As lockdowns continue and hard times loom on the horizon, the continuing search for other investments drives classic car prices ever higher. So much so that one private equity firm has staked €150 million on the future of high-end collectibles.
Despite a slow start to the 2020 classic car season, due to a fairly uninspiring economic picture in the midst of Brexit that was followed by the onset of COVID, the market eventually picked up, as classic car enthusiasts and collectors accepted that attending physical auctions would be difficult in the midst of a pandemic, and embraced the upswing in online auctions instead.
Reduced commuting costs and the Government’s financial handouts improved many car-buying budgets, not to mention the extra spare time some people had on their hands due to furlough schemes and zero commuting due to working from home.
These factors and a lower supply of high-quality vehicles helped to support classic car market conditions through 2020, as buyers looked for classics that could help tick some bucket lists and investors sought other ways to sidestep dire economic forecasts.
The market had already seen a steadying in some classic car prices through the end of 2019 and this was encouraged by better trading through the second half of 2020, again encouraged by low supply of nice examples. With supply constrained and trade buyers keeping away from cars needing work, due to fewer people working in bodyshops and difficulty in obtaining many spare parts, the demand for project cars and barn finds was also given a boost.
This increased activity in classic car and higher-value asset sales was one factor behind the decision by UK private equity firm Permira to invest €150 million in Catawiki, a Netherlands-based “curated marketplace” targeting wealthy consumers with high-end collectibles including classic cars, art and movie memorabilia.
Founded in 2008, Catawiki describes itself as “the most-visited curated marketplace for special objects in Europe, providing a safe and reliable experience to over 10 million passionate users. Every object is carefully selected by one of its 240+ in-house experts who are specialised in collectables, art, design, jewellery, watches, classic cars and more. Its unique business model has earned a strong vote of confidence from its users, enabling the company to earn over 80% of its revenue from returning buyers and sellers.”
Catawiki announced Permira’s €150 million investment in early December. Existing shareholder Accel also participated in the funding round. Catawiki aims to use the investment to grow its user base by investing in technology, marketing and hiring more experts across Europe. The investment will also provide liquidity for a number of early investors and employees.
Ravi Vora, CEO of Catawiki, said: “Our mission is to become the most popular destination for special objects across the globe, starting with Europe. This investment is the latest confirmation that we are delivering on this mission.”
Martin Gibson, partner at Accel and Chairman of the Board at Catawiki, said: “Catawiki’s business model is unique as it enables everyone to discover and buy special objects that help them fulfil their passions. And while the company is already a fast-growing business with healthy profit margins, it has only just begun scratching the surface of its addressable market.”
A visit to the Catawiki website invites one to bid on over 65,000 newly added special objects every week. The items are curated by 222 experts and divided into sixteen categories, from Art and Archaeology to cameras, watches, wine and whiskey. There are currently 258 classic cars listed for auction, including ten BMWs across the classic and youngtimer categories. A two-owner BMW Z1 starting at €33k is an interesting find, and there are some interesting E21-era brochures listed in the automobilia section.
While the site remains underpopulated in terms of car content, the better-stocked categories suggest that the concept may have some legs. Meanwhile, Collecting Cars and a raft of new imitators (including a new online auction platform at Car and Classic) are competing to grow their market share or gain a steady foothold in this emerging gold rush territory.
The short-term issue is that a splintered Internet with countless niche platforms like Catawiki offers little incentive for classic car owners to stray too far from the tried and trusted eBay or Car and Classic routes. Catawiki will have to step up awareness if it wants to compete with these behemoths in the busy UK market (as it should, with a 9% income on car sales).
Across the classic car and motorcycle sectors that my valuation business follows, supply of desirable items at sensible prices remains tight. With returns staying low in conventional investment schemes, classic car investors who do not face economic stress in 2021 will leave their four-wheeled assets in storage and this will limit the best opportunities to buy. Client advice for the moment is to buy a little ahead of the market if needs be, as one simply doesn’t know what if anything is coming up next.
This article first appeared as my monthly column in BMW Car Magazine.