Tuesday 18th October 2016

Silverstone Auctions Porsche sale results

Are we too familiar with expensive Porsches, or do these prices not look completely absurd?

---

Alright, so Silverstone Auctions' sale last weekend didn't herald the return of the £35K GT3, 968s that could hardly be given away and bargain 964s. But then neither did it set any outrageous new records for Porsches, the results looking fairly reasonable in the current climate.

See, four-cylinder Porsches can be desirable

Examples? A pair of 968 Club Sports in the region of £25,000, a low mileage 996 GT3 at £70,000 and a right-hand drive, manual 928 GT that sold for £24,750. More expensive than they once were, yes, but seemingly no longer on a meteoric rise.

Silverstone even sold a couple of affordable 911s. Yes, really. This manual, silver 996 Carrera 2, with a decent service record and just over 70,000 miles, sold for £14,625. At slightly more money (£16,880), this Carrera 2 of similar vintage comes with the added provenance of being an ex-press car... Its service history is very nearly all from OPCs, plus there's been a recent £6K top-end rebuild. Long live the amber indicators!

Of course for those still inclined to spend a lot of money on a 911, the opportunities are still there. Like the £200K 1972 S. A flatnose 930 Turbo also smashed its lower estimate and sold for £140,000, while the £168,750 commanded by a 997.II GT3 RS was £30,000 above its lower guide. Lot less than a 911 R though... For GT3 thrills at half the money, a Manthey tweaked 996.II Clubsport sold for £63,900 and this LHD first-gen car made £66,460.

An interesting sale then, with 70 per cent of the lots sold and total sales of £2.5m. There were one or two cars left unsold you might not expect though, including a Carrera GT - see the full list of results here. Silverstone Auctions' next sale is in November; cars can be Christmas presents enjoyed by all the family, right?

[WojaWabbit]

I'm not convinced ~£14k for a C2 is such a bargain.

[MDMA .]

the Rubystone 964 RS seems a bargain at 163,240 ! few for sale in Germany at the moment for over 250,000 euros.

http://www.germansportscars.net/GB/cars-for-sale.p...

[Leins]

This does seem cheap though at £48k with only 30k kms. Is it because it was a Japanese car? Can't imagine being LHD would have affected its value much due to potential demand from abroad: https://www.silverstoneauctions.com/porsche-996-gt...

[Dave Hedgehog]

MDMA . said:

the Rubystone 964 RS seems a bargain at 163,240 ! few for sale in Germany at the moment for over 250,000 euros.

http://www.germansportscars.net/GB/cars-for-sale.p...

[oli_quick]

Inflation heading up - interest rates will rise - asset prices will fall...simple economics...

The asset-buying car people will have already shifted these items off their balance sheets and reinvested - leaving the rest of us to cheer for the return to sensibly priced cars over the next 3 years

[WojaWabbit]

oli_quick said:

Inflation heading up - interest rates will rise - asset prices will fall...simple economics...

The asset-buying car people will have already shifted these items off their balance sheets and reinvested - leaving the rest of us to cheer for the return to sensibly priced cars over the next 3 years

I doubt there will be much in the way of cheering. Air cooled 911's and GT3's are not going to half in value.

[AshBurrows]

That Manthey car seems like an absolute bargain! I'd certainly be willing to pay 60K for a Manthey GT3!

[rampageturke]

oli_quick said:

Inflation heading up - interest rates will rise - asset prices will fall...simple economics...

The asset-buying car people will have already shifted these items off their balance sheets and reinvested - leaving the rest of us to cheer for the return to sensibly priced cars over the next 3 years

Ah yes, the "price bubble bursting" If we keep repeating it week after week, we'll be right some day

[Some Gump]

Dave Hedgehog said:

MDMA . said:

the Rubystone 964 RS seems a bargain at 163,240 ! few for sale in Germany at the moment for over 250,000 euros.

http://www.germansportscars.net/GB/cars-for-sale.p...

Lol, wut? Bargain?
They're not even that good.

[DonkeyApple]

WojaWabbit said:

oli_quick said:

Inflation heading up - interest rates will rise - asset prices will fall...simple economics...

The asset-buying car people will have already shifted these items off their balance sheets and reinvested - leaving the rest of us to cheer for the return to sensibly priced cars over the next 3 years

I doubt there will be much in the way of cheering. Air cooled 911's and GT3's are not going to half in value.

