How to Spend $100,000 on a Car While in Line at the Grocery Store

(Bloomberg) -- Eli Kogan lives the type of life about which many auto fanatics dream.

The twentysomething Arizona resident owns a members-only car club and a dozen special toys, including a big black Mercedes-AMG G 63 SUV, a Porsche 997 RS track-ready sports car, and a Lago Green 1956 Porsche 356, plus many high-powered and beloved Ducati motorcycles. He knows a prize when he sees it.

Kogan just spent $500,000 on a car he’d been coveting for years, a 1956 Porsche Speedster. It’s not an unusual purchase for him, but how he bought it is a first: online, sight unseen, and undriven. The medium for his indulgence was the San Francisco-based website called Bring a Trailer. (As in that old classifieds gem: “The car’s not running—so bring a trailer.”)

“The Speedster was a passion buy, an emotional buy,” Kogan says. “I’d hunted a Speedster forever. It was the color I wanted. It was the build I wanted. It checked every box. At the end, I got into a little bit of a bidding war to get it, but I couldn’t stop. At the end of the day, it was still a great purchase.”

He’s not the only one spending big bucks buying cars he’s never seen in person, let alone driven. Bruce Meyer, the Rodeo Drive real estate mogul and a prominent collector who was the founding chairman of the Petersen Automotive Museum Foundation in Los Angeles, recently used Bring a Trailer (or BAT) to find a 1935 Bugatti Type 57 in black, with rich golden sides that give it the poise of a monarch butterfly. It cost him almost $1 million.

“I had tried to buy it 20 years before that, but I missed it,” Meyer says. “I never would have known about it and found it again had I not known about Bring a Trailer.”

Kogan and Meyer are the type of big-money buyers the unassuming online auction company has attracted in the years since Randy Nonnenberg co-founded it in 2007. (Michael Strahan is another prominent fan; most notably he used it to buy a rare 1994 Porsche 928 GTS manual coupe.) The site has become so successful that the online used-car classifieds Hemmings has announced an upcoming version of its own, called Hemmings Auctions.  

Nonnenberg, a former mechanical engineer for BMW of North America, started BAT with a college buddy as an easier way to share links about cars they wanted rather than emailing them back and forth the way they had for years. After tag-teaming to find and buy a long-desired Corvette, they got to thinking.

“Whether I was in the market for a car or not, I was always looking at cars on EBay and Craigslist, and I’d help friends find cars, too, sending them links and stuff,” Nonnenberg says. “So the start of it was a very basic blog format. It was a very immature experiment to just start writing about cars.”

Turns out more people wanted help finding cool cars to buy than he expected. In its first year of offering cars to the public, 2014, BAT listed 450 cars for an average sale price of $21,000 and a sale rate of 72%. Last year it listed 7,718 auctions with an average sale price of $28,000 and the sale rate was 74%. In the first half of this year, BAT listed 5,131 cars for sale, vs. 3,224 for the first half of 2018, a 60% increase that came with a sale rate of 73%.

More than 200,000 people receive a daily email message that lists auctions closing that day. All told, more than 15,000 people have won an auction on BAT at least once.

“I find it so entertaining,” says Meyer, 78. “The guys that are running it are honorable. They’re really doing a good job of presenting a car correctly and honestly and without outrageous reserves. It’s a whole new paradigm.”

Curated for Cool

In its simplest description, BAT lists classic and collectible cars for sale online that users bid on over the course of seven-day sales. (Some premium listings last as many as 21 days.) Everyone can follow the sale as time runs out on the very visible clock ticking down at the top of each page. Those who want to place a bid must register with the site, including providing a credit card number. Whoever has the highest bid when the auction ends wins the car, pays the (unusually low) 5% buyer’s fee, and is connected with the seller to arrange for pickup. If more than one person places a bid within the last two minutes of a sale, a special function extends the auction until they reach a détente.

