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Bring-A-Trailer has created close to a perfect market for collectible automobiles - for Americans. The stats speak for themselves; over 700,000 users, 17,846 vehicles totalling $USD 829M sold in 2021. This is a 100% increase over 2020 and $250M ahead of its closest live auction competitor. According to Hagarty, on-line auction automobile sales in North America doubled in 2021 to over over $1B.
I believe this is just the beginning of a significant disruption of the traditional auction companies and the used car lots of dealers and independents. 250+ photos, driving and walk-around videos and a lively discussion forum with many marque experts contributing, is the new standard. All the high-end auctions are coming up with hybrid models to sell cars both at live auctions and on-line.
Because of the expert commentary from knowledgable enthusiasts, BAT gives bidders the confidence they need to purchase sight-unseen. The depth of knowledge from BAT contributors is truly impressive, though not every contributor knows what they are talking about. When you list a car on BAT you can expect it to be thoroughly picked apart, and it is not always fair. People have a range of motivations which can include bolstering their own ego and getting validation for their knowledge or trying to influence the market for their own gain. That said, it isn't too hard to soak up the knowledge being offered, and sift through the rest.
Leaving aside the ultra-high end of the market - if I was in the market for a vintage Ferrari I would talk to Mike Sheehan and I would want to talk to David Gooding if I wanted a Duesenberg - I think BAT is the best option for Canadian collectors, but it could be improved.
The problem we Canadians have is that every time a car crosses the border it costs 20% of its value. This disappears into duty, brokerage fees, provincial sales tax, GST and transport.
Let's say an American wants to buy a $100k US titled car on BAT. They would pay a $5,000 buyers fee and then pay for shipping - which could be anything between $500 and $2,500. The cost of the transaction might be $7,500 or likely substantially less, not including state or city sales tax. When it comes time to sell, the owner puts it back on BAT for the $100 listing fee. Leaving aside changes in the market or the car, they get their $100k back. The cost of owning the car would be $5,100 to $7,600 plus sales tax in this admittedly simplistic example. Reasonable.
The Canadian doesn't fare as well. The cost of the car is again $USD 100,000. With todays exchange rate, that is about CAD $127,200. If you don't have a USD account, banks will charge up to 3% for the currency conversion! Add 6.1% Duty and 5% GST on top of that and you get to $141,750. Going through a 3rd party FOREX company can get the exchange fee down to .5% or another $700. Add the BAT buyers fee (CAD $6,400), transport ($3,500) brokerage ($500) and inspection/licensing fees and you get to about $153,000. At todays exchange rate, you can add 50%-60% of the car's US BAT auction price to start driving it in Alberta. Add another 12%-20% of the purchase price if you live in BC. Ouch!
Now you go to sell the car. Once a car has a foreign identity it has to be re-imported. By far, the US has the largest pool of buyers. Most of them don't want the hassle and expense of importing a car. They will only go through the trouble if the Canadian car is very unique or cheap. Canadians can expect to have to offer a 20% discount when selling to an American. Also, BAT will insist on a reserve price that reflects this.
The 'Canadian discount' is more pronounced on lower value and more common machinery. If you have a Pegaso, it won't matter too much as they only made a few hundred and they are all unique and almost never come up for sale. Porsche made tens of thousands of 911 Turbos, half of which went to the US, and there are usually good examples for sale in every state. There has to be a pretty good reason for a guy in California to buy a 911 in Calgary, when there are 500 for sale within 100 miles of where he lives.
So, you have paid $CAD 153,000 for your sports car, and now list it back on BAT to sell it. BAT will offer you a $USD 80k reserve to make sure it sells, and this will net you just under $CAD102,000. BAT is pretty good at predicting what your car will sell for. At least the listing fee is cheap at $130!
You will have spent $153k and received $102k. The car cost you $51,000, and that's without even driving it. This is for an Alberta owner - the person in BC would have spent another $10k. That said, at least you will have sold your car. The alternative is letting it sit on Autotrader, which produces inquiries mostly from scam artists.
Things even get worse if you buy at a live auction where you have to pay a 8%-10% sellers fee and a 10%-12% buyers fee. BAT has a 5%, buyers fee, capped at $USD5,000, and a nominal $100 selling fee.
I don't think giving up 20%+ of the car's value for each transaction would be in anybody's definition of a perfect market. Clearly things would improve immeasurably if Canadians bought and sold cars amongst themselves, rather than shipping them across the border. I think that there are enough cars and buyers to do this, they just all have to find each other.
BAT now has over 600 listings at any one time, usually adding about 80 cars per day. You have to be pretty dedicated to go through every day's worth of entries. There are very limited search options. You can break out the no reserve cars. You can list in order of auction closing date, or proximity to a postal/ZIP code. You can sort by the type of car. The one thing you can't do is break out the Canadian cars. The only work-around would be to type in postal codes for the major Canadian cities which would be painful, and it would still include a large number of US cars close to the border.
BAT could clearly use a more sophisticated search function.
A very simple idea would be to push out a daily email of Canadian cars to those who were interested...
I'll give a nod to Shiftgate, which is starting to gain some traffic. They clearly indicate Canadian cars, which is a big help. Perhaps we will see a 'BAT Canada' in the future. I would have to believe that it is on their radar. If not, it leaves a void for an efficient marketplace where Canadians can buy and sell collector cars.
Come to think of it, maybe I should break out all the Canadian BAT cars and post them every week? I'm not looking for more things to do, but it might not be a bad exercise... Stay tuned...
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