Making Sense of $43 Million at Maranello

Buyers will pay over the odds for a perfect, no stories road car just to feel they have the best available

Machiavelli was Italian. So were Mussolini and Enzo Ferrari (not that I'm comparing them). And although he isn't, Scuderia Ferrari's director Jean Todt has probably lived there long enough to qualify. I grew up in Italy, and sometimes even I find it hard to decipher Italian political and business situations. But that's part of the country's romance and charm, especially if you're more interested in food and art than contracts and delivery dates.

So it's been interesting watching how master dealmaker RM Auctions has fared in its partnership with arch-Italians Ferrari since 2007, when they began jointly hosting Italy's first serious classic car auction, devoted of course to the cars of the Prancing Horse.

Last year's auction, before most people had heard the words "credit crunch" or "sub-prime," was a runaway success, with all lots except one (an F40 prototype whose owner must have felt rather conspicuous) hammered sold. The result was a colossal $45.3 million turnover, a European record. There was frenzied speculation in the run-up to this year's event: Will RM continue to find good cars? Will the market hold up? Given the wider economic climate, nobody was sure.

In the end, RM did assemble a decent selection of cars. No amazing discoveries, but given that in the Internet era, every Ferrari owner seems to track the value of his investment-sorry, car-to the last hour and euro (no dollars, thank you-they track exchange rates, too), it's no surprise that Prancing Horse sellers play harder to get. So how did the horse traders fare?

Despite a torrential downpour and a faltering start to the auction, by the end of the evening there had been a collective sigh of relief. There were still people willing to spend large amounts of money-yes, euros-on obsolete Ferraris.

Headlines in the next day's popular press would make much of a well-known British entertainer's purchase of a California Spyder once owned by actor James Coburn, but in the best Italian tradition, there's more to this story than meets the eye, and in the best SCM tradition, we'll try to give you a clearer picture. Let's go behind the scenes of the highest profile sales....

1961 Ferrari 250 GT SWB California Spyder
s/n 2377GT, sold at $10,894,400

We could devote the whole issue of SCM to discussing the sale of this car, which has produced more comment among market insiders and casual observers alike than any I can remember in the past 20 years. Among the experts I have interviewed, those who take this result at face value are in the minority. I'll reserve judgment, but I do have a couple of observations.

The last two private sales of SWB California Spyders with covered headlights have been from extremely well-informed and well-off owners for close to $6 million apiece. Covered headlights add as much as $1 million to the value of an individual car, nearly what the entire production run cost new. And by the way, Ferrari didn't keep a record of which cars they built with open or closed headlights.

These were cars in good condition, with European taxes paid (an extra 5%), matching engines, and in the case of one car, Brigitte Bardot's famous movie director husband Roger Vadim as its original owner. In short, no questions, no stories cars.

The black SWB California Spyder offered in Maranello was in presentable condition and had covered headlights. Yes, James Coburn once owned it, but unlike the ex-Steve McQueen Lusso that blitzed its estimate last year at Christie's Monterey, it wasn't built for him and without disrespect to ultra-cool Mr. Coburn, he wasn't quite the car legend McQueen has become.

It wasn't one of the three made with an alloy body. Nor was it one of those built with a more powerful engine. Most importantly, however, in this era of matching-numbers obsession, RM's catalog tellingly didn't give an engine number, and an announcement at the sale informed bidders that, sure enough, the car didn't even have its original engine.

Given these factors, but allowing a bit for the Coburn provenance, most experts would have valued the car around the $5 million mark, maybe $5.5m on a good day. So how does the price with premium and import taxes more than double that?

There is no logical answer. We can simply congratulate the new owner on his single-mindedness and put this anomaly down to a perfect storm of a uniquely cozy relationship between car, auction house, buyer, and his advisor.

1958 Ferrari 250 GT LWB California Spyder
s/n 0923GT, sold at $3,659,838

If this car hadn't been offered nine lots after the black SWB, its British seller would most likely have been cracking open the bubbly, assuming the price of the black car had just revalued all Californias upward by perhaps 50%. But if proof was needed that one fluke doesn't make a market (upward or downward), this result couldn't have been more unequivocal.

Historically, an LWB California was worth two-thirds the price of the equivalent SWB version. Okay, this was an early LWB with the 508C frame and drum brakes, but unlike the SWB, it did have its correct motor and European taxes were paid. At first glance, it looks like a steal at just one-third of the SWB price, but consider this: Last summer in Pebble Beach, Gooding sold a stunning black, disc-brake, late-model, covered-headlight LWB in concours condition for $4.45 million, well above its $3.3 million low estimate.

This January, Gooding sold an open-headlight car in a slightly garish color scheme and driver condition for $3.3 million. The car in Maranello hammered at just over $3.6 million is perhaps a little under market, but not by more than 10%. The U.S. buyer may be drinking bubbly, but the seller shouldn't be drowning his sorrows.

1964 Ferrari 250 Le Mans berlinetta
s/n 5845GT, sold at $6,979,225

Full disclosure: The 250 LM is my favorite Ferrari, and my company has just sold one, so I'm probably biased.

