Acquire
Questions answered and trends analysed
M A R K E T A N A LY S I S
The changing use of auction reserve prices, and the coming end of the Baby Boomers’ market dominance
Words Dave Kinney
THE LARGEST NUMBER OF questions that I get from friends and acquaintances are about car auctions. I’ve never been in the business, but I have both bought and sold automobiles – and bought car-related things such as signs, photos and books – at auction. I have written about collector car auctions, and attended hundreds of them – starting with my first, way back in the 1970s. As with a festival, county fair or magic show, auctions – including collector car sales – don’t like to give away all their secrets. As an event, auctions are fun and generally make for inexpensive entertainment. They can also be confusing for those who are new to the scene, or those who are buying or selling for the first time. The main auction question I get asked is about setting a reserve price or, conversely, why would one wish to sell their car at no reserve. Just in case you don’t know, setting a reserve on your car
means that you have told the auction company the minimum amount that will buy your item for sale. In a no-reserve sale, the item will sell for the highest bid, no matter the amount. Selling at no reserve signals to potential buyers that, barring unforeseen incidents, the last bidder who has their hand (or paddle, or cursor) active will go home with the car. In essence, selling at no reserve is a gutsier option, and signals that you have belief that your car will bring a price that will satisfy your needs. If you are selling with a reserve, there
‘Auctions are fun and generally make for inexpensive entertainment. They can also be confusing’
R E S E R V E S AT A U C T I O N The share of sub-$250k vehicles auctioned with a reserve has trended up since 2011
60%
40%
20%
2006
186
Magneto
2008
2010
2012
2014
2016
2018
2020
2022
is always a possibility that the car will return home with you. A recent article by John Wiley, manager of valuation analytics at collector car insurer Hagerty, took a deep dive into the numbers. John is looking to see if a decrease in cars offered with reserves valued at more than $250,000 signals an impending weakness in the market. “In practice, reserve prices are more likely for some vehicles and less likely for others. Cars worth less than, say, $100,000 often don’t warrant a reserve because there’s an ample supply of vehicles in that price range. This means the auction firm has more leverage. At that number, there are also usually enough bidders participating, so a fair price is more likely. “At higher values, fewer vehicles mean the seller has more leverage, but fewer bidders make a fair price less certain. As supply and demand change over time, reserves may become more or less common (more reserves could improve diminished supply; fewer reserves might help with low demand).” Will the decrease in reserves at the $250,000 mark signal the possibility of slightly lower values at auctions in the future? The conventional wisdom of late is that 2023 will be a down year in the auction marketplace, for a number of reasons, including inflation. At time of writing, the numbers are yet to be written for 2022, but perhaps this will be a correlation to watch. On another point, is it time for Baby Boomers to move over? In the collector car world, we Boomers did a lot of stuff. We didn’t invent
the hobby, but we certainly did make changes. The hobby we inherited was smaller, with littleto-no interconnection with newer cars. We went to autojumbles and swap meets. And we collected. Boy, did we collect. Everything... Brochures, paint chips, old tin cans, movies, signs, road maps, advertising; pretty much everything you could find in a vintage petrol station. And for some, that wasn’t enough, so they collected or recreated actual petrol stations at their home. American diners from the 1950s? No problem. Many of us have been to a collection so big, and so grand, that it is an afternoon destination in and of itself. But the demographics, like the times, are a changin’. As this graph from Hagerty (opposite) illustrates, the intersection between new