For the first time ever, there are two current-model cars with price tags of more than $1 million. To be sure, these are limited editions and get lousy gas mileage, but the fact that there are any cars that expensive, let alone two of them, means some kind of psychic — if not reality — barrier has been broken.
Yet, crazy as it might sound, neither the Bugatti Veyron nor the Lamborghini Reventón — which each retail for around about $1.5 million — was the most expensive car sold in 2007. That honor falls to a Ferrari 330 TRI/LM Testa Rossa.
If you aren't familiar with that particular model, don't feel ashamed. It was built in 1962 and sold in May at auction for a record $9.3 million, making it the most expensive Ferrari ever sold. (The most expensive car ever sold was a 1930 Bugatti Type 41 Royale auctioned at Christie's in 1987 for approximately $9.8 million. Adjusted for inflation, that would be more than $17 million today.)
And there were plenty of other cars with multimillion-dollar price tags this year. The reason for the 330's appeal was it was the original 1962 Le Mans-winning Ferrari driven by Phil Hill and Olivier Gendebien. The next most expensive, also a Ferrari, sold for $5.7 million. Of the top 15 most expensive cars sold in 2007, the least expensive was a 1932 Alfa Romeo 8C 2300 Corto that sold in June for $2,819,000.
What makes the sale of the '62 Ferrari 330 even more interesting is it had been offered at auction in 2005 for $8 million — and failed to sell, despite its pedigree. So what was it that made the value of the 330 jump more than 16% in less than three years? "A lot of people go by the theory that buyers go for what they grew up with," said Peter Wallman, a London spokesman for RM Auctions of Ontario, Canada, which auctioned the record-setting car at the Ferrari factory in Maranello, Italy.
"Those people who are sort of in their mid-50s and up now, they go for cars from the mid-1950s and early 1960s that they remember racing from their early days, seeing their heroes drive them, and now they can afford them," he said.
More ways to spend
And more and more people can afford them, as more get rich and the rich get richer. Worldwide, the number of "ultra-high net-worth individuals" grew 11.3% from 2005 to 2006, according to the 2007 World Wealth Report, published in June, 2007, by Cap Gemini and Merrill Lynch.
The report identifies as "ultra-high net-worth" those individuals with more than $30 million in "financial assets" — that is, public and private stock, bonds, and cash, but not counting "collectibles, consumables, consumer durables, and real estate used for primary residences." "Global wealth is rapidly consolidating among this ultra-wealthy segment," the study said. As fast as the ranks of the ultra-wealthy grow, so grows the number of ways they can spend their money.
Of course, demand for new luxury cars and supercars has also increased. While the competition for drivers of modest means remains heated and margins keep thinning, automakers such as Porsche, BMW and Daimler grow more robust every year. Moreover, even such middle-class carmakers as Fiat and Volkswagen have seen great success with the acquisition of legendary marques Ferrari and Maserati, and Lamborghini and Bentley, respectively.
Blue chip brands
The surge in prices of classic cars at auction has been even greater. Auction houses report that 2007 is already a record-setting year in terms of prices for individual cars, total sales, and attendance. Barrett-Jackson Auctions, of Scottsdale, Ariz., is leading the charge to popularize collector-car auctions by hosting giant spectacles with hours of cable TV coverage, celebrity tie-ins, and charity fundraisers. Sales at the company's week-long showcase event in January, 2007, were a record $112 million, and more than 250,000 people attended, the company said.
The RM Auctions event in Maranello last May was the company's first-ever auction in Europe. The company is expanding into Europe and Asia, in an alliance with Sotheby's. At the Maranello auction, RM Auctions said it sold a record-breaking $46 million worth of cars.
"Our point of view is, there are certain brands that will always hold their value, such as Ferrari, Aston Martin, Maserati, any car with a good solid racing history that was not crashed completely and dismantled and rebuilt," said RM's Wallman.
Above a certain level of wealth, the money appears to be secondary. As RM founder Rob Myer said in a written statement, "If a car brings you great pleasure to own and drive, then it will be a great investment for you." Just imagine what a Lamborghini Reventón will fetch in 30 years.