With on-line auctions working so well do classic car dealers have a big future?
by Mike Gulett –
New technologies and business models tend to create disruptions to existing markets as we have seen with the internet and retail selling. Amazon’s business model of selling on-line has dramatically changed the retail business.
It seems likely this could also happen in the classic and collector car dealer world. Not because of Amazon but the on-line auction business pioneered by Bring a Trailer seems likely to disrupt the classic car dealer business model.
Dealers offer sellers a quick and easy sale by buying the car (or handling a consignment sale) but on-line auctions can offer sellers a higher net price and an easy experience too. Dealers have their network of sellers and buyers and their job is to make the connection between the two. But with the easy access of on-line auctions all those same sellers and buyers have just as easy access to the on-line auctions. Dealers do have expertise that they share with buyers and sellers but buyers and sellers can hire expertise when needed. Some dealers will also execute a search for a client for a specific car but this is likely a small part of their business.
There are a few dealers who use BaT to sell some of their cars and it got me wondering, “Why are two middle men needed?” The original seller could have signed up their car for an on-line auction almost as easily as selling to or consigning with a dealer. And the net price to the seller will be higher with the auction. If a dealer does not have their own network of buyers then what added value do they bring? I know some dealers buy cars at in-person auctions and resale them through their dealership. Do dealers also buy from on-line auctions? We do not know who the buyers are unless they use their real name.
With the success of BaT we have seen many new auction companies start up including: Hemmings, Autohunter, Cars & Bids, PCARMARKET, RM Sotheby’s Open Roads and The Market by Bonhams. I expect we will see even more new on-line auctions starting up.
Why haven’t any classic car dealers entered the on-line auction business? They all have their own web sites with the cars listed for sale – so why not transition to an on-line auction and eliminate one middle man?
Traditional dealers offer a personal service that is not available from on-line auctions and maybe that is the big difference that dealers must exploit.
I know I have provided more questions that answers but we will not know the answers until the future reveals itself.
Let us know what you think in the Comments.
Ferrari of Los Gatos is no longer in business (nothing to do with on-line auctions). This space is now used by an exercise & fitness business.
Mike: Just because it is easy to put a car online, and it cuts out a “middleman,” doesn’t mean it’s a superior way of selling — or buying — a classic car. Yes, you can hire someone to look the car over for you, But that’s still a 3rd party. Being able to see a car in person, talk to someone with the knowledge about the car and its history, and benefit from the dealer’s expertise in handling the transaction are advantages that a dealer provides. Further, they are usually in a better position to help a buyer find that special vehicle because of their networking capabilities. We’re talkiing about some fairly large transactions here, not boots or sweaters found on Amazon. Yes, Amazon has a good return policy, but in my mind why deal with the hassle of a return? Why not buy exactly what you when you look at it in person? Yes, very old school…
Online auctions have their place. So does ebay. But to say that classic car dealers are no longer necessary is, I think, a mistake. If I were going to dump a large amount of cash on a rare classic, I would rather trust my relationship with someone like Bruce Trenery than with a hired gun stranger.
For what it’s worth!
I wrote “on-line auction business pioneered by Bring a Trailer seems likely to disrupt the classic car dealer business model”.
I did not say dealers would be eliminated but I am suggesting their business will change. I also think some of the weaker dealers may not survive this business model transition and the stronger ones will likely see their business change significantly.
I have often noticed other dealers with car lots at the large auctions, Mecum and BJ, buying and selling cars, but those fees are higher than BaT, so BaT would be a more profitable marketplace for them.
“Why haven’t any classic car dealers entered the on-line auction business? They all have their own web sites with the cars listed for sale – so why not transition to an on-line auction and eliminate one middle man”?
My guess is that the dealers would rather wait for the right buyer willing to pay the higher price that they hope to get rather than offering their cars on an auction format, which has a limited time frame, and auctions do not offer trade-ins.
Yes, trade ins are a big advantage for dealers that is not offered by auctions.
The atmosphere in a high end classic car dealership is quite different then in any online auction environment. Brokers have been around since the beginning of time for a reason.
Buggy whip manufacturers were around for a long time too.
You cannot feel or touch or even test drive a car on BAT and plus what has already been mentioned trade your other classic car in on . Also many finance providers do offer loans for classic cars through actual real life dealerships . Strong , well established classic car dealers will still be around in the future , even selling some classics like the Royal’s E type Jag that have been converted to electric power ( ugh ) .
Thanks for reminding us about Ferrari of Los Gatos. What an incredible dealership that was. Not only could you find new and classic Ferraris, the dealership had muscle cars, hot rods, and very cool classic cars as well, all in one place. This summer your readers will be able to learn the true story of what happened to Ferrari of Los Gatos. The Dealer, How One California Dealership Fueled the Rise of Ferrari Cars in America will be published by Rowman and Littlefield. It’s on AMAZON as a pre-order right now if anyone is interested. There was no internet, no computers, no cell phones, not even a fax machine when the dealership became number one in the 1980’s. The technology of the day was a push button land-line telephone.Yes, those days may be gone for some, but The Dealer tells how it was done in the old days, and what happened to one of the most iconic dealerships ever.
Thanks for continuing to post so many interesting car stories.
I really think it’s all about timing and the market. Everyone wants to get the most that they can for the car being sold. Obviously with the dealers you can set your own price and also in an auction environment where you can set a reserve. As we all know many auctions never meet the reserve price so the car moves along. But I think in general the car sold as auction arsold chin Arsenal faster and get more money for them.
Case in point,
There are 3 Apollo G t’s being sold right now. 2 at dealers and one at auction. The one at cropley was at auction back in 2010 and didn’t meet the reserve.
https://www.copleywest.com/showroom/1964-apollo-5000gt-for-sale/
https://www.fantasyjunction.com/inventory/1964-apollo-5000gt-1/overview
Those 2 will sit for sometime, Whereas the RM auction pollo will definitely sell, And I think it’ll be above 200 K.
https://rmsothebys.com/en/auctions/az22/arizona/lots/r0031-1963-apollo-3500-gt/1189432
I think it’s the human nature and all of us whether selling or buying that we get the most value for the money.
I think that Telsa should take there chassis mottor smodel and put 65 66 bodies and sell as ELectro mUSTANGS iDBUY WON dANNY MATHERS.