If you get a sell off triggered by rising rates then those that have risen the most will more than halve. It's an unregulated market that is now loaded with debt which will mean no support at all from outside forces to underpin any values and forced sales to crystallise bad debts. Any significant sell off wil be a rout the likes of which most under 40s have never witnessed in an asset class.

With no external entities to step in and vision the fall by buying up supply or halting banks delivering stock to the markets the chances for such markets to unwind gently are immensely slim.

The only real question is what the trigger is likely to be and when the event will happen. The fact that it will be a monumental rout is very hard to disagree with.

[CS Garth]

DonkeyApple said:

WojaWabbit said:

oli_quick said:

Inflation heading up - interest rates will rise - asset prices will fall...simple economics...

The asset-buying car people will have already shifted these items off their balance sheets and reinvested - leaving the rest of us to cheer for the return to sensibly priced cars over the next 3 years

I doubt there will be much in the way of cheering. Air cooled 911's and GT3's are not going to half in value.

If you get a sell off triggered by rising rates then those that have risen the most will more than halve. It's an unregulated market that is now loaded with debt which will mean no support at all from outside forces to underpin any values and forced sales to crystallise bad debts. Any significant sell off wil be a rout the likes of which most under 40s have never witnessed in an asset class.

With no external entities to step in and vision the fall by buying up supply or halting banks delivering stock to the markets the chances for such markets to unwind gently are immensely slim.

The only real question is what the trigger is likely to be and when the event will happen. The fact that it will be a monumental rout is very hard to disagree with.

Not sure I entirely agree - the above logic certainly applies where products are bought on borrowed money although in times of high inflation assets also become value stores and hedges against inflation. Things are also affected by how distressed the sale is, that's why there was no great house price crash post 08 as am sure you well know as people didn't need to sell unlike the crash on the early 90s when interest rates were sky high post ERM departure which was the low after the Big Bang high.

The key here will be how high inflation rises and how Carney reacts. Notwithstanding, if you couldn't service your borrowings for say 5 years out of cash in the bank with base rates at 5 percent within 2 years then I would be concerned

[DonkeyApple]

CS Garth said:

DonkeyApple said:

WojaWabbit said:

oli_quick said:

Inflation heading up - interest rates will rise - asset prices will fall...simple economics...

The asset-buying car people will have already shifted these items off their balance sheets and reinvested - leaving the rest of us to cheer for the return to sensibly priced cars over the next 3 years

I doubt there will be much in the way of cheering. Air cooled 911's and GT3's are not going to half in value.

If you get a sell off triggered by rising rates then those that have risen the most will more than halve. It's an unregulated market that is now loaded with debt which will mean no support at all from outside forces to underpin any values and forced sales to crystallise bad debts. Any significant sell off wil be a rout the likes of which most under 40s have never witnessed in an asset class.

With no external entities to step in and vision the fall by buying up supply or halting banks delivering stock to the markets the chances for such markets to unwind gently are immensely slim.

The only real question is what the trigger is likely to be and when the event will happen. The fact that it will be a monumental rout is very hard to disagree with.

Not sure I entirely agree - the above logic certainly applies where products are bought on borrowed money although in times of high inflation assets also become value stores and hedges against inflation. Things are also affected by how distressed the sale is, that's why there was no great house price crash post 08 as am sure you well know as people didn't need to sell unlike the crash on the early 90s when interest rates were sky high post ERM departure which was the low after the Big Bang high.

The key here will be how high inflation rises and how Carney reacts. Notwithstanding, if you couldn't service your borrowings for say 5 years out of cash in the bank with base rates at 5 percent within 2 years then I would be concerned

But that is the exact point. The only crash most people can refer to is the 2008 property correction. A market where the State intervened to halt it by creating an artificial demand for assets in one hand and by forcibly restricting supply by preventing lenders from foreclosing.

Asset classes such as classic cars have no such entity to step in to prevent market forces from applying. They are true markets and in the case of classic cars it is a highly leveraged market especially at the top end.

Lenders won't be calling people up to chat about how they will be restricting the debt on their home and the BofE won't be slashing interest rates to zero to stem defaults and not will the State be pretending lenders from aggressively dealing with arrears and defaults or offering 'help to buy' schemes. Same with stock markets and currency markets as well as commodity markets. All ultimately underpinned by States and central banks.

