What Would Happen to Auction Houses If Luxury Sales Outstrip Art?

Editor’s note: This story originally appeared in On Balance, art news Newsletter about the art market and beyond. Register here Receive it every Wednesday.

Since I started covering the convergence of the art and luxury markets last year, I’ve been asking people in the auction world a simple, rational question: What would happen if Christie’s, Sotheby’s, and Phillips sold more luxury goods than art? The answer is often an emphatic: No, that will never happen. People often tell me that art is—and always will be—the bread and butter of the family.

For now, this is correct. In 2025, Christie’s sold $3.7 billion in art, accounting for almost 60% of total revenue. Sotheby’s auction house also accounted for about 60% with revenue of US$4.3 billion. Phillips only recently revealed that its consolidated sales grew by $927 million, with $290 million of that coming from watches, suggesting that art still accounts for about 60% of its business.

But things are changing. Art sales among the Big Three fell 35% last year to $7.04 billion, down from a peak of $10.8 billion in 2022, according to research firm ArtTactic. In contrast, the luxury goods industry is booming. Luxury public auction sales will reach US$1.84 billion in 2025, a year-on-year increase of 18%. Cars are an important driver. Just last month, Christie’s Gooding auction house acquired the automobile auction house Gooding & Company in Paris. The auction house acquired about 90 automobile auction houses in 2024, with auction prices exceeding 50 million euros. Last year, the company’s vehicle sales increased 14% over 2024, with sales exceeding $234 million, a record high. RM Sotheby’s, its dedicated car collection arm, surpassed $1 billion in automotive sales in 2025, its best year yet.

Cars are just the tip of the luxury iceberg. At Christie’s, sales of handbags, watches, cars and jewelry will grow about 30% in 2025, accounting for nearly a quarter of total sales. Luxury goods now account for one-third of Sotheby’s revenue, three times its share in 2019, and private luxury goods sales are up 350% year-on-year. Thanks largely to the latter, Sotheby’s combined luxury goods sales have exceeded US$2 billion for three consecutive years.

If this trajectory continues, the identities and strategies of these companies may soon look very different. Sotheby’s transformation into a luxury retail giant has begun. During Abu Dhabi Collectors Week in December, the company transformed two restaurants at the St. Regis Saadiyat Island hotel into something resembling the first floor of a very high-end Macy’s, with glass cases filled with handbags, watches and diamonds available for private sale. Paul Redmayne, one of Sotheby’s luxury goods experts, even touts its “Sotheby’s Bespoke” service, which offers bespoke jewelry. Perhaps more importantly, not a single artwork made it to the auction block in this week’s five sales. There is a strong demand for luxury goods in the Middle East, and Sotheby’s is working hard to meet this demand.

Still, former Christie’s chief executive Guillaume Cerutti isn’t convinced that the auction house’s diversification will lead to a redefinition. “I don’t think the rapid growth in luxury sales relative to fine art sales is a threat to the position of auction houses,” he told us. art news Recently, it has been noted that jewelry and classic cars have long been part of their history. He sees the 2011 sale of Elizabeth Taylor jewels as part of the “Christie’s legend”.

“Whether it’s fine art or luxury goods, the basics are the same: auctioneer, items with provenance, auction room, bidders on the phone or online, and a bidding war,” he continued. “Diversification reinforces this model rather than redefining it.”

Tad Smith, former president and CEO of Sotheby’s and one-time sparring partner of Ceruti, is less optimistic. “Auction houses are defined by more than just revenue mix,” he said in an email, “but if capital, talent and narrative shift towards luxury sales first and art second, then auction houses are no longer being reinvented but abandoned and rebuilt.”

Magnus Resch, an art market expert who teaches arts management at Yale University, described Sotheby’s strategy as a “structural transformation.” He said that with cross-category integration, prime retail addresses and potential hotel business, the company is evolving from an art market into a full-fledged luxury platform.

“It reflects the shift from object-centric to customer-centric,” he said. “When billionaires can buy Rothkos, penthouses, diamonds and vintage Ferraris from the same institution, auction houses stop being a marketplace and start operating like private luxury concierges.”

