Click Here for more inforamation
  • Mon. Mar 4th, 2024

What happens when classic cars sell for too much? JOHN MAYHEAD explains

Bynewsmagzines

Mar 4, 2023
This immaculate low-mileage 1987 Ford Sierra Cosworth RS500 sold at auction last week for a staggering £596,250 - that


One week ago, a 1987 Ford Sierra smashed records by selling for a staggering £596,250 at auction.

Granted this was no normal Ford family car. The motor in question was one of 500 limited-edition Sierra RS500 Cosworths, which have fast become one of the most collectible vehicles from the eighties era.

However, the winning bid at the Silverstone Auctions Race Retro sale at Stoneleigh Park in Warwickshire on Saturday pitched the room into a stunned silence, with the low-mileage car obliterating the previous world record price paid for one of these models four times over.

But what caused this to happen, and how common is it for bidders to go dramatically over pre-sale guide prices?

One man who knows is John Mayhead, editor of the Hagerty Price Guide. It’s his job to know the value of classic and collectible vehicles. And he says the Sierra sold last week – like so many before it – is what the industry dubs an ‘outlier’.

In a special guest post for This is Money, John explains what this means. 

This immaculate low-mileage 1987 Ford Sierra Cosworth RS500 sold at auction last week for a staggering £596,250 - that's four times higher than the previous record for a car of this ilk. John Mayhead explains why it happened and details why 'outliers' sometimes occur

This immaculate low-mileage 1987 Ford Sierra Cosworth RS500 sold at auction last week for a staggering £596,250 – that’s four times higher than the previous record for a car of this ilk. John Mayhead explains why it happened and details why ‘outliers’ sometimes occur

The stunning low-mileage Cossie sold last weekend for nine times its inflation-adjusted original price - that's an 856% value increase in just over three and a half decades

The stunning low-mileage Cossie sold last weekend for nine times its inflation-adjusted original price - that's an 856% value increase in just over three and a half decades

The stunning low-mileage Cossie sold last weekend for nine times its inflation-adjusted original price – that’s an 856% value increase in just over three and a half decades

Last weekend, I watched as a 1987 Ford Sierra RS500 Cosworth sailed past its top estimate at the Silverstone Auctions Race Retro sale and just kept going.  

The previous record for a road-going Sierra was quickly eclipsed, followed by the record for the actual British Touring Car Championship racing cars on which the RS500 was based. 

Bidding paused at around £300,000 and I thought it was over, but then picked up again and the hammer finally fell at £530,000 (very nearly £600,000 when buyer’s premium was added).

John Mayhead, Hagerty Price Guide Editor

John Mayhead, Hagerty Price Guide Editor

John Mayhead, Hagerty Price Guide Editor

I was amazed at the price, but not that a car had sold for such a huge margin above what was expected. 

I have been tracking classic car auctions for years and have seen this all before; this was what our valuations team at Hagerty call an ‘outlier,’ cars that sell for much more than is really rational, would probably not be worth that much again if sold again tomorrow, and won’t be reflected in our Hagerty Price Guide values.

On that day, the planets aligned, and the price kept rising: two people just decided that they were going home with that car, whatever the cost.

Why ‘outliers’ occur

There are many reasons why outliers happen, and I’ll have to divert from my usual day job of looking at data trends and into amateur psychology to explain a few of them. 

Sometimes, it’s just good old fashioned human competition. 

A few years ago, I was at a large London auction when a very nice Porsche came onto the block and two men, both in the room, started bidding against each other. 

Neither would back down and until the price, more than double the top estimate, became too much for one of them and he backed out. 

The winning bidder later explained that he had just sold his company so the money was no problem as he really liked the colour. 

He paid £1million over the car’s top estimate.

'Good old fashioned human competition' is one reason why outliers occur in car auction rooms, but there are other factors at play to consider

'Good old fashioned human competition' is one reason why outliers occur in car auction rooms, but there are other factors at play to consider

‘Good old fashioned human competition’ is one reason why outliers occur in car auction rooms, but there are other factors at play to consider

Then there are the ‘once in a lifetime’ cars that may have ultra-low mileage, are in an almost unbelievable state of originality or were once owned by someone very special. 

Last year, a Ford Escort that was first owned by Princess Diana was offered for sale. 

The auction house made a great deal about the one-off opportunity to own this part of history and two bidders decided they had to have it. 

It eventually sold for £722,500, making it the second-most expensive Ford ever sold in the UK at public auction after an original GT40 racing car.

Was the last week’s Sierra Cosworth RS500 the ultimate outlier? 

When new in ’87, the Ford Sierra Cosworth RS500 homologation special had a list price of £19,950.

It means last weekend’s winning bid of £596,250 has seen it appreciate in value by a scarcely-believable 2,889% in 36 years.

When taking historical inflation into account, that 1987 list price translates to £62,360 in today’s money, as our historic inflation calculator shows.

That means this stunning low-mileage Cossie sold for nine times its inflation-adjusted original price – that’s an 856% value increase in just over three and a half decades. 

Ahead of the hammer dropping on Saturday, the previous world record amount paid for a Cosworth Sierra at auction was a non-RS500 model with 9,000 miles on the clock, which changed hands for £132,750, also at a Silverstone Auctions sale last year.

The previous highest known price paid at the block for one of the rarer RS500 cars – of which only 500 were ever made – is £122,400 back in 2017. 

