The Most Expensive Car Ever Sold at Auction and the Emotions Behind It
Since 1976, RM Sotheby’s has been one of the world’s largest high-standard automotive auction scenes. This August, at the RM Sotheby’s Monterey, California auction event, a rare 1962 Ferrari 250 GTO became the most-expensive car ever sold at auction when it went for $48.4 million.The Monterey auction event was not only successful due to the sale of the 1962 Ferrari 250 GTO, but also because of the sale of 849 cars for a total of $371 million dollars.
Bloomberg’s article “What the $371 Million Monterey Auctions Mean for Car Collectors” analyzes lessons learned from this year’s car auctions huge success. One of the most interesting points that Bloomberg made is that a great portion of this year’s bidders were willing to pay higher than the market value in order to purchase a vehicle. This bidding behavior does not align with the dominant bidding strategy of not bidding more than the original value (market value) of the item.
Additionally, Bloomberg shows that the bidding strategy varied based on what collector category the vehicles fell under. While 20% of entry-level collector vehicles (costing less than $25,000) were sold above the market value, 54% of the top of the market cars ($250,000 and more) were bidded above market value. This significant difference in the desire to pay above the market price for entry-level and top-value cars can be attributed to the emotions behind bidding.
The rareness of the top-value cars makes the auctions of those cars seem very special. For example, the 1962 Ferrari 250 GTO is one of 36 of its kind to ever be produced. Furthermore, the car is not only in its original state (it has never been wrecked or repaired), but it also holds a national racing championship title and multiple significant racing awards. Thus, the car is very unique due to both its history and technical attributes which made it very attractive to high-end bidders. The three “finalist” bidders were live bidding the auction over a phone call for over 10 minutes up until the final bid of $44 million was reached! The fact that three bidders were willing to keep on raising their high bids over a significant amount of time shows how emotionally stimulated bidders are to purchase a top-value car. On the other hand, there is a much larger number of entry-level collector vehicles which do not posses many unique attributes. The normality of the entry-level collector vehicles does not emotionally motivate many bidders which is reflected in the the fact that a far smaller percentage of entry-level cars were purchased above their market value. The Monterey auction demonstrated that bidders are willing to follow their emotional drives rather than the rational dominant bidding strategy in order to fulfill their desires of owning a rare asset.
Sources:
http://fortune.com/2018/09/08/mecum-auctions-monterey/
https://www.businessinsider.com/1962-ferrari-250-gto-breaks-record-selling-for-484-million-2018-8
https://blogs.cornell.edu/info2040/2015/10/15/auction-psychology-emotions-behind-bidding/