Property is a politically under pinned and artificial market. Classic cars are a true market and the two types share almost no similarity in how they react to either a rise in debt funding costs or external trigger events.

So, if people find themselves struggling to meet the finance obligation on their classic car what do you genuinely believe that lender will be doing? For the honest answer you need look no further than the assets of various leveraged collectors who's income and wealth was derived from the price of oil.

The change of sentiment alone will drive values down. If lead assets are being forced into the market by lenders (who are the ultimate owners) then once the sell off commences who is going to sit on the other side of the sale and deliver matching demand? No one. What people will be doing is trying to unwind their own debt or convert their investment into an alternate asset as quickly as possible just adding to the supply while almost all demand falls away overnight.

But this is part of the point, a huge number of people today have never witnessed a true, free market asset value correction only State and central bank artificial market manipulations.

Edited by DonkeyApple on Wednesday 19th October 09:56

[CS Garth]

Agreed - it could get messy. If things start being repossessed and auctioned off for whatever they can get this will recallibrate their worth in any remaining buyers' eyes.

I'm nailing the door shut and coming out in 2020

[DonkeyApple]

CS Garth said:

Agreed - it could get messy. If things start being repossessed and auctioned off for whatever they can get this will recallibrate their worth in any remaining buyers' eyes.

I'm nailing the door shut and coming out in 2020

Yup. If we reach that point it will be a slaughter house. Interestingly, which wealthy group(s) are immune from the default risk of rising interest rates? One would assume that it is those who do not have any or any significant debt which would imply the very young and the very old. Are they going to be stepping up and bagging bargain 911s? Or is an asset correction driven by spiralling debt costs going to be the type of event that results in no current buyers and a reliance on the next generation of new money to grow before demand returns?

But with global economies lurching from one debt caused problem to another and always using more debt to patch over the issue thus fuelling all these incredible asset inflations as money becomes more and more devalued something is going to give both politically and economically and with the unending rise in the social wealth divide then it's all too easy to see political sway turning towards scapegoating and the deliverybof some markets to the slaughterhouse to saciate the masses.

Basically, who knows but over stretching oneself in a pure market where there is no political need for artificial support is always high risk and at some point there will be a reminder! As to when? Well that can only be pure speculation but good fun guessing.

[MikeGoodwin]

I hope they do return to prices that are more in reach. Not just for cars like this but 90s JDM stuff too. Although an R33 isnt going to set anyone back 70k is it.

[WojaWabbit]

DonkeyApple said:

CS Garth said:

DonkeyApple said:

WojaWabbit said:

oli_quick said:

Inflation heading up - interest rates will rise - asset prices will fall...simple economics...

The asset-buying car people will have already shifted these items off their balance sheets and reinvested - leaving the rest of us to cheer for the return to sensibly priced cars over the next 3 years

I doubt there will be much in the way of cheering. Air cooled 911's and GT3's are not going to half in value.

If you get a sell off triggered by rising rates then those that have risen the most will more than halve. It's an unregulated market that is now loaded with debt which will mean no support at all from outside forces to underpin any values and forced sales to crystallise bad debts. Any significant sell off wil be a rout the likes of which most under 40s have never witnessed in an asset class.

With no external entities to step in and vision the fall by buying up supply or halting banks delivering stock to the markets the chances for such markets to unwind gently are immensely slim.

The only real question is what the trigger is likely to be and when the event will happen. The fact that it will be a monumental rout is very hard to disagree with.

Not sure I entirely agree - the above logic certainly applies where products are bought on borrowed money although in times of high inflation assets also become value stores and hedges against inflation. Things are also affected by how distressed the sale is, that's why there was no great house price crash post 08 as am sure you well know as people didn't need to sell unlike the crash on the early 90s when interest rates were sky high post ERM departure which was the low after the Big Bang high.

The key here will be how high inflation rises and how Carney reacts. Notwithstanding, if you couldn't service your borrowings for say 5 years out of cash in the bank with base rates at 5 percent within 2 years then I would be concerned

But that is the exact point. The only crash most people can refer to is the 2008 property correction. A market where the State intervened to halt it by creating an artificial demand for assets in one hand and by forcibly restricting supply by preventing lenders from foreclosing.

