since the car sold a few weeks later for an undisclosed price. (Photo source; Mecum)

But the results left the Corvette market with some serious questions. Could the disappointing results be attributed entirely to the external factors or was there a shift coming in the previously strong Corvette market? Analyzing the results, one important fact emerged, more than a few of the “blue chip” Corvettes did not sell in Kissimmee, and due to the heavy impact of these cars on the entire Corvette market those results raised a flag indicating a need to find answers and determine the actual direction the 2014 market was headed. Of the top ten most important, rare and important Corvettes, of the 400 consigned, seven did not sell. Though the weather and attendance may have influenced those results, normally the strongest “blue chip” collector cars are rarely affected by factors such as weather, since most serious, informed and qualified potential bidders have vetted the cars, developed bidding plans and contingencies for those investment lots well in advance of the actual auction. If the weather or some other external factor arises those bidders are usually prepared to place their bids by phone, fax, or computer. So if it wasn’t the drop in attendance and if the collector whales had their plans in place, what was it that kept the cars from changing hands, were the bids too low or were the reserves too high? Buyer’s reserves are something that the auction company has little control over and no auction company works harder to bring buyer and seller together than Mecum®. The next step is to determine whether the bids placed were realistic in light of the strong Corvette market up to that point and were the bids at least “fair market value.”

Were the bids placed actually strong bids and realistically within range of market value for the cars crossing the block or was interest in the “blue chip” Corvettes beginning to ebb? And there lies what may be the mitigating factor to help arrive at a realistic analysis of the Kissimmee sale and more specifically the health of the Corvette market. Failing to sell due to not meeting the reserve may just indicate that the sellers were being over optimistic in their expectations and trying to over-capitalize on the previous year’s otherwise strong market. Based on the robust sales and record prices in 2013 more than a few sellers jumped on the band wagon to try and reap the benefits of a seller’s market and it is common to see owners of collector cars over react and project super-inflated values on their cars following record setting sales in the market. Certainly there is little Mecum can do rectify unrealistic reserves aside from advising consignors on their reserve prices versus the actual market value. Certainly no one works any harder to bring buyer and seller together than Dana and Frank Mecum and their auction teams, but ultimately the decision as to the reserve price rests with the consignor. And as many have witnessed in person and on TV consigners can be more than a little obstinate and set on their prices. So let’s take a look at those top ten Corvettes, not from a “sold” perspective but more importantly for market analysis purposes, the final bid price.

Dana Mecum on the Block trying to bring the buyer and seller
to an agreement. (Photo source: Mecum)

Below is a list of the top ten Corvettes and the selling price or the final bid price. For the purpose of determining the market direction we will ignore whether the car sold or not and look at the final bid price versus the fair market valuation of the car at the beginning of 2014.

Though the ’56 Corvette prototype and the 1963 Earl styling cars were disappointing that they did not sell, since they are unique cars they are difficult to consider in determining the health of the Corvette market. More importantly are the highly desired Z06’s and L88’s where there is considerable prior market data to help judge the quality of bids placed.

To help us in our analysis let’s look at only the cars in blue type since those are the cars for which we have some historic price data over time. One of the best market guides available for determining both historic and current market values for collector cars is the Hagerty Price Valuation Guide®. Hagerty® has compiled extensive data on the first four Corvette generations’ values over the last seven years based on the condition of the car and many of the the production RPO’s. You can find information here: http://www.hagerty.com/valuationtools/

The first thing which must be kept in mind is, with the exception of only a limited number of Corvettes with rare options, the vast majority of Corvettes, today, are not selling for the prices they were getting in 2007 according to Hagerty. Many of the strong optioned cars are getting close to their market highs but most average optioned Corvettes are still selling below what they were being sold for in 2006 and 2007/ The biggest reason is that 2007 was the last year prior to the stock market and corresponding collector car market crash of 2008. Two optioned Corvettes which are exceptions are the 1963 Z06’s and the 1967 through 1969 L88’s. Both of these optioned Corvettes are bringing considerable more on average than they did seven years ago. Even the rarer 1967 L89, of which there were only sixteen produced, is not bringing 2007 prices on average even though they have doubled their seven year low price of $217K . But the reality is that most Corvette enthusiasts are not buying $250K + cars even though we may want to. Most of us are buying the less rare but well to mid optioned and less costly cars. While most of those cars’ values are still on average below the 2007 prices, the top dollar “blue chip” Corvette sales performance has a ripple effect on most other Corvette prices. So, in short, blue chip prices impact the entire Corvette market, if not immediately, shortly thereafter.

One of the factors that have driven some rare optioned Corvette’s pricing to all time highs and helped them defy the trend for most of the Corvette market is the focus over the last several years with performance and racing optioned cars, especially those with documented heritages. As a result not only have the prices of Z06’s and L88’s escalated well above their seven year highs they have influenced prices on other high performance optioned cars, as seen in the values of the high horsepower big blocks as well as the LT1, ZR1 and ZR2’s, though bargains can occasionally still be found.