BAT is not the first company to sell used cars online—just look at the millions of cars listed on EBay, Craigstlist, and Hemmings. (A Hemmings spokesman did not respond to requests for comment for this story.) But using BAT feels different from other auction sites that sell cars online. It’s sorted much more thoughtfully, allowing for easy queries by make and model, and you can filter results based on the status of the auction. Selecting a car and then scrolling down brings up dozens of photos of the car, some so detailed they’ll show tiny corners of the engine or minuscule components in the wheels or windshield wipers.

It’s a steady drip, with auction updates and new offerings listed daily. And the community feels like a special group of like-minded fellows. Users scroll through the auction results to get a sense of the market like they check the Dow Jones every morning. Parents and children bond over sharing, critiquing, dissecting, and dreaming over the day’s new listings.

The comments section is a big draw, providing humorous and insightful addenda while everyone watches the sale unfold—and especially for the thousands of people who follow along but have yet to place their first bid. It’s also moderated; meanies and know-it-alls are not allowed.

“We want BAT to be a welcoming environment,” Nonnenberg says. “It’s great to have knowledge, but if you’re really arrogant about that or you’re a jerk about it, that can create sort of a firefight online that we’ll go in and address. We try to limit the negative parts of an open microphone on the internet.”

Quality Control

Most important, BAT curates its wares. Whereas EBay and Craigslist present thousands of cars from all backgrounds and conditions, making it tedious to sort the real jewels from what should be used as scrap metal, BAT is selective about what it offers. It’s like the difference between a high-end vintage store that sells original David Bowie tour T-shirts and the castoffs from the local Goodwill. When you go to the latter, you have to dig through a lot more grit to find a treasure.

“Bring a Trailer tries to present cars that are interesting and to their taste—and it happens to be my taste, too,” Meyer says. “With EBay, it’s just so vast, and there’s no scrutiny whatsoever.”

Vetting is an art as much as it is a science, Nonnenberg says. His team of 22 full-time staff evaluates a vehicle based on uniqueness, rarity, beauty, design, condition, and the reserve price requested by the seller. And speaking of the sellers—they’ve got to qualify, too, he says. (The platform does not personally inspect the mechanics and condition of the cars it offers for sale.)

“The process is a little bit quantifiable and a little bit qualifiable,” he says. “Dealers that overdescribe cars—those are out. So are those who don’t want to say a price, who make setting a price like a fishing expedition. Or somebody who seems like a liar. Those are out, too. People want to just be able to check boxes that you list on a car, and then you’re in. But it’s still very much a human process, and we don’t want to lose that filter.”

BAT accepts only 40% of the vehicles that apply to be listed every week.

Going High-End

Scrolling through Bring a Trailer is indeed addictive and all-consuming. It’s thrilling to see a Lotus Esprit Series 2 like the kind James Bond drove in The Spy Who Loved Me going for $10,000. It takes just moments after you start scrolling to see something you’ve always had your eye on, maybe even the car you dreamed about when you were in high school, listed for a bargain basement price. After that, you’re hooked.

One user who goes by the name @mmalamut has bought six cars off BAT since February of this year. Another, @chookasd, has bought 30 cars on BAT since March 2015. 

In the past 30 days, having never bought anything on it before now, Kogan has actually bought four cars on BAT—two for himself, including the Speedster and a 1974 Jeep, and a Legacy Power Wagon and 1973 Porsche 911 for clients.

The Speedster in particular illustrates why BAT could be prompting a larger shift in the collector car market in general. Kogan bought it from a special new section of premium tiers of sale that Nonnenberg introduced last June. He used a 1956 Mercedes-Benz 300SL Gullwing, which sold for the PR-perfect price of $1,234,567, as a way to promote the new service. 

It’s the new Plus and White Glove tiers that are handling these super high-dollar cars. Plus, which costs $349 for each car listed, sends BAT photographers to the seller to produce quality photos that will support the auction listing. White Glove, which costs considerably more, though the pricing depends on the car, promises that BAT will tailor the listing via concierge, with professional photos, writing, and curating, and will provide company-sponsored marketing for the car while it’s for sale. 