The Middle East luxury market is worth $13 billion, according to Dubai-based luxury goods supplier Chalhoub Group, and Sotheby’s took in $133 million during the collection week alone. Mark Westgarth, professor of art market history at the University of Leeds, is not surprised that auction houses are “chasing the money” in the region, but he doesn’t see a dramatic rupture even if luxury goods eclipse art.

“Art has always been a luxury product of the highest order,” he told us art news. “It has status. The art and luxury markets are not as binary as we thought.” Still, he is skeptical that the boom can be sustained. “Luxury is always changing. What is desirable now may seem kitsch or outdated in ten years. We are in a specific cultural moment, but I don’t think luxury will be the art market of the future.”

Westergarth suspects luxury may also be a strategic foothold. As Sotheby’s and Christie’s expand in the region (Christie’s opens a Saudi Arabian office in 2024), luxury goods can more easily enter a market where the art ecosystem is still nascent. “It takes decades to build a sustainable art market,” Westergas said. “You can’t simply transplant one – it requires a long-term cultural foundation.”

Sotheby’s CEO Charles Stewart said a 31.68-carat diamond was hammered down during Abu Dhabi Collectors Week and was eventually sold for $8.8 million. art news He believes luxury goods sales will one day surpass art. I was a little surprised because when I pitched the idea to most auction directors, they all said no. However, he stressed that the two categories were complementary. “Our heritage, our DNA and our identity are all rooted in fine art,” he said, “but the potential market for luxury goods – cars, watches, spirits, real estate – is much larger than the art market.”

Kimberly Miller, Christie’s new head of luxury goods, echoed Stewart’s stance. She said the luxury category has been part of Christie’s DNA since the 18th century, when it held its first major jewelry auction in 1795, selling items from Madame du Barry’s collection.

“Luxury products complement, not compete with, our identity as an arts institution,” she told us art news This week. “Christie’s identity has never been tied solely to a portfolio of categories, but to principles of connoisseurship and stewardship. Whether we offer a bottle of 1961 Petrus wine or a Rothko Color Field painting, what unites our clients is a shared passion for quality and authenticity.”

First-time buyers are at the heart of this shift: at Christie’s, 38% of new buyers in 2025 will make their first purchase in the luxury category, rather than art. Many of these purchases are made online. Sotheby’s does not have separate relevant data, but its 2025 financial report stated that 35% of new bidders in the art and luxury goods fields were first-time bidders. Perhaps they were attracted to the Sotheby’s website, which offers pre-owned luxury goods at auction or through “buy now,” ranging from real estate, classic cars and dinosaur fossils to handbags, jewelry, fine wine and game-worn football jerseys.

Tad Smith explains how this could reshape the auction house’s customer base: “Art collectors are consumers of luxury goods, but most luxury consumers are not significant art collectors. Focusing on luxury products can broaden the customer base, make auction houses more marketing-oriented rather than sales-oriented, and change the culture. Bernard Arnot Arnault can sprinkle Basquiat in a Tiffany’s store in New York, but filling an auction house with such clients is another matter.”

Luxury goods sales, as well as contemporary art, are now the main sources of new clients for Christie’s, Cerruti added.

“The aim is not just to attract them but to encourage exploration of other categories, especially fine art,” he said. “Many luxury sales are conducted online, which demystifies auctions and introduces buyers to exhibitions and live sales who may otherwise be intimidated.”

I asked Cerutti whether a luxury-led revenue model had the potential to undermine that perception, given the vast amount of deals Christie’s, Sotheby’s and Phillips do as cultural authorities in fine art. “The greater contribution of luxury goods does not diminish cultural authority,” he said. “It reinforces the role of each winery at the intersection of art, connoisseurship, heritage and global wealth.”

Smith agrees, but says these brands should enter the luxury market cautiously to maintain their cultural cachet: “I think [the Big Three] They’re too smart to give up their place in the cultural zeitgeist…so I hope they’re sensible and smart about adding luxury items. “

Jo Vickery, the former head of Sotheby’s Russia department, was more cautious. “Switching to luxury goods can be very profitable – the real question is how much it will cost,” she told us art news.