Welcome to our final newsletter of the year, which also launches our updated website. You'll find market comment, the latest private sales, new articles and some videos which we hope you enjoy. On behalf of my colleagues and I, please accept our best wishes for Christmas and a successful 2010.

Rather than sending Christmas cards this year we are making a donation to the Smiling Children Foundation (www.smilingchildren.org)

By Simon Kidston

With the final Lot knocked down at Bonhams' London sale last week, let's look back over 2009 and see if we can find pointers to predict what the market holds in store for us next year.

If it was a wine, 2009 might be described as a 'middling' vintage, which considering the turmoil that other markets have endured this year is probably rather better than expected. As always there have been ups and downs, but it's hard to think of an instance where a car didn't deserve to blitz its auction estimate or indeed where one was almost given away. By and large, reason has prevailed.

I've chosen five hits and misses to paint a picture of the classic car market in 2009:

Hits

-1960 Ferrari 250GT SWB California Spyder (Gooding, Scottsdale, January). Fellow owners- especially those who had joined the club recently- may have been unnerved to learn that a 'recently discovered' example of the 55 built was to be offered without reserve by Gooding last January. Most of them probably breathed a sigh of relief when it made just under $5 million, the first big sale of the year. A restored sister car later made $165k more at Goodings Pebble Beach auction. Now we know what they're really worth.

-1937 Bugatti Type 57S Atalante (Bonhams, Paris, February). Without doubt the car which attracted the most media attention this year, and the most eagerly awaited amongst the collector community: insiders had been trying to buy it for decades from its reclusive owner, who wouldn't even let anyone see it. $4.5m was a good return on the $1,000 it cost him, but a lot less than the $7.9m a similar car made just six months earlier, showing that a). Timing is everything, b.) It pays to get in first even if you're selling something as rare as hen's teeth, and c.) The biggest collectors live in the real world too.

-1913 Bugatti 5 Litre 'Black Bess' (Bonhams, Paris, February). Famous enough to have its own nickname, fast enough for even the most jaded palate, impeccable provenance and- critically- fresh to the market. This was a must-have for the serious Bugatti collector, which is why it took over double the bottom estimate to own the car...but there's only one Black Bess and it might be another 25 years before it comes up again.

-1957 Ferrari 250 Testa Rossa (RM, Maranello, May). Whether this was a hit or a miss depends on your perspective- most people would say it was a hit for the buyer, who paid just $1.5m more than a steel California Spyder with non-matching engine made a year earlier. Imagine offering that deal to most 250TR owners: you wouldn't be invited to stay for tea. A rare example of a highly motivated seller for whom taking a 'big ticket' car home wasn't really an option.

-1965 Shelby Daytona Coupe (Mecum,Monterey, August). Much the same comments apply as above. The general press got into a frenzy when this 'American GTO' sold in August at Mecum (yes, really) for $7.7m, but nobody seems to have told them the car was shopped around privately a year earlier with a price tag of double this figure. But at least it sold, and anyone coolly writing a cheque for a car approaching eight figures in uncertain times deserves a pat on the back. I'll bet the seller was relieved.

Misses

-1963 Corvette Grand Sport (RM, Monterey, January). The first high profile casualty of the year, and it confirmed just how sensitive buyers have become: selling racing cars at auction is never easy, and rumours of pre-sale deals behind the scenes- rightly or wrongly- tend to cool bidder enthusiasm. Tellingly for the mood of the market, it has since been sold to a major private museum.

-1967 Ferrari 350 CanAm (RM, Maranello, May). It started life as a legendary P4, and all the auction marketing trumpeted little else, but there's no escaping it raced in that configuration for just three months and has been a CanAm hot rod- rather less evocative- for the past 42 years and three months. The $12 million being sought might be 75% of the theoretic value of the only surviving untouched P4, but the hard-to-impress buyers who frequent this stratosphere prefer to pay the extra and not have to make excuses at the next gathering of automotive oligarchs.

