Why Auctions?
Hi Friends!
First thing this week: I wanted to say a big thank you to everybody who’s contributing to this newsletter in one way or another. This means if you’re voting in our surveys, leaving us comments, sending me emails or DMs on social media or even just opening and reading every week, we very much appreciate it. We definitely pay a lot of attention and we take these interactions really seriously. This week, we did some extra number crunching both internally and did some research out in the world and found that this newsletter is being opened and read a little bit over three times at the rate of other US-based newsletters. These numbers are pretty big across the board and we’re very grateful to have you along for the discussion.
One of the things that seems to be getting brought up a lot lately is our focus on auctions. Yes, we definitely talk about auctions a lot here, but there’s a method to that madness, so I thought I would use this weeks’ time to clarify and explain the three main reasons why.
- RESULTS IN PLAIN SIGHT
The fact is, auctions have A LOT of oversight. Whether it be data focused organizations like Hagerty, Hammerprice or Hi-Bid, media outlets like Sports Car Market magazine or Daily Vroom (for online auctions in particular – highly recommended as this guy goes into crazy detail on a daily basis), people in the audience or even auction house’s own YouTube feeds and websites, there’s always several somebodies pretty openly verifying what’s happening at automotive and motorcycle based auctions of every kind.
Of course, nearly every dealer publishes a list of past sales on their website and I’m not by any means saying that any dealers we work with or otherwise are embellishing their results. However, it’s not a situation where you can go multiple places to check what things sell for as easily and get that information from somebody or someplace that has no skin in the game directly. Auction reporting is pretty much always more impartial.
EVERYBODY USES THEM
I think there’s a bit of a misconception out in the world that the average auction buyer is somebody who saved their pennies for decades while clutching their remote control and watching their favorite auction on television. Auction company marketing would certainly like you to believe this in many circumstances as well. This said, the reality of the situation is that a huge percentage of auction transactions (both on the seller side and on the buyer side) are conducted by dealers. This is demonstrated even more in plain sight on Bring-a-Trailer. Essentially, every single top seller on BAT is a dealer. This includes 911R, 1600Veloce, DriverSource, Silver Arrow Cars, Mohr Imports, basically all of them. In order to do the volume required to be a top seller on a platform like this you would have to legally be a dealer anyway.
Now, I can hear you asking “wouldn’t that hurt the credibility of a dealer if they had to rely on an auction to sell their inventory?”
The answer to this is definitely no.
To correctly answer this, I first think we need to take a look at what an auction actually is:
At the end of the day, an auction is a crossroads for the most qualified buyers to purchase from the most qualified sellers. Yes, most states require transportation focused auction houses of every kind to be licensed dealers, but what they’re ultimately doing is providing a marketplace where services are guaranteed on both sides and both buyer and seller are most likely to achieve their goals with the least amount of friction possible. If you’re a dealer with inventory or if you’re a buyer looking for the best car available, auction companies create that meeting place and then provide a safe place for both parties to do business in a quick, tested and formulated manner.
Additionally, being successful in the auction environment (no matter the platform) is a bona fide skill that takes full-time work to get good at. These dealers have become specialists and even Bring-a-Trailer has formally begun to recognize this via their “Local Partner” program. There’s ins and outs and little things involved that create slivers of profit that can make or break somebody when they do this. High level collectors, dealers and even individuals who become serious students of this space get good at this stuff and that’s who auction companies like to partner with when offering vehicles, so huge part of their focus definitely continues to involve them as well.
AUCTIONS ARE THE TIP OF THE PYRAMID
Nobody in this space has larger marketing budgets and more aggressive media teams than auction houses. Because of this, markets get moved. This means if something sells exceptionally well at an auction house someplace (let’s take Restomod Ford Broncos at Barrett-Jackson in Scottsdale in January for example), people see this on TV, read about it someplace or hear it through word of mouth, then the auction company goes out in the world and touts this through their results marketing and via their PR teams, then it causes shops, builders, etc to start reaching out to parts companies and purchasing the necessary things required to try to replicate this success later on. This trickles down to their teams who then build those vehicles, which then trickles down to companies like ours (Motorwerks) who advise people what they should and shouldn’t do, then we create additional marketing that appears via their social media accounts or in magazines which advertises their skill set, their ability and what and when they are bringing to market when it’s finally complete. This turns back around again when the car or cars that they are building show up on the block someplace the following year and the whole cycle repeats itself.
This doesn’t happen with Craigslist. The results that auction houses produce fuel the entire marketplace and everything ultimately starts with them.
Of course, there’s other factors that can contribute to the validity of other places and other things being worth paying attention to…. and they definitely still are. This said, for the majority of people involved in this hobby and in this industry, auction house activity provides the required amount of data necessary to make decisions that keep food on people’s tables and roofs over people’s heads and that’s generally why we focus on auctions first.
As always, I would love get your feedback. If you think there’s something that we’re missing (or something we’re doing well), we’re always open to suggestion there too. One of the things that we like about this newsletter is it’s really proving to be a two-way street and that’s something we certainly intend to maintain. Drop a line here or find me on social media anytime you want to chat.
That’s it for this week…
Darin Roberge