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The on-line auction platform Bring A Trailer has gone from a quirky email distribution list to pioneering the on-line auction with forum concept to now breaking solidly into the ultra-high end of collector car transactions. All in less than 10 years.
In June of 2019 BAT started their premium section in an effort to break into the $500k+ classic market.The sellers fee remains capped at $5,000, but the 'Premium' auction duration increased from one week to two. The first listing was a no reserve auction on BAT's own Mercedes-Benz Gullwing which gave them their first $1M sale. Silver Arrows followed suit with another Gullwing in Sept 2020 for $1,152,000, and a Saleen S7 followed in November of that year with a $1.2M result. Then things really got going in 2021 with twelve $1M+ sales. With only two months gone in 2022, we have twelve sales above $1M and three of those were for $2M+. I don't see this trend reversing - the first $5M and $10M BAT sales can't be too far away.
Bring A Trailer started auctioning cars in 2014, and in that year the average sale price was something like $20,000. I doubt David Gooding or Rob Meyers was too worried about them at the beginning. They were soon making an impression however - a few years ago RM reportedly tried to buy them for $10M. The owners held off, and sold for ten times that amount to the Hearst Publishing Group.
It doesn't appear that the price paid was a sky high valuation either: BAT is currently auctioning between 70 and 80 cars per day, every day, selling more than 85% of them at an average price of about $50,000. Commissions charged are 5% to a limit of $5,000 which probably makes for an average of 4% when the over $100k lots are factored in. Back-of-the-envelope math gives annual sales revenue of 75 (cars per day) x 360 (days per year) x .85 (% sold) x $50,000 ($ per car) x .04 (% commission) = $45.9M annually. I wouldn't be surprised if half of that went straight to the bottom line. That's around $20M per year in profit or a 5X earnings valuation. A pretty good deal for Hearst actually.
Naturally this success has inspired many competing on-line auction platforms; from new start ups and from the traditional auction houses. The start-ups have tried to create a niche - by brand or price - and RM, Gooding and Bonhams have tried to tweak the BAT formula to compete for the on-line market share.
Gooding assembles the on-line offers in one place and allows for viewing (in California) and for you to engage one of their specialists to describe the auction item for you.
RM 'Open Roads' on-line auctions feature vehicles from all over the the world, and will presumably offer some logistical help from buying overseas. These auctions feature a collection of cars, all auctioned in a one-week format, each month.
Bonhams started 'The Market' which is more similar to eBay Motors in concept with 'Buy It Now' options for some cars. Most of the lots are in the UK, but there are some in the US. The seller pays a 5% fee which differs from BAT where they buyer pays it. The auction description is written by Bonhams which differentiates it from eBay.
Doug DeMuro's Cars and Bids has targeted late model specialty cars. PCAR Market focuses on Porsche but isn't exclusive to them. TheMBmarket is active with Mercedes. Shiftgate is making some progress at the lower end of the market and by promoting Canadian classics. I think the market share taken by these companies comes mainly at the expense of eBay and AutoTrader. I wouldn't be surprised if AutoTrader entered the on-line auction market.
Why is BAT so successful?
BAT comes the closest to creating the perfect market in my opinion. As I see it this involves two major components with some lubrication. One component is bringing a group of qualified buyers together. The second is describing the item fully so everybody knows what they are bidding on. Then there needs to be reasonable fees and an efficient process. BAT has all of it pretty much nailed (though they can be slow to list an item).
Buying a classic car is all about confidence, and this has traditionally held back on-line auctions as all the cars look nice at 72 DPI. Sellers ratings help, but with larger purchases arranging a Pre Purchase Inspection or flying out to inspect the car in person is highly recommended. Most people don't want to bother. Increasing the photo count from 20 to 250, and adding a forum of (mostly) educated enthusiasts to comment has gone a long way to alleviating the fears of sight-unseen buying. BAT brings together this community, and with them, increases buyer confidence. Most collectors are now comfortable buying a car from their computer.
I have a client's Lancia for sale on BAT right now. Lancia is not that well known in North America, and I'd guess most people have never seen one. The Fulvia Sport (Zagato) has a pretty thin market and at a traditional auction you would wonder whether the car with its 1.3L narrow angle V4 engine and front wheel drive would meet any appreciative bidders.
