Why do traders buy from auction sites?
Discussion
While I save up the funds for a classic I’ve been perusing the various auction sites - The Market, Collecting Cars etc.
Several times now I’ve noticed cars I’ve had an eye on pop up for sale with a dealer a few weeks later, for a huge mark-up. Eg asking price of £30k for a car that sold on CC for £19k (20ish with fees). This week I’ve seen one for sale at £23,950 that sold in August on CC for just over £18k. With fees that would be about £19k.
I get that dealers need to make a profit but surely this isn’t a good business model?
Cars like these don’t come up for sale often and when they do, the same people will be looking. It’s difficult to know the true market value of a vehicle but an auction is presumably a decent reflection. As a buyer I’d hate to know I was paying well over the odds for a car I’d recently missed out on.
Several times now I’ve noticed cars I’ve had an eye on pop up for sale with a dealer a few weeks later, for a huge mark-up. Eg asking price of £30k for a car that sold on CC for £19k (20ish with fees). This week I’ve seen one for sale at £23,950 that sold in August on CC for just over £18k. With fees that would be about £19k.
I get that dealers need to make a profit but surely this isn’t a good business model?
Cars like these don’t come up for sale often and when they do, the same people will be looking. It’s difficult to know the true market value of a vehicle but an auction is presumably a decent reflection. As a buyer I’d hate to know I was paying well over the odds for a car I’d recently missed out on.
Simple answer is ‘because they can’ I guess.
If there’s someone out there to pay that inflated price then that’s good profit to be had. Even making a little bit of room for prep / admin / wiggle room.
If you were a trader and saw a car for sale at £18k that you knew you could easily move on for £23k, why WOULDNT you be looking at it?!
If there’s someone out there to pay that inflated price then that’s good profit to be had. Even making a little bit of room for prep / admin / wiggle room.
If you were a trader and saw a car for sale at £18k that you knew you could easily move on for £23k, why WOULDNT you be looking at it?!
Iwantafusca said:
Classic car dealers are ruining the hobby for many.
They bring nothing to the classic car world in the uk.
Greedy hustlers.
Don't they bring anything though? They bring nothing to the classic car world in the uk.
Greedy hustlers.
They often offer finance, car prep and percieved purchasing security which "justifies" a higher price which in turn pushes car prices up further making other similar cars more financially viable to maintain and restore which need money spending on them.
I hate the idea of them making a few quid on me buying from them but they're just making a living - not that great a living often for the hassle they probably get.
I sold one of my classics recently for £16K, the dealer did £3K of repairs on it and sold it for £22K. Most would just see the car selling for £16 then a month later up for £22K - nice £6K profit but he's actually made £3K on it for quite a bit of risk and hassle.
Also bear in mind - he offered me more than any other buyer.
I could have had the work done myself but I still couldn't offer the "benefits" a dealer could and quite honestly - wasn't worth my effort to do it.
I think for a lot of people they like the idea of owning a classic but will never lift the bonnet. For some of these people buying from a trader gives “peace of mind”.
For other people, buying and improving, DIY maintaining etc is the attraction and the idea of buying from a trader adds very little except a few thousand to the asking price.
I don’t begrudge them to be honest. Classic cars are usually hiding a few horrors and any self-respecting trader will be shouldering some considerable risk.
For other people, buying and improving, DIY maintaining etc is the attraction and the idea of buying from a trader adds very little except a few thousand to the asking price.
I don’t begrudge them to be honest. Classic cars are usually hiding a few horrors and any self-respecting trader will be shouldering some considerable risk.
blueovercream said:
While I save up the funds for a classic I’ve been perusing the various auction sites - The Market, Collecting Cars etc.
Several times now I’ve noticed cars I’ve had an eye on pop up for sale with a dealer a few weeks later, for a huge mark-up. Eg asking price of £30k for a car that sold on CC for £19k (20ish with fees). This week I’ve seen one for sale at £23,950 that sold in August on CC for just over £18k. With fees that would be about £19k.
I get that dealers need to make a profit but surely this isn’t a good business model?
Cars like these don’t come up for sale often and when they do, the same people will be looking. It’s difficult to know the true market value of a vehicle but an auction is presumably a decent reflection. As a buyer I’d hate to know I was paying well over the odds for a car I’d recently missed out on.
Seems to me it's a fantastic business model, the traders are making a profit, what's bad about that when it comes to business and making money? Several times now I’ve noticed cars I’ve had an eye on pop up for sale with a dealer a few weeks later, for a huge mark-up. Eg asking price of £30k for a car that sold on CC for £19k (20ish with fees). This week I’ve seen one for sale at £23,950 that sold in August on CC for just over £18k. With fees that would be about £19k.
