- Written by webmin
After our story last week about Barrett-Jackson introducing a reserve at their Palm Beach auction, we had a lively and – thank you – largely constructive debate on the merits of the reserve and no-reserve formats. Not surprisingly, Barrett-Jackson has been having a long internal discussion on this, too, and we talked with Craig Jackson on Friday to get his thoughts. You can call Craig many things, and you’d be hard pressed to come up with one he hasn’t heard before, but never say he isn’t a car guy at heart. Craig’s been buying and selling his personal cars for a long time now, so he’s been on both sides of the fence.
Their decision to introduce a reserve comes from two factors: One, serving consignors of valuable cars who want some protection; and two, attracting a new class of of cars.
While Barrett-Jackson has offered reserves historically, it was many years ago and the idea didn’t really come back until this winter: “I spent a lot of time in Palm Beach talking with customers, and I spent a lot of time in Scottsdale talking with customers, and that’s what led to us doing this,” said Craig. “If you don’t listen to your customers, you’re doomed.”
He said that specifically there were Scottsdale regulars who asked about the possibility of attracting more high-end lots to the sale: “There were certain cars they wanted and they love Barrett-Jackson, they didn’t want to go to a ‘boring catalog auction’ – and that’s a quote – but I didn’t have the inventory they wanted,” he said.
Their first issue was figuring out eligibility for reserve: “We’re putting the price level at different amounts at different auctions, because we get different amounts of cars at different price levels at different venues,” Craig said. At Palm Beach, the floor for a reserve was $50,000; Orange County will be $200,000, Las Vegas $250,000 and Scottsdale 2012 $500,000.
The problem you run into is if you have numerous cars of the same type, and some are at reserve and some are at no reserve. What we noticed in Palm Beach was that the no-reserve cars did better than the reserve cars. (They also saw reserves pulled from cars entered with them, as bidding activity was clearly hotter on the no reserve cars. – ed.) And this is something I’ve watched time and time again, especially in catalog auctions where they put the bracket of the prices – well, everybody knows the low bracket is the reserve and really, once the car hits the reserve, does the bidding go much higher? Because everybody knows that’s where they can buy the car at.
I’ve been on both sides of this discussion internally here, but when you watch it play out in the auction arena, the excitement is when the cars are no reserve, that’s when the bidding activity is fierce. On the reserve cars, it’s a lot more sparse. I think that once you get into the higher level cars, then you have got guys that are gunning for a specific car, and it’s not going to be as much an impulse purchase. That doesn’t mean that it’s set in stone; in Scottsdale it’s up to $500,000 but we may take a car at a reserve a little under that if it’s the only one there is, or the only one for sale in the marketplace and we think it’s achievable.
In Scottsdale, if we got Amos Minter selling his T-Birds at no reserve and they’re $100,000 cars; and a guy wants to put in a different T-Bird with a $100,000 reserve, that just isn’t going to work. So you’ve got to raise the bar higher and meet people’s expectations when you’re selling the car, and also do the best job you can for them.
Where we don’t think it’s fair is if you start picking and choosing, where you have 10 of the same cars, but these two are going to have reserves and these eight don’t. It confuses people, and a little bit of confusion did happen in Palm Beach… we’re trying to learn from it, listen to our customers, and adapt.
What we did not do in Palm Beach is run it like a lot of other guys, where you’re just running the car – that just creates a lot of bad will. What we were trying to do there was keep the car on the money; and once we passed the reserve we did not announce it, we just kept the bidding going. Otherwise, a lot of guys will sandbag, they’ll wait until you hear the car is loose and selling and then they’ll jump in. If you don’t give them that opportunity, they had to jump in earlier because they never know where it’s going to end.
The other thing that I want people to know is, whether its reserve or no reserve, our process for consigning the cars has always been the same. And we have a pretty good idea going in what the cars will bring, and what they’re worth. Now, it takes multiple bidders to get there, but at Palm Beach we had north of 1,000 bidders and in Scottsdale in a year we’ll have 3,500-4,000 registered bidders. You have enough buying power. On our computer screens that we run the auction from, and all through the consignment process, you’ll have what the consignor’s … dream price is; and then you’ll have what our value is. We are plus or minus within two percent of every auction on what we think the cars are worth – a pretty good average.
Now, if we would take the cars at the consignor’s dream price… if it’s reserve, it’s probably going to be a no-sale waiting to happen; and if it’s on a no-reserve, you’re going to have hard feelings. That’s why we have those conversations up front, and I think it’s a misconception that we’ll take any car at no reserve. That is not true, and in fact, at Palm Beach we turned down some no-reserve cars… We may alter this all again as time goes on, but right now this is where we feel comfortable.
As a result, there are already consignments for Scottsdale for next year, including “several” Gullwing Mercedes and a collection of “high-end classics and vintage race cars, very rare cars,” which will be announced soon. “For Orange County, we also have a multiple-platinum-winning Ferrari Daytona. We’re working on some other cars for Vegas – I want people to know they can go ahead and submit whatever you have. If you have a very rare car, talk to us and we can go through the process.”
“I still believe in no reserve, but as a car guy myself? If I was going to sell a 427 Cobra, would I want a reserve? Maybe… But if I’m going to sell any one of my regular cars, that I know there’s a big demand for, I know the car will bring more money no reserve. I’ve done it numerous times myself.”
How about his Bugatti? “I might, I’ve had five or six guys try to buy it from me. Would I sell a one-off Type 57C Bugatti no reserve? I’d have to know ahead of time that I had four or five guys who want the car. And that’s what we talk to people about when they’re consigning. I have guys who know what they want to buy, we just have to get the cars. So those guys out there with four-cams? Give me a call… We have some great cars.”
“I know I have the buyers. The consignors need to know that we will work with them on fair reserves for those cars.”