> Read the full report on the Sierra Cosworth RS500 record breaker

 

Finally, there are the buyers who think they have seen something that others may have missed. 

There were two great examples at last September’s Bonhams sale at the Goodwood Revival, both with McLaren heritage but both very different cars. 

The first wasn’t much more than a twisted heap of bits that had started life as a 1961 Cooper-Climax F1 racing car and then had been rebodied, altered and finally left to rot in a barn in South America. 

But the car had been the first to ever wear the McLaren Racing Team badge and had been driven by Bruce McLaren himself.

Bidding went crazy, and it finally sold for £911,000, the buyer seeing the opportunity to recreate a motoring legend and almost certainly put it back on track. 

In the same sale there was a 2009 Mercedes-Benz McLaren SLR 722 S roadster with a great colour combination and a top estimate of £320,000. 

The SLR is a car that Hagerty have tipped to be a future collectable, and it seems as if others agree: the bidding went crazy and the car sold for £687,000, the buyer obviously believing that he was ahead of the game and had spotted a car that in the future will be worth a lot more than what he paid. 

So far, he’s on the right track: Hagerty Price Guide vales for the model have already started to creep up.

The auction houses and dealers all obviously encourage this, as would any good salesperson. 

Once-in-a-lifetime offers, buy it now or it may be gone, think how bad you’ll feel in ten years if the price is now out of your reach… all of these feature heavily at most sales, and the drink often flows freely too.

But ‘outlier’ sales don’t just happen at the big, flashy international auctions. 

Of the thousands of lots that Hagerty tracked in the UK and Europe from 2020 to the end of 2022, the car that sold for the highest percentage compared with its top pre-sale estimate was a 1987 Mercedes-Benz 290TE estate, sold by Brightwells in December 2021 for an astonishing £20,720, that’s 341 per cent over the £5,000 that was expected. 

Six of the cars in this top ten were sold by Poole-based auctioneers SWVA including a Triumph Stag, a Morris Minor and a 1933 Austin Six Westminster that achieved £25,110 against an expected price of just £6500. That also suggests that the team at SWVA are great at setting really tempting low estimates that attract the buyers.

Mind you, the best reason for spending more than others may think is wise on a car is because you just love it.

 At the end of the auction, whatever someone pays for a car, if they go home with a huge smile on their face and they get a flutter in their stomach every time they drive it then, as long as they’ve bought within their means, they’ve probably made the right choice.

#fiveDealsWidget .dealItemTitle#mobile display:none #fiveDealsWidget display:block; float:left; clear:both; max-width:636px; margin:0; padding:0; line-height:120%; font-size:12px #fiveDealsWidget div, #fiveDealsWidget a margin:0; padding:0; line-height:120%; text-decoration: none; font-family:Arial, Helvetica ,sans-serif #fiveDealsWidget .widgetTitleBox display:block; float:left; width:100%; background-color:#af1e1e; #fiveDealsWidget .widgetTitle color:#fff; text-transform: uppercase; font-size:18px; font-weight:bold; margin:6px 10px 4px 10px; #fiveDealsWidget a.dealItem float:left; display:block; width:124px; margin-right:4px; margin-top:5px; background-color: #e3e3e3; min-height:180px; #fiveDealsWidget a.dealItem#last margin-right:0 #fiveDealsWidget .dealItemTitle display:block; margin:10px 5px; color:#000; font-weight:bold #fiveDealsWidget .dealItemImage, #fiveDealsWidget .dealItemImage img float:left; display:block; margin:0; padding:0 #fiveDealsWidget .dealItemImage border:1px solid #ccc #fiveDealsWidget .dealItemImage img width:100%; height:auto #fiveDealsWidget .dealItemdesc float:left; display:block; color:#004db3; font-weight:bold; margin:5px; #fiveDealsWidget .dealItemRate float:left; display:block; color:#000; margin:5px #fiveDealsWidget .dealFooter display:block; float:left; width:100%; margin-top:5px; background-color:#e3e3e3 #fiveDealsWidget .footerText font-size:10px; margin:10px 10px 10px 10px; @media (max-width: 635px) #fiveDealsWidget a.dealItem width:19%; margin-right:1% #fiveDealsWidget a.dealItem#last width:20% @media (max-width: 560px) #fiveDealsWidget #desktop display:none; #fiveDealsWidget #mobile display:block!important #fiveDealsWidget a.dealItem background-color: #fff; height:auto; min-height:auto #fiveDealsWidget a.dealItem border-bottom:1px solid #ececec; margin-bottom:5px; padding-bottom:10px #fiveDealsWidget a.dealItem#last border-bottom:0px solid #ececec; margin-bottom:5px; padding-bottom:0px #fiveDealsWidget a.dealItem, #fiveDealsWidget a.dealItem#last width:100% #fiveDealsWidget .dealItemContent, #fiveDealsWidget .dealItemImage float:left; display:inline-block #fiveDealsWidget .dealItemImage width:35%; margin-right:1% #fiveDealsWidget .dealItemContent width:63% #fiveDealsWidget .dealItemTitle margin: 0px 5px 5px; font-size:16px #fiveDealsWidget .dealItemContent .dealItemdesc, #fiveDealsWidget .dealItemContent .dealItemRate clear:both

Leave a Reply

Your email address will not be published. Required fields are marked *