I get that dealers need to make a profit but surely this isn’t a good business model?
Cars like these don’t come up for sale often and when they do, the same people will be looking. It’s difficult to know the true market value of a vehicle but an auction is presumably a decent reflection. As a buyer I’d hate to know I was paying well over the odds for a car I’d recently missed out on.
Pistom said:
Don't they bring anything though?
They often offer finance, car prep and percieved purchasing security which "justifies" a higher price which in turn pushes car prices up further making other similar cars more financially viable to maintain and restore which need money spending on them.
I hate the idea of them making a few quid on me buying from them but they're just making a living - not that great a living often for the hassle they probably get.
I sold one of my classics recently for £16K, the dealer did £3K of repairs on it and sold it for £22K. Most would just see the car selling for £16 then a month later up for £22K - nice £6K profit but he's actually made £3K on it for quite a bit of risk and hassle.
Also bear in mind - he offered me more than any other buyer.
I could have had the work done myself but I still couldn't offer the "benefits" a dealer could and quite honestly - wasn't worth my effort to do it.
Looking at Volkswagens i see classic dealers doing nothing more than sticking 5k on the price , some even use the auction photos lol. Some use their own pictures but add the “white background “ tax. They often offer finance, car prep and percieved purchasing security which "justifies" a higher price which in turn pushes car prices up further making other similar cars more financially viable to maintain and restore which need money spending on them.
I hate the idea of them making a few quid on me buying from them but they're just making a living - not that great a living often for the hassle they probably get.
I sold one of my classics recently for £16K, the dealer did £3K of repairs on it and sold it for £22K. Most would just see the car selling for £16 then a month later up for £22K - nice £6K profit but he's actually made £3K on it for quite a bit of risk and hassle.
Also bear in mind - he offered me more than any other buyer.
I could have had the work done myself but I still couldn't offer the "benefits" a dealer could and quite honestly - wasn't worth my effort to do it.
Re buying security, a lot have screeds about bearing in mind it’s a old car etc.
They are all aimed at the dreaded “a great investment “ crowd.
Slowly killing the scene imo.
Some good points above,
I would absolutely agree that buying from a dealer would be preferable, particularly reputed marque independents. I think specialist classic dealers should be supported and I generally wouldn't have a problem paying a bit extra over what I perceived to be market value for the benefits mentioned.
However, the examples I gave are in the region of 30-50% over what could be considered market value. I think this would put a lot of people off unless they could genuinely show that a lot of work had been done since the car went through the auction.
Why do I think it's a questionable business strategy? It just seems a bit counter-productive to have your purchase price freely accessible by buying stock through such popular and accessible forums. As a customer, it could either turn me away completely or be used as a negotiating tactic: "well you paid x, what are you offering me for x + 50%, and why is this car worth so much more than the market seems to say it is?"
The downside for buyers in general is that the next time someone wants to sell a similar car, you can guarantee they'll ask a higher price based on what the trader is now advertising and the "values" continue this upward spiral.
I would absolutely agree that buying from a dealer would be preferable, particularly reputed marque independents. I think specialist classic dealers should be supported and I generally wouldn't have a problem paying a bit extra over what I perceived to be market value for the benefits mentioned.
However, the examples I gave are in the region of 30-50% over what could be considered market value. I think this would put a lot of people off unless they could genuinely show that a lot of work had been done since the car went through the auction.
Why do I think it's a questionable business strategy? It just seems a bit counter-productive to have your purchase price freely accessible by buying stock through such popular and accessible forums. As a customer, it could either turn me away completely or be used as a negotiating tactic: "well you paid x, what are you offering me for x + 50%, and why is this car worth so much more than the market seems to say it is?"
The downside for buyers in general is that the next time someone wants to sell a similar car, you can guarantee they'll ask a higher price based on what the trader is now advertising and the "values" continue this upward spiral.
Edited by blueovercream on Tuesday 5th October 19:36
Exactly , upward spiral of prices means less people can afford to get into classic cars. Rising prices means cars are seen as “shudders” investments and locked away.
Less use of cars , less buying of parts , less shows etc etc
All so lying chancers can suck more money out of the hobby
Less use of cars , less buying of parts , less shows etc etc
All so lying chancers can suck more money out of the hobby
Iwantafusca said:
Exactly , upward spiral of prices means less people can afford to get into classic cars. Rising prices means cars are seen as “shudders” investments and locked away.
Less use of cars , less buying of parts , less shows etc etc
All so lying chancers can suck more money out of the hobby
.Less use of cars , less buying of parts , less shows etc etc
All so lying chancers can suck more money out of the hobby
I have no axe to grind but I do enjoy a well balanced post.