Asset classes such as classic cars have no such entity to step in to prevent market forces from applying. They are true markets and in the case of classic cars it is a highly leveraged market especially at the top end.

Lenders won't be calling people up to chat about how they will be restricting the debt on their home and the BofE won't be slashing interest rates to zero to stem defaults and not will the State be pretending lenders from aggressively dealing with arrears and defaults or offering 'help to buy' schemes. Same with stock markets and currency markets as well as commodity markets. All ultimately underpinned by States and central banks.

Property is a politically under pinned and artificial market. Classic cars are a true market and the two types share almost no similarity in how they react to either a rise in debt funding costs or external trigger events.

So, if people find themselves struggling to meet the finance obligation on their classic car what do you genuinely believe that lender will be doing? For the honest answer you need look no further than the assets of various leveraged collectors who's income and wealth was derived from the price of oil.

The change of sentiment alone will drive values down. If lead assets are being forced into the market by lenders (who are the ultimate owners) then once the sell off commences who is going to sit on the other side of the sale and deliver matching demand? No one. What people will be doing is trying to unwind their own debt or convert their investment into an alternate asset as quickly as possible just adding to the supply while almost all demand falls away overnight.

But this is part of the point, a huge number of people today have never witnessed a true, free market asset value correction only State and central bank artificial market manipulations.

Edited by DonkeyApple on Wednesday 19th October 09:56

Valid points and sound logic.

However, anecdotal evidence would suggest that those buying the cars that have increased in value the most - the rarer, low mileage, classic S & RS examples - have not been borrowing to do so. I don't believe many owners I've spoken to would need to offload their collections due to bad debt, car-related or otherwise.

The cars that have risen in value following on from those at the top end (200k mile 993 at £60k anyone?) are ,I believe, a different story, with many being bought by speculative investors without sufficient capital to ride out a financial storm. I think they would fall into the bracket you describe above.

Happy to be proven wrong though... the return of £35k GT3s can only be a good thing!

[DonkeyApple]

WojaWabbit said:

Valid points and sound logic.

However, anecdotal evidence would suggest that those buying the cars that have increased in value the most - the rarer, low mileage, classic S & RS examples - have not been borrowing to do so. I don't believe many owners I've spoken to would need to offload their collections due to bad debt, car-related or otherwise.

The cars that have risen in value following on from those at the top end (200k mile 993 at £60k anyone?) are ,I believe, a different story, with many being bought by speculative investors without sufficient capital to ride out a financial storm. I think they would fall into the bracket you describe above.

Happy to be proven wrong though... the return of £35k GT3s can only be a good thing!

Very many of the top end vehicles are bought using debt as it forms part of the investment wrapper for tax purposes. And the recent oil price fall highlighted that people who were meant to be worth hundreds of millions were using debt to build their car collections. Plus, speculation is absolutely rife as people are leaping onboard for a turn.

The debt at the lower end is probably fine as your average owner typically will have a pension pot or height LTV property that can be raided etc but at the high end, when the market turns the leveraged Ines will fund it difficult to pay their margin calls as they won't be able to raise the money against other assets. In that regard it will be exactly the same as the highnet worthy who were over leveraged learned in 2008.

I don't think we should under estimate the amount of debt that is in this asset class because it's no longer about car appreciation but speculation and investment. And the number of specialist lenders for this asset has expanded immensely in the last decade

[WojaWabbit]

DonkeyApple said:

WojaWabbit said:

Valid points and sound logic.

However, anecdotal evidence would suggest that those buying the cars that have increased in value the most - the rarer, low mileage, classic S & RS examples - have not been borrowing to do so. I don't believe many owners I've spoken to would need to offload their collections due to bad debt, car-related or otherwise.

The cars that have risen in value following on from those at the top end (200k mile 993 at £60k anyone?) are ,I believe, a different story, with many being bought by speculative investors without sufficient capital to ride out a financial storm. I think they would fall into the bracket you describe above.

Happy to be proven wrong though... the return of £35k GT3s can only be a good thing!

Very many of the top end vehicles are bought using debt as it forms part of the investment wrapper for tax purposes. And the recent oil price fall highlighted that people who were meant to be worth hundreds of millions were using debt to build their car collections. Plus, speculation is absolutely rife as people are leaping onboard for a turn.