But on Bring-A-Trailer it seems like the entire North American Lancia community is watching the auction and commenting. The guy who brought the car over from Italy commented. As did the co-driver and a fellow Lancia-driving competitor at a vintage rally the car participated in. Add to that the expertise of owners that have restored similar cars. When other people know the car and comment on it, it greatly increases the credibility of the seller - providing they all say the same things of course!
I recently auctioned a 1965 Volvo (P) 1800S. It was restored about 20 years ago. I put it on BAT and it found an owner in The Netherlands. Wouldn't you know it, the guy who restored the car found the auction and started commenting on his time with the car, and graciously offered to help fill in any details the new owner was curious about.
Classic car videos are getting longer and more detailed
On my last few auctions, including the Lancia and the Volvo, I did really detailed YouTube videos that were about 1 hour in length. I think I am the only one on BAT doing videos of this length right now, but I expect others to follow. That is about how much time it takes to go through each body panel with a paint meter, describe each piece of trim, each piece of glass, go underneath the car and take a close look at the floors, look for leaks, and then video the car's start up and take it for a drive. In other words, about as close to an in person walk-around as you can get, with the added benefit of getting a close look underneath the car. You also have the ability to watch the video multiple times, pause and magnify any areas of concern.
The Volvo buyer said he never would have placed a bid, but after watching the videos and reading the comments his confidence in the car was total - so he bought it even though it was on a different continent. The Lancia might total 2hrs of coverage all together. The detail of the presentation has been widely and favourably commented on. I'm not expecting an invitation to Sundance, but the next owner of the cars should not have any surprises.
I've been doing walk-around car videos since 2007 when I started my YouTube channel. I remember shooting a Maserati in 2008 when I was the Sales Manger for FMOA. Remo Ferri came in from Toronto, and I was proud to show him this new marketing initiative. He said something like, "We're not making movies here, get back to your desk and start selling cars!". He's not the kind of guy you argued with, so that ended that at FMOA, but thankfully I wasn't there much longer.
Tony Dilawri was more appreciative and I built up a sizeable YouTube presence for the Distinctive Collection (Aston, Bentley and Spyker). At Porsche I pushed hard for a photo studio and pushed harder to have all of our inventory presented in video format. There was a lot of resistance so I did the first 100 cars myself to prove it could be done. All the marketing people told me to make the videos only 2 minutes long. I ignored them because it takes longer than that to properly describe a car! I'm glad that we are now seeing the most popular automotive videos from the likes of Jay Leno, Harry Metcalf etc. settle in the 30-40min format. If you provide good content, people will watch it. If you are not saying anything, even 2 minutes is too long.
My new format copies Jay Leno's Garage where he talks about the car, then usually invites the owner to come in and have a conversation about it, then takes it for a drive. We tried this with the Lancia and it worked pretty well. It's nice to get a feeling for who owned the car. Most of the time if the guy is OK, the car probably is too. And, if the guy is sketchy, the car is probably a mess - even though it may present well.
Jay Leno doesn't have a Ferrari in his collection. One reason is the dealers and his insistence that he be treated like a customer. The other reason is that whenever a vintage Ferrari is offered to him, it is always through the owner's representative, who is always away somewhere. Jay wants to talk to the guy who looked after it.
Any problems then?
Well, shopping for a car on BAT reveals few bargains - everything seems fully priced, and then some. That said, Canadian cars sell at a discount as most of the collector car market is in the US, and the costs and hassle of importing are factored into the bids by US collectors. So there are potential deals looking for Canadian cars on BAT that have an 'import discount' attached, but you don't have to import them because they are in Canada.
But what you want may not be for sale in this country. I've been looking for a Porsche 356 Speedster for a client for quite some time. We set ourselves a disciplined process to find the right car. What I have found is that the best deals on 356 Speedsters were at physical auctions from Gooding & Co. and RM Sothebys, even with their buyers fees which are 10%-12%. So for Canadians, I am recommending selling on BAT, but having a serious look at buying in Scottsdale, Amelia Island, or Monterey. Besides, it would be nice to go somewhere...
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