Always makes me smile when I see a post like this, how dare a trader make any profit…
They have substantial costs that many people aren’t aware of, it’s not as simple as buy for X and sell for Y and take huge profit.
They may have the car for weeks or months before it sells and every member of joe public who walks through the door wants/expects a discount on the screen price, dealer to jump for any little issue that may arise.
Finding stock, especially classics is not easy and can be very time consuming (=expensive) so buying from an auction may give them more reassurance they are getting what they pay for. And as others have said, how are they meant to find stock? There are only so many cars available.
Private sellers also have a habit of over describing cars and demanding top money.
Hidden costs of prep, warranty, premises, staff etc have to be paid for somehow - how do you suggest they do that without a profit margin?
End of the day, you don’t have to buy from a dealer, you can buy privately and take the risk for a saving, each to their own
They have substantial costs that many people aren’t aware of, it’s not as simple as buy for X and sell for Y and take huge profit.
They may have the car for weeks or months before it sells and every member of joe public who walks through the door wants/expects a discount on the screen price, dealer to jump for any little issue that may arise.
Finding stock, especially classics is not easy and can be very time consuming (=expensive) so buying from an auction may give them more reassurance they are getting what they pay for. And as others have said, how are they meant to find stock? There are only so many cars available.
Private sellers also have a habit of over describing cars and demanding top money.
Hidden costs of prep, warranty, premises, staff etc have to be paid for somehow - how do you suggest they do that without a profit margin?
End of the day, you don’t have to buy from a dealer, you can buy privately and take the risk for a saving, each to their own
Edited by mattman on Tuesday 5th October 20:50
mattman said:
Always makes me smile when I see a post like this, how dare a trader make any profit…
They have substantial costs that many people aren’t aware of, it’s not as simple as buy for X and sell for Y and take huge profit.
They may have the car for weeks or months before it sells and every member of joe public who walks through the door wants/expects a discount on the screen price, dealer to jump for any little issue that may arise.
Finding stock, especially classics is not easy and can be very time consuming (=expensive) so buying from an auction may give them more reassurance they are getting what they pay for. And as others have said, how are they meant to find stock? There are only so many cars available.
Private sellers also have a habit of over describing cars and demanding top money.
Hidden costs of prep, warranty, premises, staff etc have to be paid for somehow - how do you suggest they do that without a profit margin?
End of the day, you don’t have to buy from a dealer, you can buy privately and take the risk for a saving, each to their own
Again, I agree that they need to make a profit and I think that specialists provide a valuable and important service for which I am happy to pay. What frustrates me is the size of that price inflation in the examples I came across (eg £10k on top of a £20k car) and its immediate knock-on effect. They have substantial costs that many people aren’t aware of, it’s not as simple as buy for X and sell for Y and take huge profit.
They may have the car for weeks or months before it sells and every member of joe public who walks through the door wants/expects a discount on the screen price, dealer to jump for any little issue that may arise.
Finding stock, especially classics is not easy and can be very time consuming (=expensive) so buying from an auction may give them more reassurance they are getting what they pay for. And as others have said, how are they meant to find stock? There are only so many cars available.
Private sellers also have a habit of over describing cars and demanding top money.
Hidden costs of prep, warranty, premises, staff etc have to be paid for somehow - how do you suggest they do that without a profit margin?
End of the day, you don’t have to buy from a dealer, you can buy privately and take the risk for a saving, each to their own
Edited by mattman on Tuesday 5th October 20:50
As to where else they'd source from - I'm happy to be corrected as I'm not a trader, but based on those I have previously bought from, I imagine that many established specialists will have a network of trade contacts, previous customers, friends of customers etc through which they find stock.
Edited by blueovercream on Tuesday 5th October 21:16
blueovercream said:
Again, I agree that they need to make a profit and I think that specialists provide a valuable and important service for which I am happy to pay. What frustrates me is the size of that price inflation in the examples I came across (eg £10k on top of a £20k car) and its immediate knock-on effect.
As to where else they'd source from - I'm happy to be corrected as I'm not a trader, but based on those I have previously bought from, I imagine that many established specialists will have a network of trade contacts, previous customers, friends of customers etc through which they find stock.
Trade contacts only go so far, if they are lucky enough to have a decent turnover of stock they need to have multiple sources. And don’t forget, general public buying from auctions being classed as normal is a relatively new thing, auctions have been the main source of stock for dealers for many years As to where else they'd source from - I'm happy to be corrected as I'm not a trader, but based on those I have previously bought from, I imagine that many established specialists will have a network of trade contacts, previous customers, friends of customers etc through which they find stock.
Edited by blueovercream on Tuesday 5th October 21:16
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