-1939 Auto Union D-Type (Bonhams, Monterey, August). Yes, that one again. Proof that if a car doesn't sell the first time, potential buyers will expect something dramatic to change before putting their hands up again: preferably the price, not the chassis number. This reconstituted racer needs to be enjoyed like a piece of sculpture and forgotten for a few years. It'll be worth the wait.

-1912 Bugatti 5 Litre (Bonhams, Reims, September). This result shows- yet again- that if you can see the bandwagon disappearing into the distance it's too late to jump onboard. Sister car 'Black Bess' combined all the ingredients that a collector prizes and hit the jackpot, but remove just one element- provenance, for example, and you get a very different outcome.

-1970 Chevrolet Chevelle SS 454 LS6 Convertible (RM, Los Angeles, September). Anybody who doesn't think the muscle car market was overheated should study this. Admittedly an extreme case, it perfectly illustrates what can happen when two determined bidders decide to fight it out...and the alternative outcome when one is absent. Sold by Barrett-Jackson for $1,242,000 in 2006, the successful bidder (I use the word 'successful' loosely) disposed of it at RM in September this year for $264,000: a million dollar haircut. I admire his pragmatism.

What does it tell us?

After the dizzying numbers we're now used to seeing achieved every year in Monterey, the market tends to return to earth for the rest of the European auction season. Gone are the distant days when the London market, with a plentiful supply of world class cars and local spending power boosted by a property boom and a gung-ho City, set the pace. For the past decade America has taken over to lead the way, with the Pebble Beach auctions established as an annual world market barometer.

That said, Europeans are now in a better position than for years to snap up comparative bargains in the USA and Britain thanks to the current exchange rates. This has helped sustain the market during the past few months as cars return to Europe from across the Atlantic and the Channel, but you can expect a relatively quiet period until the big guns line up in Arizona next month. My picks include a lithe Ferrari 250GT Pinin Farina Series 1 Spyder which is very much 'of the moment' and a 'no stories' D-Type Jaguar at Gooding, both good long term bets. RMs feature car is a familiar Aston Martin DB4GT which they last sold in January 2007 for $1,265,000- it'll be interesting to compare how it fares three years later.

That same weekend, for their now traditional Retromobile auction Bonhams has secured a diverse selection of pre-war 'heavy metal' from a collector in Marbella. These aren't easy to sell- particularly the cautiously catalogued Alfa Romeo 8C 2300 which has led a mysterious life- and the firms negotiating skills will be put to the test in getting deals done.

Looking further ahead, the major development for 2010 is a new auction by RM in Monaco. The Canadian firm's established Maranello extravaganza will now take place every two years- hosts Ferrari find it difficult to support an annual event- which enables RM to fit in an alternating flagship sale in nearby Monaco to coincide with the biennial Grand Prix Historique. With Bonhams the established local players and Coys hanging in there, the competition in the salerooms should be every bit as fierce as on the track.

Raising the stakes higher still, there's also talk of the first Ferrari 250GTO to be offered at auction in almost a decade- if ever there was a car which focuses media and public attention, this is it.

We don't expect 2010 to be significantly different to the year we've just experienced; if anything, now more than before those buying should chose their purchases carefully and for those selling, picking the right place and time to do so are essential.  And above all, think long term.

The Auctioneers View

Given that his boutique firm has been at the forefront of the industry in recent years, who better to comment on the classic car market than American expert David Gooding:

"2009 proved to be a much more resilient year in the car market than many of us had anticipated, especially taking into consideration the status of the world economy. I think there are three key factors: 1. car collectors are quite passionate about their cars and would rather sell some other discretionary item such as a boat, second home, painting, etc before selling their beloved motorcars. As a result we have not seen many fire sale situations. 2. There is a flight towards hard goods since interest rates are so low. Money in the bank isn't what it used to be...actually even the bank isn't what it used to be! 3. The car hobby keeps growing in size and popularity. We continue to buy and sell with all of the same clients we did 5 years ago, but I am amazed at how many new clientele are entering the hobby because they are excited to collect cars. By all measures 2009 was a great year-we all weathered an economic crisis better than expected and most of us were reminded that we like old cars not purely for investment but also for the fun that they bring to our lives."

