Wednesday, January 25, 2017

Arizona Auctions Review

2017 Arizona Auctions Review


With the 2017 Arizona collector car auction cycle now complete, here is a look at how the results of the high-end auction companies (Bonhams, Gooding & Company, and RM Sotheby’s) compared. While all three had sales rates between 80 and 90 percent and each sold over $30 million of cars (all prices referenced in this post are before fees), differences in the results appear when making a distinction in the cars that were offered. Unlike a classification by condition as with the post on RM Sotheby’s Duemila Ruote auction, here the distinction is a price threshold of $250,000. Cars with a pre-auction mid-estimate (the average of the low and high estimate) that was less than $250,000 go in one group, and those with a pre-auction mid-estimate above that threshold go in the other group. Using this distinction, the first auction company performance difference is that one of the auction company’s pre-auction mid-estimates are much better at predicting the sale price of cars in the lower estimate group, but their mid-estimates are the worst at predicting the sale price of cars in the higher estimate group. Similarly, one auction company had pre-auction mid-estimates that were the best at predicting sale prices for cars in the higher estimate group, but their mid-estimates were the worst for cars in the lower estimate group. For all three auction companies, their pre-auction mid-estimates were either consistently too high or too low, depending on the price group. Given the price group variations among auction companies, these findings could be helpful in determining which is the best company to buy or sell a high or low priced car.

The scatter plot below shows results for the three auction companies. Each price group can be plotted separately, and by moving the cursor over each point, the lot, mid-estimate, and sale price can be seen. The prices are before buyer’s fees and prices for unsold lots are zero.




The company with pre-auction mid-estimates that were the most accurate in predicting the sale price of cars in the lower estimate group was Gooding & Company. Their sale rate for the group was 100 percent (compared to 89 percent for Bonhams and 99 percent for RM Sotheby’s), which helped raise the correlation coefficient of their mid-estimates to sale prices to 0.72 (compared to 0.50 for Bonhams and 0.61 for RM Sotheby’s). Their R2 (the amount of variance in the sale price explained by the pre-auction mid-estimate) was also the highest at 0.74 (compared to 0.31 for Bonhams and 0.58 for RM Sotheby’s).

Gooding & Company’s accuracy with pre-auction estimates in the lower estimate group is despite the sale of lot 62, the 1958 Porsche 356 A Super Speedster, which sold for $310,000 (estimate range $200,000 to $275,000). This car was a basket-case, and as was observed in the results of the Duemila Ruote auction, these cars are difficult to value accurately.

Porsche 356 A Super Speedster 84274 eng no 81478 1958 1

Unfortunately, Gooding & Company seemed to do poorly with the sale of cars in the higher estimate group as shown by their low R2 of 0.32 for this group (compared to 0.91 for Bonhams and 0.86 for RM Sotheby’s). While Gooding & Company’s sale rate was not the worst at 67 percent (compared to 66 percent for Bonhams and 80 percent for RM Sotheby’s), instead it is probably because Gooding & Company’s unsold lots had the highest total value relative to the total value of the lots they did sell in that higher estimate group. Adding up the mid-estimates of their unsold lots totals $17,775,000, which is 62 percent of $28,865,000, which is the sum of the mid-estimates of the lots they did sell. At Bonhams, adding up mid-estimates of unsold lots is only $8,387,500, which is just 23 percent of $36,587,500, which is the sum of the mid-estimates of sold lots. RM Sotheby’s has a similar percentage of unsold value to sold value at 21 percent, which is the $10,612,500 sum of mid-estimates for unsold lots to the $51,470,000 sum of mid-estimates for sold lots.

Gooding & Company seemed to suffer most in the higher estimate group due to a couple of lots that failed to sell. Lot 46, the 1967 Ferrari 275 GTB/4 s/n 10563 (estimate $3,000,000 to $3,400,000) stopped at a high bid of $2,400,000, and lot 146, the 1966 Ferrari 275 GTB Long Nose Alloy s/n 08117 (estimate $2,900,000 to $3,200,000) stopped at a high bid of $2,500,000. Had these two cars sold, along with lot 34, the 1936 Squire 1 ½ Litre Tourer Ranalah (estimate $1,500,000 to $2,000,000) that stopped at the high bid of $1,050,000 - Gooding & Company’s results in the higher estimate group would have improved.
Ferrari 275 GTB-4 Scaglietti 10563 eng no 10563 1967 Ferrari 275 GTB Long Nose Alloy 08117 1966

Bonhams had pre-auction mid-estimates that were the best predictors for the final sale price for cars in the higher estimate group, but that was partly because they offered the fewest number of lots in that price group with just 29 (compared to 61 at Gooding & Company and 64 at RM Sotheby’s). The correlation coefficient for Bonhams was 0.76 (compared to 0.44 for Gooding & Company and 0.78 for RM Sotheby’s). The R2 of their pre-auction mid-estimates to sale prices was 0.91 (compared to 0.32 for Gooding & Company and 0.86 for RM Sotheby’s).

Bonhams results in the higher estimate group were helped by two sales, which were lot 44, the 1952 Ferrari 340 America Spider Competizione by Vignale s/n 0196A, which sold for $5,800,000 (estimate range $7,500,000 to $9,000,000), and lot 24, the ex-Bob Jane 1963 Jaguar E-type Lightweight Competition s/n S850667 engine no. V682558P, which sold for $6,700,000 (estimate range $7,500,000 to $9,000,000).
Ferrari 340 America Spider Competizione Vignale 0196A 1952 0 Jaguar E-type Lightweight Competition S 850667 eng no V682558P 1963 4

In a similar reversal to the predictive power of Gooding & Company’s pre-auction mid-estimates with respect to sale prices, Bonhams had the worst performance when it came to cars in the lower estimate group. It is likely because their sale rate for the lower estimate group cars was the lowest at 89 percent (compared to 100 percent at Gooding & Company and 99 percent at RM Sotheby’s). The correlation coefficient for Bonhams in the lower estimate group of pre-auction mid-estimate to sale price was just 0.50 (compared to 0.72 for Gooding & Company and 0.61 for RM Sotheby’s). The R2 value of variation explained also was the lowest at 0.31 for Bonhams (compared to 0.74 for Gooding & Company and 0.58 for RM Sotheby’s).

One final observation of the results of the auction companies was the direction and magnitude of the difference between the pre-auction mid-estimate and the sale price. In the lower estimate group, all three auction companies had regression intercepts that were greater than zero. The implication is that (after multiplying the mid-estimate by a factor in the range of 0.50 to 0.72) the estimates for the lower estimate group were consistently less than the sale price by $13,441 to $13,904 – except for Gooding & Company which had estimates that were just $3,492 too low. The opposite was true in the higher estimate group, where excluding the poor results from Gooding & Company, the intercept was -$211,893 for Bonhams and -$93,699 for RM Sotheby’s (Gooding & Company had an intercept of +$54,261). The implication being that both Bonhams and RM Sotheby’s had pre-auction estimates for cars in the higher estimate group that (after multiplying by a factor of 0.76 to 0.78) overestimated the sale price by between $93,699 and $211,893. Given the coefficients for both price groups were between 0.50 and 0.78, but the resulting intercepts were positive for the lower estimate group and negative for the higher estimate group, it seems buyers were more aggressive in bidding for cars in the lower estimate group.


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