This exceptional 1969 L88 sold $510K at Mecum's world's largest collector car auction in January. In Corvette L88 terms this could be considered a prudent buys. (Photo source: Mecum)

So when the “blue chips” go up usually other Corvettes will follow almost in order of options and rarity. In other words values of high optioned performance based Corvettes will go up in a quicker time frame than the lower optioned and horsepower cars. And, though the overall Corvette market has been making a comeback towards meeting or exceeding their overall market highs of 2006 and 2007, at the end of 2013, mid and lower horsepower optioned Corvettes are still lagging well behind their highs and in many cases have shown little upside growth from their historic low prices. So much of the otherwise strong Corvette market in the last two years has come from the concours condition restored or survivor, well optioned, condition 1 and 2 cars with a bulletproof provenance and even better if they had a documented performance heritage. Various strong and weak examples can be seen In the “Affordable” chart below which illustrates that most examples are well above their “Market Low Value” but have not quite attained their value as of December 2006, and there is even an example of the current value being only $100 above the historic low value.

The fact that most Corvette prices have not yet attained their seven year highs is good news for collectors who still want to get in the market, but many optioned Caorvettes are now rapidly approaching those highs. Understanding this and the market direction adds some urgency to potential purchases if the market performs like it did in 2013. To give you a feel for some of those values here are some Hagerty® historic and current valuations of some of the most affordable first through fourth generation Corvettes all rated in a strong #2 condition. (Note these are averages and deviations to these valuations will occur.)

Another helpful tool in valuating collector cars is Mecum’s Infonet® which allows Mecum members to find sales data on all cars crossing the block at Mecum auctions for the past several years. This can be found at http://mecum.com/ . This tool is one of the best and even allows you to pull up a specific auction lot number, description from several years ago. And another attribute of Infonet® is that it even if the car did not sell it shows the highest bid placed. It illustrates Dana Mecum’s belief that an educated bidder is good for his business.

Over the past seven years Mecum’s Infonet® reports that eleven 1963 Z06’s have crossed the block since 2007. Four of the eleven 06’s were sold, four failed to meet reserve and three show no bids and no disposition. Sold prices ranged from a $250K bargain for a Nabers Brothers older restoration, from the Buddy Herin collection (the same consignor of the 1967 L88 which set a world’s record price of $3.5M at Mecum’s 2013 September Dallas event) to over $1M for the well documented historic Gulf Oil race car which sold in January of 2009. The chart below shows Hagerty’s historic valuation on number 1 condition “Blue Chip Corvettes,” of which the 1963 Z06’s and 1967 – 69 L88’s make up an important piece of the “blue chip” segment. (Note that the historic high price on all of these Corvettes is the current valuation and that all cars are significantly above their 2006 year end prices)

By analyzing the data in this format we get a better perspective of the “blue chip” segment of the Corvette market. Using this approach it appears that the bids placed on the investment Blue chip segment were at or above market valuation. This finding would support the theory that in many cases the reserves were set to maximize, if not over-estimate, the potential value of the consignment. Though this would support the theory that overall the current Corvette market appears healthy. However, that being said there may be some softening or stabilization in the C3 market segment. Of the seven C3 Corvettes on the lists, two were underbid/sold, three were sold above the current market value, and two were bid at market value. But the second generation blue chip segment appears exceptionally strong based on the five L88, Z06, and L89’s offered for sale. Every one of these cars were bid/sold above the current market evaluation, and most of those were substantially above the current values. Based on this the ripple effect of these high value, investment cars should positively impact well optioned other Corvettes, particularly the second generation cars.

But as previously noted, we should get a more definitive answer and 2014 market direction following the two auctions taking place later this week. Both auctions have some good examples of first, second and third generation Corvettes in every segment scheduled to cross the block and we will be watching, analyzing and reporting our findings. Both auctions have more than a few Corvettes that will help us decipher the market direction. You can learn more about the Mecum consignments at http://www.mecum.com/auctions/top_picks.cfm and the Barrett-Jackson Corvettes at http://www.barrett-jackson.com/palmbeach/ .

The Revenant's Auction Picks

Mecum's April Houston Auction 2014

An original 2996 mile survivor found under blankets, the American and Marine flags after the passing of its original Viet Nam veteran owner don McNamara. The car was virtually unknown until discovered by a neighbor. If this car doesn't become the most valuable Corvette sold in Houston it is certainly the most storied. Don't be surprised if the car sells for $750K to $1M+. This car will be a factor in determining the future 2014 strength of the Corvette market.

Barrett-Jackson's April Palm Beach Auction 2014

This won't be the most expensive Corvette to cross the block in Palm Beach. That distinction will inevitable go to the buyer of the first production Corvette Z06 which will likely cross the block somewhere north of $1M. But with the continuing interest in original survivors though this isn't nearly as storied as Don McNamara's 1967 Corvette consigned at Mecum's Houston event and it has nearly 16K more miles (total 19.1K) it is one of the most original 1967 427's out there. Literally the car is a time capsule and has received the NCRS Chevrolet Bowtie Preservation Award, five NCRS Top Flight Awards, NCRS Performance Verification Award on the first and only attempt, NCRS Duntov Marque of Excellence Award, Bloomington Gold Historic Survivor, Bloomington Gold - Gold Certification, Bloomington Gold Benchmark Award, Gold Spinner Award and Triple Crown Award. Cars like this can be a challenge to put a price on since they are often bought to end up either as trailer queens or sitting idly in a museum in order to preserve their time capsule status and value. It will also serve to illustrate the strength of a benchmark survivor 1967 Corvete vs a concours restored 1967 corvette which is also being sold from Rick Hendrick's collection. Nevertheless I think this car will hammer for $350K+. Unlike the McNamara Corvette at Mecum;s, this one will definitely be sold since it has no reserve.