Auction House Opt-Out

For those who can afford its elite ante, the biggest draw for the extravagant cars now for sale is the fee structure: Auction house fees can reach 20% on one individual sale, but BAT caps the buyer’s fee at $5,000 regardless of the price of the vehicle. So instead of paying a $50,000 commission on his Speedster, as he would have if he had bought it at a Gooding & Co. auction, Kogan paid only $5,000.

“Superhigh fees chafe, and people don’t like it,” Nonnenberg says. “Do we really do more work to list a $100,000 car than to list a $400,000 car? I don’t think we do. So we came up with the cap idea. I think it’s fair. It resonates with people. I mean, I don’t want to participate in the big auctions because I feel like I’m being taken by the house. It’s like Vegas—the house always wins.”

It raises this question: If wealthy collectors can save money buying a classic car from an online auction community that they trust, why would they keep patronizing traditional auction houses? Is BAT the auction house of the future?

Depends on whom you ask. Kogan wouldn’t mind. He cites two compelling reasons for his BAT splurge: the ease of the transaction, and that buyer’s premiums and fees are significantly less than buying cars at auction.

“Why would I as a seller or a buyer go to an auction house and have the auction house take 10%? That’s $50,000!” he says. “It’s something I have to consider. But when you bid on Bring a Trailer, you’re not factoring in the fee. At that point it’s a rounding error.”

A representative from Gooding & Co. declined to comment for this story. But Nonnenberg himself tends to agree: “I don’t know if we’ll put them out of business. Certainly not in the short term. But maybe later.”

Meyer, decades older and with a different perspective, is more circumspect. He uses BAT auctions and the glamorous real-world auctions of Bonham, Gooding & Co., and RM Sotheby’s in Paris, London, and Carmel, Calif., in very various ways.

“I think [BAT] is completely different,” he says. “The auctions are still entertaining. They give you a really good pulse to where the market is going. This gives people a comfort level so they can buy online. It does not preclude them; it includes them. They work well together.”

No More for the Little Guy?

Longtime BAT users have noticed the growing overlap between online car sales and real-world auction houses. Some say BAT’s increased public profile of late—a result of an apparent marketing push: videos with Jay Leno, a YouTube channel, Instagram stories, and big sales announced via a press release—has ironed flat the site’s formerly interesting life force. Those early users liked the feel of following magical rabbit trails frequented only by a secret society of treasure hunters.

“BAT has kind of destroyed the car market for the common guy,” a user called SilverMK2 wrote on a Reddit forum. “There are too many people with Ferrari money buying up common cars IMO. It used to be you could get lucky and find an odd gem on your local CL that was off the radar. Now either the seller wants 3- or 4x the market price or some reseller halfway across the country scoops it up 30 secs after it posted.”

One Instagram commenter named @missile_coop put it in simpler terms: “I always bid, but never win. Neither thrilling, surprising, nor insightful, but definitely painful.”

Nonnenberg doesn’t dispute the slight shift, noting the “feeding frenzy” he can remember in years past after he’d post an “unbelievable” car priced way under market value. Some of the critique is true, he says. There’s been a slight increase in prices on BAT in recent months. The average sale price for the first six months of 2019 is $29,700, up $1,700 from last year’s cumulative average. Following the rollout of BAT Premium Listings, the average sale price in June hit $32,000, the website’s highest single-month average.  

But that doesn’t devalue the state of the platform today, he adds. Some of that sentiment is nostalgia-driven—people tend to hark back to something that no longer exists. What BAT offers remains of high allure for a rapidly growing audience, himself (still) included. A quick flip through the site reveals cars with real personality and value: a 1977 Lancia Scorpion for $8,500; a 1991 Jeep Grand Wagoneer for $17,750; a 1969 BMW 1600 Coupe for $4,400. 

“I still am on it every day looking for cars for no reason–cars that I know I’m not even going to buy!” Nonnenberg says.

To contact the editor responsible for this story: Chris Rovzar at crovzar@bloomberg.net

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