1965 Shelby Cobra Daytona Coupe

This 1965 Shelby Cobra Daytona Coupe sold for $7,685,000, including buyer’s premium, at the Mecum auction in Monterey, California, on August 15, 2009.

Arguably, this was one of the more interesting transactions of the week, being extensively discussed both before and after the result, and being used to bolster or demolish a panoply of theories about the state of the collector car market almost a year into the current financial meltdown and slack recovery.

What we see is the result of a number of diverse factors working through the market. Let’s try to tease these different factors out individually and review their respective roles. First, let’s go to the quality of the offering.

The moral victory was clearly Shelby’s

As a class, Shelby American Cobra Daytonas are one of the few post-war series soaked in mystique and charisma. They look good, they have enormous performance, despite their antiquated chassis, and most importantly, they were winners. Only political jiggery-pokery by Ferrari, that ace political in-fighter, allowed Ferrari’s GTOs to win the 1964 GT Championship, though the moral victory was clearly Shelby’s. In 1965, the Cobras comprehensively dominated, and in contrast to Cunninghams and Corvette Grand Sports, the appreciation of these American icons translates overseas into worldwide demand. Indeed, two Daytonas now reside outside our shores.

Of the short list of equally great contemporary collectible cars, the Ferrari GTO series (39 made), and the Ford GT40s (102 made) are “dual use” competition cars, both roadable, if only barely, and raceable. Such cars have historically commanded the highest values.

Of the eight Daytona coupes (one built by AC-A98-and one by Willment Racing-CSX2131), the most important are the six Shelby cars. Our subject 1965 Cobra, CSX2601, is one of the most successful and most desirable of the six Shelby coupes, having achieved four GT class victories. Depending on your taste, the top trio are considered to be CSX2601, CSX2299, another four-win car and the 1964 Le Mans GT class winner, or CSX2287, the first of the series, the only car built in Shelby’s own shops, and the only car in original condition. You pays your money and takes your choice.

At this point in the market cycle, it’s challenging to assess true values given the role psychology plays in such volatile times. Given the pending uncertainty in tax and business rules caused by the new administration in Washington, coupled with potentially adverse long-term inflation trends, the collector car market is polarized, with those who view cars as an alternate tangible investment buying, and those who view them as indulgences sitting pat or selling to raise cash. In either instance, only the best cars are finding homes.

Make no mistake, CSX2601 is one of the best. The massive negativity of the first quarter of 2009 substantially hurt collector sales, though those fearing future inflation would have seen opportunity. And so that was the case here; the car received only a $6.8 million bid at Mecum’s Indianapolis auction in May.

A terrific PR machine

By the time of the Monterey auction, the car had been promoted for the better part of a year with the unstated implication that it would sell for a record sum. In fact, in an August 18 article in the Springfield, Ohio, News-Sun, one of the four investors who owned the car, Danny Mershon of Mershon’s World of Cars, was quoted as saying, “We didn’t make as much as we should have, but it was still a profitable deal.” In an earlier article, Mershon told the News-Sun he and his partners were hoping to set a record between $10 million and $15 million.

There is some logic underlying this value assumption. After all, shouldn’t a Daytona Coupe be worth $12 million, half the value of a Ferrari GTO, given its vastly fewer numbers, or twice a Corvette Grand Sport, given the latter’s lack of serious competition use? But who wants to publicly pay a record amount for something, especially in bad times?

With improving fundamentals, the owners decided to try again at Monterey and settled for the $7.7 million sale.

In the end, this deal boiled down to the buyer deciding that, despite the market’s negative $6.8 million high bid message in May, he would buy this significant Shelby. Would the car have done better if sold fresh to the market by a long-term owner? I would say almost certainly. Did excessive exposure damage the value of this important car? I would say demonstrably; witness the Auto Union D-type that failed to sell at Bonhams & Butterfields the night before. Therefore does this number under-represent the value of Daytona Cobra team cars? Not on that night, and not in the near future.

But in time, the mythic image of an oil-stained and battered Daytona, nose dipping under hard braking as the driver pounds down through the gears amid the wheat fields of France, will again prevail to the current buyer’s benefit. Fairly bought.