15 July 2013

Why didn’t the Mercedes-Benz W196 Grand Prix car sell for more?

After months of speculation, the hammer has fallen and an all-time record has been set for the most valuable car ever sold at public auction. The 1954 Mercedes-Benz W196 Grand Prix car driven to multiple victories by Grand Prix legend Juan Manuel Fangio netted $29.6M at Bonhams’ Goodwood sale, shattering the $16.4M record previously set by a 1957 Ferrari Testa Rossa at Gooding’s 2011 Pebble Beach sale.

It was an impressive result, to be sure; however, it leaves some scratching their heads and asking why it didn’t sell for more. After all, this car is essentially one of one. The opportunity to acquire a Mercedes Grand Prix car of this era with this level of provenance and history is if not a once-in-a-lifetime opportunity, certainly a once-in-a-generation opportunity. Few pre-war Grand Prix cars survive the War intact, and post-war cars are similarly rare since Mercedes-Benz withdrew from racing following the 1955 Le Mans disaster.  It’s not lost on most market observers that a Ferrari 250 GTO without a significant competition history might be expected to break $30M and perhaps even $40M, and Ferrari made almost 40 250 GTOs.

The difference is the usability factor. Noted collector Miles Collier has called the W196 a “contemplative object,” meaning that it is the ultimate “velvet ropes” car. The cost and risk associated with using the car are simply too great to bear, even for someone with the resources to acquire it. Like most competitions cars, the W196 has a highly stressed powerplant designed to hold together for a limited number of hours. The cost of overhauling such anengine is truly frightening. They run on specialized fuels and require a support team just to put on a few exhibition laps at a circuit. The Ferrari, on the other hand, is docile enough to be used on the street — you could pick up your kid from school in a 250 GTO if you were so inclined.

When the final price of the W196 was announced, many observers pointed to the symbolic aspects of the sale and whether it would answer the question of what matters the most at this level of collecting: history, rarity and provenance alone or history, rarity and provenance combined with usability. The latter seems to be the answer.

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