Levels to the Game
Hi Friends!
A few weeks ago, somebody reached out and mentioned that they had recently attended a reasonably well-known, but smaller auction company’s semi-annual sale in the Midwest and expressed some concerns about what they saw. They were also curious about the advantages and disadvantages of these sales and why somebody would choose to buy or sell in an environment such as this versus one of the larger national or international sales.
First of all, I think it depends on what your objectives are and what you are trying to accomplish. If you’re looking to buy a number three car and take it to number two condition (if you’re not familiar with that terminology, here’s the breakdown from Hagerty) that’s probably a pretty good environment for you. If you’re looking for a 100-point restored, potential Pebble Beach candidate, you’re probably not going to find one there.
Likewise, it depends on what niche you are shopping in. Although, as we’ve seen recently (with RM in Hershey for example), the major auction houses do cater to markets pretty much across the board. Cars that are sort of on the tail end or just slightly past their major market moments or cars in that “almost classics” phase, tend to show up at smaller sales and in larger numbers. If that’s your forte, as a buyer, smaller sales are probably a pretty good thing to pay attention to.
Same goes if you’re looking for something super weird or unique. I religiously attend the annual Motorsports Auction Group sale (MAG Auctions) during Arizona car week largely for this reason. Year in and year out, that sale has the most fun and most entertaining inventory of anyone and I can’t get enough of it. It’s probably the only sale that I attend multiple times throughout the week. Whether it be Gucci Cadillacs, 1970’s custom vans with fishbowl window ports, shag carpeting and airbrush dragons on the side or incredible collections of vintage Schwinn bicycles, for me, over the last couple of years MAG has had my favorite things of the week. Although again, the larger auction houses do cater to this a little bit here and there, it’s never the same as it is at smaller regional sales.
Then there’s the element of tradition. The fact is, the larger auction houses for the most part are very dialed in, tested and refined on every level. From the intake of the cars that they consign, to the on-stage presentation, to check out procedures, etc. Most major auction houses are well-oiled machines. As great as that may be, that does remove some of the personable elements of the auction experience. The elements of the hug and the handshake at smaller sales seem to exist in a wider and more significant capacity.
Additionally, the art form that is the American Style Auctioneer is generally on display at these sales in ways that the bigger guys can’t touch. Again, MAG Auctions staffs their sale with world champion, after world champion, after world champion American Auctioneer and these guys are really, really good. Same goes for Ringmen. Even when you see the same guys working at larger sales, they’re not really the larger than life characters that they become in a smaller, regional type environment. Make no mistake, these guys are the real stars of the show and the real pros of the game and watching them interact not only with each other, but with the bidders and the auctioneer is truly special.
From the perspective of somebody selling at one of these sales, it again depends on what you’re trying to move, the condition that it’s in, the amount of work that you’re willing to put into presenting the car correctly and to a degree where you are located personally, how shipping costs will play into your potential ability to make a profit and what time of year and how urgently you need to sell. Most of the time, the cars that you’re going to see at these sales are below the standard of what the major auction houses are willing to accept. A feature car at a small regional sale would likely be towards the bottom of the docket anywhere else, so you have to sort of be realistic with your expectations of what you have and compare that versus what you may get at a higher volume sale (that may or may not be restricted as far as block time goes because of things like television contracts) and if it’s worth balancing the personal attention versus the overall reach of a larger company.
There are real places where smaller auction houses come up very short and it unquestionably hinders their ability to produce significant results for consigners.
Geographic location of the events themselves and proximity to other significant events can both help and hurt smaller houses. For example, MAG clearly has difficulty pulling people away from Barrett-Jackson’s Scottsdale event and it’s a challenge for them to compete for consignments when the guy up the street has television, basically all nearby municipalities on their side and needs 2,000 cars to make it all work. On the other hand, MAG is part of Arizona Car Week and not a standalone event in the middle of a country in a small town, so there’s almost an inherent audience built in by default that may be bigger than what they can get otherwise on their own.
Before we go further, let’s break down what an auction house actually is. Yes, an auction house is a tried, tested and true third party provided environment for the most qualified buyers and most qualified sellers available to meet and do business with the least amount of risk possible. However, at the end of the day an auction house is ultimately a marketing platform. They put cars out to attract other cars and buyers, then they serve those cars up in the most appealing way possible. This leads to the other major difference between smaller and larger auction companies and it’s one of the real challenges that smaller houses oftentimes deal with and to a large degree mismanage.
Larger auction houses have extremely dialed in marketing approaches. They’re always visually current, up to date strategically and as a result have large built-in platforms of people that not only attract top consignments, but also offer them in a way that’s smaller houses don’t and can’t. A lot of this definitely breaks down to money. We know as well as anyone that marketing isn’t cheap, but this is something that clearly gets overlooked by a lot of the smaller, regional houses.
This is a difficult sell too. We have worked with a number of small houses like this and trying to get things like logos updated, email marketing functional and even the order of cars in ads (this really, really, really matters by the way) proper and making sense is a significant challenge. This is ultimately the biggest problem and by default the biggest risk for sellers when trying to work with smaller, regional houses. A lot of these guys simply do not want to take the time or make the effort to try and stay current, relevant and reaching people and this definitely hinders results. If you’re marketing platform and you’re not marketing properly, chances are, you’re going to have a bad time. We’re starting to see this more and more and the landscape is unfortunately starting to change as a result.
All in all, I think these sales are fun, I think they’re important, I think there’s tradition elements to them and I think they’re worth supporting. As a buyer, these are outstanding. Unique cars, great deals, fun environment with people that genuinely love what they do (and as far as the event is concerned, do it very well). From the perspective of a seller, it’s much more of an enter at your own risk scenario. Of course, if you do the work, prepare your cars correctly and have a strategy going in, you should be able to sell anywhere and for a solid and market correct price.
As with most things in this business, the best results come to the people that know the most and put in the most effort. If you do the work, line up with the correct house for your car and who’s going to properly assist you in doing the work, have a plan going in and then stick to it, your chances are always going to be pretty good.
That’s it for this week…
Darin Roberge