After opening my Christmas gifts, I still have one more present under the tree. You see each January the Scottsdale, Arizona area hosts a bevy of classic car auctions. Seven auction houses came in and held auctions offering nearly 3,300 cars. I always say if you are looking for a car, it is bound to be here. This year we were blessed with good weather, just a few drops of rain on one day. So the car detailers kept busy.
Over a ten day period there are actually twenty days of auctions for all types of cars. From imports to roadsters, from muscle cars to exotics and even some cars that make you scratch your head. This year over 2,600 cars and trucks sold for over $250 million. That is a ton of sheet metal to see and enjoy!
The auction houses charge a commission (typically 10%) to both the buyer and seller of the car. (The prices we list always include the buyer's commission.) So if a car sells for $70,000, the buyer must pay an additional $7,000 above that price to take the car home. Plus they are charged sales tax on the purchase if they don’t have a dealer's license. The auction house also deducts $7,000 from the seller's proceeds, so the seller will only net $63,000 from the sale. In under five minutes the auction house just made $14,000 from just that one car being sold. In addition to the cars and trucks, most sites offer automobilia for sale at the auction to help fill up the garage.
Most auction houses allow sellers to offer their cars with or without a reserve. When a car has a reserve, it is an undisclosed minimum price that the car has to reach before it can be sold. If bidding doesn't reach at least that high, the car goes home with the seller. And of course the auction house doesn’t earn a commission with no sale. So the auctioneers strongly encourage sellers to list their car without a reserve. The auction companies often offer lower rates and give out better time slots to entice sellers to list them with "no reserve". Barrett-Jackson breaks that rule by requiring almost every seller to offer the cars without a reserve. They argue that given all their buyers, if the car can't sell here at a good price then it won’t sell elsewhere at a higher price. Plus bidders are more likely to come and bid when they know for sure that the car will be sold.
People always ask if these cars are as beautiful as they look on television and in the photos. Well the auction houses stage the cars to look just right but these typically are the top end of the cars. But a keen eye will often detect some flaws and issues with the cars offered for sale. So buyer beware.
I look at these auctions to help gauge where the market is going for the year. What these results showed was that the million dollar plus cars were hard sells and often did not meet their reserve. On the other hand, cars valued under $100,000 were vigorously bid on and were snapped up in record numbers. People were seeking out quality and originality and that showed in the bids made. I didn’t sense that buyers were as anxious to buy this year. Maybe it is the economy or maybe they realize there is always another car available somewhere. But three Ferraris sold, each for over $5 million.
So if the prices at these auctions are too high for your budget, just scan through these pages and I bet you'll find something you like just as much, at a much lower price. © 2019 Mark C. Bach