Questions answered and trends analysed

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

Reserves At Auction

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 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 insurance quotes for customers born in the Gen X demographic is quickly catching up with that for Boomers. So should Boomers be worried? Actually, not at all.

First and foremost, these are new Hagerty clients, not existing ones. Boomers still rule the roost when it comes to collector car ownership. As you might expect, 20-somethings with growing families and workplace obligations do not always have the time or money to enjoy old cars, even if they are inclined toward ownership.

To be sure, those under 30 do own collector cars, and do represent a significant population of collectors. However, older enthusiasts tend to have more, and more expensive, vehicles –including motorcycles and, in North America, the ever-present pick-up trucks of all ages.

Gen X buyers – to the surprise of absolutely no one who has been paying attention – are purchasing cars from their early years, the 1980s, 1990s and early 2000s. The Boomers ‘bonded’ with, and usually bought, cars of the 1950s, 1960s and 1970s. Boomers’ cars will, eventually, become rather less desirable in the marketplace, with exceptions for models that appeal across the generations, that are historically important or that are eligible for events such as rallies, historic drives and second uses such as wedding hire.

It is precisely the same thing that is happening to cars from the generation before the Boomers. Worthless, no – but worth less, yes.

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