Zermatt, Switzerland: The odometer has rolled over another 365 days, and 2021 is in the books. Following the lockdowns and broad cancellations of 2020, the collector car world came roaring back to life in 2021. Radnor put on their wonderful Concours d’Elegance in Pennsylvania hunt country. Monterey Car Week restarted, and Pebble Beach was as big as ever. We were lucky to attend most of the events at Monterey, including the Quail. Lime Rock’s Labor Day weekend Historic Festival proceeded in style. The 3rd biennial Turtle Invitational benefitted from perfect weather and a roster of spectacular cars. Now under the ownership of Hagerty, the Greenwich Concours occurred in late October. The colorful foliage was a welcome contrast to the usual spring leaves of Greenwich’s traditional June dates. At Greenwich, we were honored to speak on a Hagerty panel with Lowell Paddock, Ken Gross, and Dr. Paul Sable. Finally, in December, Turtle Garage attended the Palm Beach Concours—It was a lovely and relaxing day at Banyan Cay golf club. We were humbled to have the Sports Car Market cover story in the May 2021 issue—our fourth cover story in SCM. In summary, 2021 was a busy and productive year and there was plenty of pent-up demand as car shows, and car-related events witnessed strong attendance.
Changes at Turtle Garage in 2021 include the acquisition of a spectacular 1933 Packard Twelve Dietrich Victoria. This car was purchased new at Zell Motorcars in Baltimore Maryland by Alfred Vanderbilt Jr. After 1941, it was subsequently owned for seventy-two years by one owner. In 2012, the car was purchased by a renowned Packard collector as a thoroughly original 18,000-mile example. The buyer embarked on a three-year 5,500-hour restoration utilizing top Packard experts and then the car was shown at Pebble Beach in 2015. Our lifelong dream to own a CCCA full classic Packard Twelve from the early 30s came true in 2021. We also acquired two stunning investment-grade motorcycles—a 1991 Bimota Tesi1D and a 1939 BMW R51. Bimota interests us and remains an underappreciated and misunderstood brand—the Tesi 1D might be their finest engineering masterpiece. The BMW R51 is the only pre-war civilian BMW in the Munich archive database that was not delivered new to a dealership—instead, it was sent on April 28th, 1939 to 8 Prinz Albrecht Strasse in Berlin—the notorious evil headquarters of Heinrich Himmler’s SS. With help from BMW, we are currently doing more research to learn more about its history. We sold our CLK 63 Black Series as a way to help fund the acquisition of the Packard Twelve. The CLK63 Black Series is an iconic car in its own right but somewhat redundant to our SL65 Black Series. Turtle Garage is evolving into a V12 and boxer twin collection. Speaking of the SL65 Black Series, two significant sales of this iconic modern classic topped $400,000 on Bring a Trailer in 2021. Another SL65 Black Series just landed on Bring a Trailer a few days ago and is already at $256,000 with nine days to go. These iconic V12 modern classics are finally getting the respect they deserve in the market.
The pandemic certainly surprised many of us—the social, economic, and political implications are confounding and often counterintuitive. For example, Covid 19 helped materially increase the overall interest in collector vehicles in 2020. Bring a Trailer, Hagerty, and the traditional auction houses greatly benefitted. This trend continued into 2021, with record results at both online and terrestrial auction venues. Online auction giant Bring a Trailer witnessed spectacular growth, and today collector car valuations appear frothy across the board.
Another unexpected consequence of Covid 19 is that the pandemic has appeared to make U.S. drivers more reckless. Recent data provided by the LA Times is complex but suggests that the pandemic has increased intoxicated driving, speeding, and decreased the use of seat belts. Before the pandemic, U.S. highway safety had been steadily improving for decades thanks to the advent of airbags, ABS, crumple zones, and other innovative safety equipment. Higher speed limits and increased registrations did not increase the aggregate number of fatalities—which fell from 55,000 in 1970 to 36,000 in 2019. However, during the pandemic, there was a 7.2% increase in deaths in 2020 and an 18% jump in the first half of 2021. The statistics are complex and dumbfounding as total miles traveled in 2020 declined by 13% as most states and cities mandated lockdowns and many worked from home.