The debt at the lower end is probably fine as your average owner typically will have a pension pot or height LTV property that can be raided etc but at the high end, when the market turns the leveraged Ines will fund it difficult to pay their margin calls as they won't be able to raise the money against other assets. In that regard it will be exactly the same as the highnet worthy who were over leveraged learned in 2008.

I don't think we should under estimate the amount of debt that is in this asset class because it's no longer about car appreciation but speculation and investment. And the number of specialist lenders for this asset has expanded immensely in the last decade

Interesting. I, perhaps naively, hadn't considered people borrowing specifically to invest. I've only spoken to 'enthusiast' collectors, who probably give a skewed view of the situation.

[DonkeyApple]

WojaWabbit said:

Interesting. I, perhaps naively, hadn't considered people borrowing specifically to invest. I've only spoken to 'enthusiast' collectors, who probably give a skewed view of the situation.

Just Google 'classic car loans' to get an idea on just how many agents are peddling packages.

And then if you want to be really shocked just google 'classic car equity release'!!!! The ultimate jet fuel for a pyramid of pooh.

For the last few years I've watched peers who have no interest in cars buying more and more exposure in what they term to be the best performing asset class available. We are certainly in daft times.

[DegsyE39]

DonkeyApple said:

CS Garth said:

DonkeyApple said:

WojaWabbit said:

oli_quick said:

Inflation heading up - interest rates will rise - asset prices will fall...simple economics...

The asset-buying car people will have already shifted these items off their balance sheets and reinvested - leaving the rest of us to cheer for the return to sensibly priced cars over the next 3 years

I doubt there will be much in the way of cheering. Air cooled 911's and GT3's are not going to half in value.

If you get a sell off triggered by rising rates then those that have risen the most will more than halve. It's an unregulated market that is now loaded with debt which will mean no support at all from outside forces to underpin any values and forced sales to crystallise bad debts. Any significant sell off wil be a rout the likes of which most under 40s have never witnessed in an asset class.

With no external entities to step in and vision the fall by buying up supply or halting banks delivering stock to the markets the chances for such markets to unwind gently are immensely slim.

The only real question is what the trigger is likely to be and when the event will happen. The fact that it will be a monumental rout is very hard to disagree with.

Not sure I entirely agree - the above logic certainly applies where products are bought on borrowed money although in times of high inflation assets also become value stores and hedges against inflation. Things are also affected by how distressed the sale is, that's why there was no great house price crash post 08 as am sure you well know as people didn't need to sell unlike the crash on the early 90s when interest rates were sky high post ERM departure which was the low after the Big Bang high.

The key here will be how high inflation rises and how Carney reacts. Notwithstanding, if you couldn't service your borrowings for say 5 years out of cash in the bank with base rates at 5 percent within 2 years then I would be concerned

But that is the exact point. The only crash most people can refer to is the 2008 property correction. A market where the State intervened to halt it by creating an artificial demand for assets in one hand and by forcibly restricting supply by preventing lenders from foreclosing.

Asset classes such as classic cars have no such entity to step in to prevent market forces from applying. They are true markets and in the case of classic cars it is a highly leveraged market especially at the top end.

Lenders won't be calling people up to chat about how they will be restricting the debt on their home and the BofE won't be slashing interest rates to zero to stem defaults and not will the State be pretending lenders from aggressively dealing with arrears and defaults or offering 'help to buy' schemes. Same with stock markets and currency markets as well as commodity markets. All ultimately underpinned by States and central banks.

Property is a politically under pinned and artificial market. Classic cars are a true market and the two types share almost no similarity in how they react to either a rise in debt funding costs or external trigger events.

So, if people find themselves struggling to meet the finance obligation on their classic car what do you genuinely believe that lender will be doing? For the honest answer you need look no further than the assets of various leveraged collectors who's income and wealth was derived from the price of oil.

The change of sentiment alone will drive values down. If lead assets are being forced into the market by lenders (who are the ultimate owners) then once the sell off commences who is going to sit on the other side of the sale and deliver matching demand? No one. What people will be doing is trying to unwind their own debt or convert their investment into an alternate asset as quickly as possible just adding to the supply while almost all demand falls away overnight.

But this is part of the point, a huge number of people today have never witnessed a true, free market asset value correction only State and central bank artificial market manipulations.

Edited by DonkeyApple on Wednesday 19th October 09:56

+1 Well explained by DA as always. For a layman such as myself at least