For What It’s Worth (Star Magazine, Nov.-Dec. 2012)

By Albrecht Stachel

Printed in The Star magazine, November-December 2012.

January’s Barrett-Jackson Auction saw a steel-bodied, 1954 Gullwing sell for an unprecedented $2.2 million, the first non-alloy 300SL to exceed $2 million at auction.

While this particular car was undeniably well preserved, the remarkable fact of this sale is that the car in question was nevertheless a standard production Gullwing, more alike than not to those that regularly come through our shop in Wisconsin. A $2-million gavel price for any automobile no doubt constitutes a paradigm shift for all owners of similar models, and when such stratospheric expectations have come to rest on a postwar Mercedes model of which several handfuls exist in private hands, the moment seems right to make an inquiry into values.

It is more evident than ever before that two very distinct value scales apply to collector automobiles. We might call them “intrinsic value” and “commercial value.”

To put it into the simplest concrete terms, we will say that, literally speaking, intrinsic value constitutes all that it would cost to buy the parts necessary to build your favorite Mercedes, and then build it at today’s prices. In other words, intrinsic value at its core views the car as the sum of its constituent time and materials. More than just time and materials, however, and not easily measured, intrinsic value is enhanced when imbued with emotional interest or sentimentality. Commercial value, on the other hand, is simply the price someone would be willing to pay for your car when it comes time to sell. The latter has just been established for a nearly mint-condition 1954 300SL Coupe.

While it would be disagreeable to figure out how high a pile of Federal Reserve Notes might have to be in order to buy all of the parts for a 300SL from the Classic Center – and Mercedes-Benz doesn’t actually have all of those parts – experience allows me to conjecture that one million dollars should be enough today to purchase and construct a Gullwing from factory parts, should they become available.

Most of us know that there is much more to it, of course. Gullwings in any condition have passed beyond the realm of mere vehicles and have become financial instruments in their own right. The $2.2 million gavel was achieved in part by the car’s condition, and the low mileage on the odometer – 4,149 miles – but also in part by the very visible position of the car at a very public auction, the publicity itself virtually ensuring that the buyer’s investment would continue to appreciate. In any world with millionaires and billionaires, those with means will find commodities liquid enough to readily transform into any currency in the world, and especially those with growth potential. The value of 300SL cars offers remarkable growth potential, with prices more or less steadily rising, and remarkably few fluctuations in value compared with nearly any other investment. One can find few legal financial instruments producing anything approaching that kind of return on investment and portability. Here, even $2.2 million can be a good value, if you can muster the payment price.

Several other factors can allow intrinsic value to transcend monetary value. My 1952 300, a zenith of pre-modern automobile production, represents to me immeasurably exceptional value. With one foot in prewar Teutonic workmanship and the proud tradition of Mercedes coach building, and the other foot in postwar industrial technology, the 300 is a masterpiece. The automobile’s material content and construction architecture, utterly unattainable in today’s materialand labor-conscious auto industry, is bristling with lovely details of hand construction. A smile of satisfaction crosses my face when I see the last three digits of the body number inscribed behind every piece of chrome, sheet metal, and wood. Industrial control mechanisms such as these are reminders of the men and women who toiled to realize these abstractions of industry, and represent a richness in historical value far beyond that which the auction market can now bear.

All variants of the 300 – W186, W188, W189, W198, W199 – are industrial art of a high order. Hermann Ahrens, the man who designed those beguiling 380, 500K, and 540K cars and many others during the prewar period for Daimler-Benz, designed the W186 as his last assignment before retirement. In my musings on how my 300 came to production reality, thoughts drift to those days of its gestation. I like to believe that Herr Ahrens is likely to have attempted the swan song of his career. As contrasted to the bombastic and exuberant designs of the prewar period, the W186 is a study in restraint. With abundant modesty, the design is fluid, economical in its mass, and possesses grace. It is a mature design, demure and humble, reflecting a culture reassessing itself, retaining the promise of Mercedes’ proud brand heritage, but looking toward a transnational future. It is of immense value to me to participate in the use and preservation of the final masterpiece of one of the world’s great automobile designers. I have stewardship of a great piece of mobile industrial art. How do you put a price on that? I value the 300 more than it is worth.