The Collectors View

And finally, I asked Hong Kong-based American businessman W E 'Chip' Connor II, one of the most level-headed, knowledgeable and widely respected collectors in the field, to share with us his long term overview of the classic car market. This is his response:

"On March 9, 2009 the Dow Jones Industrial average dropped below 6500 and Hong Kong's Hang Seng touched 11,344, levels not seen in over a decade.  In the bleak weeks that followed, nobody would have predicted that by early December, these indices would be trading at 60 and 92 percent above their lows, respectively.

"I know of no script for economic recovery that would have suggested that 30 days ago, Giacometti's "L'homme qui chavire," a gaunt spindle of bronze created in 1951, would have found a buyer willing to pay $19 million, 50 percent over the presale estimate. I would not have predicted the $43.8 million paid for Warhol's "200 One Dollar Bills;" nor the $57 million paid for a 6000 square foot condominium on Hong Kong's Conduit Road.  $85,000 for a case of 2002 Domaine de la Romanee-Conti at a recent Hong Kong wine auction would have seemed impossible only 6 months ago.  In May of this year, in Maranello, the ex-Pierro Drogo Ferrari 250 TR brought $12.4 million.  In August, $7.7 million was paid for a Shelby Daytona Coupe.   Today these sales, and hundreds more, might possibly be considered solid purchases.

"Collectable automobiles, as with art and wine, comprise an alternative asset class in purest sense of the word.   These markets are driven by tiny populations of collectors. The markets are inherently subjective, whimsical, and demanding of specialized knowledge. They are volatile. They should, in theory, not be doing well in difficult times.

"Yet the clouds of 2008, let alone the storm of early 2009, did not eviscerate the market for collectible cars as was the case in the early '90s. Yes, the markets corrected and, in some cases, the correction was ugly, but cars across a broad spectrum of types sold, some extremely well. 

"Demand is there and the underlying basis for that demand is expanding.  While downside risk endures, undeniable are three factors.  The first is that wealth creation, particularly in the developing world, is of a magnitude that, in my view, is vastly understated. 

"China alone sits on Dollar reserves approaching 1.5 trillion Dollars. Second, the supply of desirable cars produced before 1975 is, relatively speaking, tiny, and the supply of great cars infinitesimal.  Third, access to specific knowledge is as simple as a few keystrokes, keystrokes that might have well have been entered on a University laptop computer in Cambridge or Palo Alto by a student from New Delhi.

"While these alternative asset classes will remain niche investments, against the backdrop of the vastness of global wealth, the availability of specialized knowledge, and, perhaps most importantly, the rarity of these intrinsically exciting assets, prospects for collectable automobiles are bright.   Money and information circulate with an efficiency unknown two decades ago.  Political boundaries and sclerotic postal administrations are not the barriers they might once have been.  And while I'm under no illusion that even a fraction of the citizens of Prague, Xiamen, St. Petersburg, or Mumbai will have a clue as to what a 250GT Short Wheelbase Ferrari, Porsche RSK, or Bentley team car is, some citizens will.  I am far from being alone in my passion for these things.   On a global scale, demand will inevitably exceed supply.

"Prominently displayed on the floor of the Dunhill shop just off the Bund in Shanghai is an Egli Vincent motorcycle.   A few meters away is a '40's vintage Harley.   The store caters to sophisticated locals, not expatriates and tourists.   The motorcycles engender questions and admiration, questions and admiration similarly triggered a thousand times over by countless channels of information worldwide.   For a few, this information spawns aspiration, which, when coupled with wealth and a desire for self-reward, bodes well for the value of our cars. The market will be there, with bumps to be sure, but it will be there."

Main image: courtesy Corsa Research BV