To consign a multi-million-dollar Ferrari as a late entry just days before an auction would normally be considered commercial suicide, with no time to market the car or identify potential buyers. Fortuitously, however, 5845 had spent more time being advertised by its previous French trade owner than it ever did being raced, so when it finally appeared at an auction with a sensible estimate, interested parties breathed a sigh of relief.

I'd rank this car at best in the middle of the 32 LMs built (of which 38 survive). Its greatest race was the Austrian Sports Car Grand Prix, it's recorded as once being "held together by duct tape," the engine number was over-stamped by a dyslexic mechanic as 1584 before the vendor restamped it correctly, and if $385,000 had really been spent on a seven-month restoration, the mechanic must be living very well (and fast) indeed.

And the price? On the one hand, 250 LMs are not as user-friendly as the ubiquitous SWBs and GTOs, but on the other they are rarer, obviously quicker, and in at least one respect more successful, having won Le Mans outright-the last Ferrari to do so. They used to be worth half the price of a GTO, but whereas the latter requires a substantial financial commitment, the LM requires devotion as well. At just under the bottom auction estimate, I'd say that with the buyer's commission included, this 250 LM was spot on the money.

1971 Ferrari 365 GTS/4 Daytona Spyder
s/n 14415, sold at $1,489,469

Daytonas are beloved of 1980s speculators and TV show producers (my generation will forever associate this model with the "Miami Vice" detective series). So it's only appropriate the Daytona Spyder market has been a thrills-and-spills roller coaster. From $15,000 when new to saleproof during the OPEC crisis (the factory begged Greg Garrison to take the last new one left over), they climbed steadily from the mid-'70s for a decade and rocketed skyward in the last boom, peaking at almost £1.5 million ($3 million today) paid for one of the seven right-hand-drive examples early in 1990, before slumping to $300,000 for the rest of the decade.

Since then, it's been back upward again, climaxing in the $2 million paid last summer for that same Spyder Garrison bought new and never drove after the trip home. Last year in Maranello, Edsel Ford II's yellow, U.S.-spec car soared past its estimate to sell for $1,410,750. This year, a rarer European-spec car sells for almost 10% less (when you figure in the dollar's collapse). Why?

Firstly, the market for Daytona Spyders is in the U.S., as it was 40 years ago. When you convert euros into greenbacks, this year's Daytona is actually 5% more expensive. Secondly, a cryptic reference to "previous damage which was repaired" in the catalog and a ping-pong roster of past owners did not paint the picture of a long-term holder that had been lovingly cherished.

Despite that, it's still one of just 18 LHD Euro-spec Spyders, and I'd say well bought. In its black livery it could have been driven by Don Johnson straight off the "Miami Vice" set. I hope RM throws in a pastel linen suit, Ray-Bans, and a pair of espadrilles for the buyer.

1967 Ferrari 275 GTB/4
s/n 10017, sold at $2,042,700

The other 349 owners are already adjusting their insurance policies (or more likely their asking prices), but what does this result really tell us? It's less than two years since the best 4-cams reached the million-dollar barrier, and here one made twice that. But not all 4-cams are created equal.

This one was bought new by a very lucky young man who not only chose a superb color scheme (midnight blue with pumpkin leather), but also had the foresight to drive the car to that year's Le Mans 24 Hours and Belgian GP, and to film the whole adventure on color cine film. Forty years later, that's every car auctioneer's dream come true.

What's more, for the past four years, 10017 has belonged to Lynx Motors boss John Mayston-Taylor, a man who knows a thing or two about marketing. After researching his car's history (it was resale red/black and just another 4-cam when acquired) and restoring it to perfection, he showed it at the right events, got it covered in the right magazines and, in fairness to RM, took it to the right auction. The result speaks for itself and shows there is always someone willing to pay for the best, which is not to be confused with the rest.

So what does it all mean?

There was a very different mood at this year's Maranello auction. The gloomy weather didn't help, but it reflected the economic malaise which, despite being publicly dismissed by many dealers, brokers, and short-term owners (i.e. flippers), does color the thinking of even the wealthiest collectors.

If there is anything to learn from the 2008 results, it is the reassurance that buyers will pay over the odds for the instant gratification of owning a perfect, no stories road car, one they can drive immediately while also feeling they have the best of its kind available. This represents the wide base of the Ferrari buying pyramid in terms of buyer profile. Anyone wealthy enough can join the club.

Move upward to sports racing cars of clear provenance, and you're dealing with a smaller audience with a good depth of historical understanding and equally deep pockets. And at the top of the pyramid you've got the pure competition cars, bought by very few and driven by fewer still. The financial barriers may be less restrictive, but your life insurance had better be up to date.

The headlines at this sale don't tell you the whole story, and a closer look reveals some cars are up, some are steady, and some are actually softer (the F1s, for example). But to put things into perspective-something easily forgotten over the past few years-even if you ignore the feature car, this was still a $30-million-plus auction of Ferraris. More than enough for Machiavelli's descendants to welcome the horse traders back with open arms next year.