2021 brought us sad goodbyes of great friends and industry icons. 2021 Sports Car Market 40 under 40 recipient and BMW expert guru Eric Keller died at age 39. Eric was a friend and an all-around great guy. He leaves behind his children and his beloved Enthusiast Auto Group specializing in rare vintage BMW M cars. Turtle Garage did an exclusive interview with Eric; you can read that story here. Also, the California legend and Shelby race driver Bob Bondurant passed away at age eighty-eight. Hazel Chapman, the co-founder of Lotus and wife of Colin Chapman, also passed away in 2021. Finally, Italian car engineer Claudio Zampolli—who is known for his sixteen-cylinder Cizeta V16T and as the man who introduced Sammy Hagar to Van Halen—died in July at the age of eighty two.
Chip shortages negatively impacted the auto industry, and dealers struggled to get new vehicles. As a result of these shortages, the used car market surged. Rivian went public and soared to $172 per share only to drop back to $94. Even with the 45% pullback, the electric pick-up truck maker is still worth $85 billion (as a reference, GM is worth $81 billion, and Ford weighs in at $80 billion). Elon Musk was crowned King of Time magazine and is Person of the Year. The valuation of Tesla stands at 1 trillion dollars—its market capitalization is an eclipse over the entire auto industry.
Harley-Davidson took the market by surprise and introduced the Pan America, an adventure touring bike. This machine seeks to capitalize on the popular adventure touring market currently dominated primarily by BMW and KTM. Harley is looking to offset aging demographics and five years of declining sales. The venerable company also launched LiveWire, a stand-alone company focused on electric motorcycles.
Hagerty went public in 2021 via a SPAC transaction and is now trading on the NYSE under the ticker HGTY. This is yet another example that highlights the explosive growth and maturation of the collector car industry. This high profile public offering follows the 2015 formal tie up between RM Auctions and global behemoth Sotheby’s as well as the 2020 acquisition of Bring a Trailer by Hearst. In a recent issue of Sports Car Market, we take a deep dive into the details behind the Hagerty SPAC transaction. Click here to read our story in SCM.
December brought some drama in Formula 1 as Hamilton and Verstappen battled it out for the winner-take-all Formula 1 finale in Abu Dhabi. With only six laps to go, Hamilton was leading by eleven seconds (a very wide margin) and seemed all but certain to win his record eighth world title. Suddenly, Nicholas Latifi crashed, and the safety car came on the track. Race officials decided to do a final-lap shootout, and Verstappen had just received a fresh set of tires. Mercedes has contested the outcome, and Hamilton did not attend the Formula 1 championship dinner in Paris. Instead, Hamilton was at Windsor Castle being knighted by Prince Charles. A statement from the Federation Internationale de l’Autombile said, “The circumstances surrounding the use of the Safety Car following the incident of driver Nicholas Latifi, and the related communications between the FIA Race Direction team and the Formula 1 teams, have notably generated significant misunderstanding and reactions from Formula 1 teams, drivers and fans, an argument that is currently tarnishing the image of the Championship and the due celebration of the first Drivers’ World Championship title won by Max Verstappen and the eighth consecutive Constructors’ World Championship title won by Mercedes,”
The Financial Times recently reported that respected long-time BMW, Mercedes, and VW auto analyst Arndt Ellinghorst is leaving Bernstein to pursue new opportunities. What is more interesting are his parting words about the sad state of the European auto industry. He stated that European auto socks have become “the lowest valued species among all publicly traded equities…Some of the best brands you can think of are valued to go out of business in four to five years’ time.” Companies like BMW trade at price-earnings multiples of 5X while Tesla commands an astonishing 350X multiple. The market views European auto companies like BMW and VW as slow to react “metal benders.” Ellinghorst has long advocated that auto companies need to focus on “exciting and emotional” products in his reports. He also has underscored that the industry has been run on an “overly volume-centric business model” along with a reliance on earnings from China that would prove temporary and unsustainable. Ellinghorst notes that the market has allocated over $2 trillion to companies like Nio, Tesla, and Rivian. He recently said, “Capital markets are taking the view, tech companies are taking the view, risk capital is taking the view that the future of mobility is amazing. But sadly, the market has also made the judgment that traditional brands will not be part of it.” It will be interesting to see where this all lands—what will the future hold for BMW, Mercedes, VW, Ford, and GM? Perhaps the onslaught of regulation against the internal combustion engine has become too big for the market to ignore. In December, the EPA announced their tightest-ever auto pollution rules with a proposal that calls for all new vehicles to average 55 miles per gallon by 2026—a scant four years from now.
In 2021, the brakes were applied to autonomous driving. It turns out that practical, safe, and accurate driverless cars may be much further out than we all thought. As the New York Times recently put it, “the industry is resetting expectations and settling in for years of more work.” The reset results from several factors like injuries, deaths, and court cases—but the fundamental issue remains technology. Several companies focused on autonomy closed or sold their intellectual property in 2021—Google’s Waymo remains perhaps the most well-capitalized autonomous driving initiative. Chris Urmson, formally of Google (now CEO of Aurora) said, “this is a transformation that is going to happen over 30 years and possibly longer.” However, long-haul autonomous trucking might come sooner. Trucking does not involve passengers, and the routes are often more straightforward given most of the miles traveled are on straight highways. Case in point, Wal-Mart has partnered with Gatik and since August has been operating two daily autonomous box trucks without a safety driver on a 7-mile loop. The Gatik trucks are loaded from a fulfillment center and drive to a nearby Walmart Neighborhood Market grocery store in Bentonville, Arkansas. This “middle mile” solution is just the beginning. Gatik CEO Gautam Narang said, “taking the driver out is the holy grail of this technology.” TuSimple also revealed that their fully autonomous semi-truck successfully navigated streets, traffic signals, on-ramps, off-ramps, and highway lane changes in open traffic while interacting with other traditional motorists in December. TuSimpe’s road test is the first time a class 8 semi-truck has operated on open public roads. Their semi-truck drove along I-10 from Tucson, Arizona, to Phoenix (almost an hour and a half long trip) with no human behind the wheel.
In 2021, GM’s CEO, Mary Barra fired the CEO of GM’s Cruise division. Cruise’s charismatic and popular CEO Dan Amman, maintains a different vision for GM’s autonomous business model than Barra. He preferred a “robotaxi first” strategy with a near-term IPO to capitalize on strong market interest in that business. Barra wanted Cruise to focus on technologies that could be used in GM’s traditional product lines. Amman was open to utilizing the technology more broadly in the future but saw immediate opportunities in the higher-margin and nearer-term robotaxi opportunity. He also wanted to take Cruise public sooner than later as to attract key talent. Ammann was a finalist for the top spot at GM back in 2014, after having served as GM’s Treasurer and CFO.
Mercedes-Benz announced the world’s first internationally valid system for conditionally automated driving. Effectively this development means that the new S-Class meets the stringent legal requirements for level 3 autonomy in Germany under certain conditions and locations. Germany is at the vanguard of binding legal requirements to level 3 autonomous systems via their Road Traffic Act of 2017. An S-Class equipped with Drive Pilot can legally operate in autonomous mode at up to 37 mph in heavy traffic or on highways that are part of Germany’s currently designated 8,197 miles of approved roads.
Finally, we highly recommend a great read by Neal Bascomb called Faster. This book is beautifully written and is a stunning account of René Dreyfus—a Jewish race car driver who, against all odds, challenged Hitler’s dominance of Grand Prix racing in the late 30s. Ironically, Dreyfus drove a French car and was financially backed by an American multimillionaire Lucy Schell. Pick up Faster and give it a spin—you won’t be able to put it down.
Turtle Garage wishes you and your family a safe, happy, healthy, and prosperous New Year.