Other intangible factors can influence intrinsic value to transcend market prices: Inherited cars symbolizing the bond between generations, and cars with remarkable provenance – Rudolf Uhlenhaut once drove my car – cars having saved their owners’ lives during accidents, even the fulfillment of a romantic notion after, for example, seeing a 230SL in the 1967 movie “Two for the Road” starring Albert Finney and Audrey Hepburn. Not least, is the value added by an owner who has diligently cared for and protected a beloved Mercedes, a value only recognized in the hours (what are those worth?) of one’s life. It seems few buyers are willing to see the real worth of that precious resource. Even more transcendent of commercial worth than these intangibles is the notion that only the sky’s the limit, the recognition of an automobile as one of the few Titans in the Pantheon of automotive history, a class of vehicle that will never be created again, and for which the asking price may prove to have no ceiling.

The current market prices of the 300SL may be affecting its intrinsic value in some unexpected ways. It is now a financial artifact, and one can become decidedly uncomfortable running around the countryside in a car worth more than one’s house. The constant monetary consciousness this creates can noticeably detract from the visceral pleasure one would otherwise derive from the experience of driving a fine automobile, as simply driving around other motorists becomes a high-stakes skill game. However, some might argue that the price of admission itself now offers up a not-altogether-innocent thrill of its own, such as when speed-shifting a Gullwing over winding rustic roads.

The sale of the $2.2 million Gullwing will send its ripple effects throughout the Mercedes owners’ community. The commercial prices of all desirable Benzes will see an uptick. One rationale will be that componentand build-quality are valued equally highly in other collector Mercedes cars of the same vintage. We will see many would-be investors simply priced out of the Gullwing market, instead opting for models with more approachable prices and growth potential.

The traditional value relationship between the most sought-after Mercedes and the second and third tier of Mercedes collector cars will eventually equilibrate to something near their former commercial price relationships. The value vs. worth inequities in other Mercedes of the period will drive commercial collector car businesses into a near feeding frenzy. Speculation will surge for a time until some saturation is achieved under the new value paradigm. In brief, there will be a lot of action, and, market willing, the flood tide will raise all boats.

Information about commercial values for Mercedes abounds should one feel the urge to speculate. John Olson’s SL Market Letter is a noteworthy example. Auction results are readily available online or directly from the houses, and quarterly value guides assist commercial sellers. The Internet also provides numerous venues that establish a sense of fair market value for buyers and sellers, and our club magazine, The Star, is a kiosk of current and future events in the marketplace.

Speculation aside, virtually any Mercedes car has ample virtues to offer its owner – and merits to recommend it. Lately, I have been driving my fintail cars often. Their road manners still thrill – their re-circulating ball, kingpin steering is quite direct and clearly communicates road surface conditions to the driver. I value that.

Many Mercedes owners share a fear of being “upside down” financially in their car. Parts do not come without cost, and competent workshops are few and far between. The cost of a few years’ routine maintenance or one major service can exceed the book value of some daily-driver models many times over. Nevertheless, there is far more to value in Mercedes ownership (and in life) than buying low and selling high, and many of the finest models to drive – those which give the most pleasure to the owner and afford the most safety, security, and joy – are those that the market values less than a single Gullwing brake drum. One can worry intensely about these inequities, or one can instead simply participate in the pleasure of owning and maintaining, even improving, one’s Mercedes.

Conscientious ownership will not only help preserve or increase the commercial value of an automobile, it will also add intrinsic value. Think of the value of a car with all of its service records versus the identical car without; while this may not in itself drastically alter the price buyers will pay, they will certainly feel that the price reflects a better value if the seller has kept those records.

Those who have followed my column will sense a familiar theme in this conclusion. Take stock. Whichever Mercedes you may have, you are privileged to participate in the ownership of one of the finer products of our industrial society. That alone is worth it.

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