“Happy New Year to all, I attempted to conduct an analysis of the auction market after the arrival of the great international companies into the online world in 2020. However, despite being a very interesting exercise, it proved to be far too lengthy and complex. So I’ll try to summarise it briefly on a simple balance sheet by using an example: at a market there are two stalls, one belongs to an online auction house, we’ll use Bring a Trailer in this instance and, alongside it, a large international auction house, let’s say Bonhams or RM. At the BaT stall, we find cars placed there by owners who want to sell, they are well priced, often without reserves, and when they are sold, the owner pays a very reasonable fee of somewhere between one and four percent. Potential customers observe the cars on offer exclusively online, they choose the ones they want and, if it’s worth it, they buy it. For buyers, this can turn out to be a true bargain, as almost always the car has not been seen previously. Somewhat like those weddings of the past, agreed upon by relatives! But more often than not the bet turns out to be a winning one.
At the stall next to it, the one owned by the great auction house, there is far more excitement: for starters, those who turn to them to sell their car, which is very often an important one, perhaps at an event such as Pebble Beach or Le Mans Classic, know that the stall will attract the right audience: they have impressive lists of customers who have already bought from them, almost a guarantee if you will. A guarantee that also applies if the auction is held online, however. Then they have specialists who travel around the world in search of important lots or entire collections to offer. Their catalogues are highly detailed and the car can usually be viewed in person. Naturally, the commissions for those selling are somewhat higher, and can reach up to 10%. But it should be remembered that an auction, unlike a sale between private individuals, is subject to the famous “law of large numbers”: it is not enough to have an enthusiast who wants the car and one who sells it. At this stall, the more people interested in the car, the more the price goes up. This is worth remembering: is it better to pay a small commission and sell more or less at the correct price or pay more and hope the car becomes the object of a bidding war which pushes the price above every estimate? That’s not for me to say.
I can however promise you that we will be looking at the 2021 Auctions from this perspective as well. Whether you are selling, buying or simply curious, it’s nice to see what happens in reality. And useful. Cliff’s word.”
Figures and comments:
Some 2020 opportunities to keep in mind: