People are bidding online for million-dollar cars – without seeing them in person
Increasingly, wealthy bidders are going online to buy collector cars worth six-figures or more at auctions without seeing them in person first.
At one online auction last month, a 2003 Ferrari Enzo sold for $2.6 million. It was the highest price ever paid for a car in an Internet-only auction, according to RM Sotheby’s. At that same auction, another Ferrari, a 1985 288 GTO, sold for $2.3 million. And, at another recent RM Sotheby’s online event, a limited edition track-only 2020 Porsche with Martini racing team stripes sold for $1.3 million.
“I have seen a marked growth in the number of people who will actually buy a car, will spend tens of thousands, or maybe even up to a hundred thousand dollars or more, in some cases, for a car they’ve not seen,” said Donald Osborne, a collector car appraiser and CEO of the Audrain Automobile Museum in Newport, Rhode Island.
Online car auctions are nothing new, of course. eBay Motors has been a venue for bidding on cars since 2000. BringaTrailer.com, which started as a blog that posted stories about cars for sale on eBay and other sites, began its own auction listing service in 2014. Now, BringaTrailer’s site is frequently cited by those in the industry for its growing influence in the world of collector cars.
And BringaTrailer.com recently added a “Premium Listings” service, specifically for high-value offerings. Last year, a 1956 Mercedes SL Gullwing sold for $1.2 million on the platform, which typically sees sales closer to six-figures.
“A year ago, or a year-and-a-half ago, people would have said, ‘Oh, those cars don’t belong online at all,” said BringaTrailer founder Randy Nonnenberg. “Or those certainly don’t belong on BringaTrailer.”
The virtual way of ‘being there’
But for established auction houses — like RM Sotheby’s, Gooding & Co. and Barrett-Jackson — that are just ramping up their online auctions, the virtual experience is very different from their usual live events.
Barrett-Jackson is famous for the carnival-like feel of its live auctions, events that attract huge crowds of spectators and are often broadcast live on cable television. RM Sotheby’s and Gooding & Co., on the other hand, hold auctions that feel almost like cocktail parties where the cars serve as the centerpiece of conversation. Before the auction begins, attendees buy high-end finger food and drinks and nibble in between perusing automobiles often worth hundreds of thousands or even millions of dollars.
Online, all of that fanfare and personal interaction are stripped away. And when bidders can’t see and touch the car themselves, information becomes the crucial element.
BringaTrailer has set the standard in the industry with sellers posting dozens of photographs of their cars so potential buyers can see every paint bubble and worn bit of leather up close.
“The traditional auction houses cannot put up six pictures of a car and sell it online because if somebody goes to BringaTrailer there are 123 pictures, plus two videos,” said Osborne.
With online auctions, traditional auction companies are providing much more photography and documentation than usual, he said. Still, there’s a lot about a car that no amount of photography will reveal. Appraising a car involves touching, listening, driving and even smelling, not just looking.
“I myself have sold and bought many cars online over the decades,” said Osborne. “And in every one of those cases, either I have looked at the car, I sent someone to look at the car, or I’ve had an extensive conversation with the seller of the car. And people have just become more accustomed to not doing that. I think, ultimately, it’s slightly insane.”
That’s one reason that Gooding said his company will actually take possession of the cars that it is auctioning and store them in a warehouse in Los Angeles so people who want to can inspect them. RM Auctions and Barrett-Jackson also said they take physical possession of many of the cars they auction, allowing their experts to conduct in-person appraisals. If not, their experts travel to see the cars.
So far, the results for these high-end online auctions have been generally good, according to Hagerty, a company that tracks collector car auctions. At both RM Sotheby’s and Barrett-Jackson’s first auctions, a higher than usual number of cars did not sell because bidding did not reach the “reserve price,” an undisclosed sum below which the owner will not sell.
But after RM Sotheby’s most recent online auction, the company boasted that 91% of the cars offered were sold.
Barrett-Jackson is typically known for offering its cars with no reserve, but it had one on most cars this time to give sellers “a bit of a comfort level,” said CEO Craig Jackson.
The prices have been good for the cars that have sold in the recent online auctions, according to Hagerty. At RM Sotheby’s Driving into Summer sale at which two Ferraris topped $2 million, the cars seemed to sell, overall, for a little more than would be expected based on their condition, according to Hagerty. RM Sotheby’s also said it’s seeing about as many bidders register for its online auctions as it does for its similar live events.
Gooding will be conducting its first online auction in early August.
Here to stay
Each of the auction houses said they had been planning to start online auctions, but acknowledged that the lockdowns accelerated the move.
“We were writing a whole new website, but it wasn’t ready,” said Jackson. of Barrett-Jackson. “The timing wasn’t quite right for what happened but you never plan out at pandemic ahead of time.”
These companies have long offered remote bidding options, including Internet bidding, at their live auctions. People could bid by phone or over the Internet and the auctioneer would accept those bids from on-site representatives, along with bids from people there in the room. As usual, the auction would end when bidding topped and the auctioneer banged the gavel.
An online-only auction works very differently. While the bidding at a live auction usually lasts for a few minutes, bidding in an online auction can go on for days. There is a set date and time at which bidding closes but online auctions usually have what is called an “anti-sniping feature.” “Sniping” is the practice of placing a bid in the last seconds before an auction ends, leaving others no time to place a higher bid. In these auctions, if someone does that then the auction clock automatically resets, allowing others a couple more minutes to bid. The clock resets again each time there’s a new bid.
“It’s a slower-paced drama, but it gives every bidder the opportunity to continue to bid on something until they simply have just decided ‘no more,'” said Ian Kelleher, chief marketing officer for RM Sotheby’s.
Online sales will now become a permanent part of what these companies do, they all said. Still, there are certain types of cars, particularly older cars with stratospheric values, that buyers will only want to buy at a live event, said David Gooding, president of Gooding & Co.
“I think the online platform is excellent for cars up to a certain level of value,” he said. “I would say up to $3 million.”
Digital auctions like these will never offer the excitement of the live event, said Osborne. He compared it to watching a digital broadcast of the Metropolitan Opera.
“It still doesn’t replace the experience of being in the room with the performers,” he said.
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