State Of The Market Update Q1

The Daily Vroom

Good morning, Vroomers!

Today's edition of The Daily Vroom takes a unique turn as we offer a comprehensive 360-degree overview of the market. I've kept it as succinct as possible, although there's plenty more I could delve into regarding each platform. I'm eager to hear your thoughts, so please make sure to share your feedback in the poll.

State of the Market

We've sailed through a quarter of the year, and it's time I shared some insights on the car market landscape, pinpointing where changes are necessary and how the leading platforms stack up. As my regular readers know, I'm known for my no-nonsense approach and straightforward analysis.

Let’s kick off with Bring a Trailer the billion-dollar behemoth that continues to set the pace. This platform is in a league of its own, consistently moving over 90 vehicles daily. But here's the kicker—they're not resting on their laurels. Majority-owned by Hearst, whose investment value has already skyrocketed, they’re undoubtedly eyeing further growth. This year, we've observed several significant updates on their site, including the rollout of Verified Checkout—its sporadic appearance in listings makes me curious about its usage frequency.

2014 Porsche 918 Spyder $1,170,800

With a website overhaul underway, along with the addition of new features, potential new revenue avenues, and possibly expanding into more countries, BaT is aggressively evolving. This relentless progress poses a clear threat not just to other platforms, which are losing potential business, but also to traditional live auction houses, which have been seeing a gradual erosion of market share year over year.

On the flip side, we’ve touched upon in TDV how the community atmosphere, or the "peanut gallery," is increasingly becoming toxic, deterring a significant number of users. This is an issue that needs urgent attention. Additionally, I believe that the user experience (UX) is becoming dated and desperately needs a revamp to simplify the car discovery process. These changes are essential for maintaining user engagement and ensuring a positive environment for all.

Next, let's evaluate where Collecting Cars stands. Right off the bat, they're not idling—they're continuously on the move. They've ventured into new markets and introduced new revenue streams, which raises the question: Is this because the auction side isn't performing as expected? Their website is perpetually under renovation, bustling with activity, and every visit brings a new surprise feature. As I’ve previously mentioned, their average sale price tops all other platforms, painting a seemingly prosperous picture.

However, there are a couple of significant opportunities that could really propel them forward. First and foremost, they need to boost their car sales volume—there's no way around it. Over the past eighteen months, their sell-through rate hasn't hit the targets I imagine they were aiming for. Secondly, increasing their vehicle listings is crucial. Neither task is straightforward or trivial. The major challenge they face is the U.S. market, where they lack a substantial physical presence. Their attempts at partnerships have been less impactful than needed. Much like their successful expansions in other regions, what they really need in the U.S. is a dedicated local team and boots on the ground. Achieving this could potentially double their daily listings from 30+ to 60+, making a significant impact on their financial outcomes.

By the way, it’s worth noting that Collecting Cars is achieving this with significantly less traffic than all their competitors. If they could manage to increase their traffic to even half of what their competitors are seeing, they could also experience a significant improvement in their sell-through rate. This boost in traffic could be a game-changer for them, enhancing both visibility and sales performance.

Turning our attention to Cars & Bids, let's start on a bright note. They consistently list about 25 cars each weekday, boasting the highest sell-through rate among all platforms. Arguably, they offer the best user experience and, thanks to Doug, attract a significant amount of site traffic.

However, since their acquisition by The Chernin Group over a year ago, there hasn’t been a noticeable positive shift in sales. This year, they've made a clear push towards the upper echelons of the market, aiming for higher-priced listings, but the success rate there has been lackluster. Recently, their CEO Ro Choy, along with a significant number of staff, has departed. This scenario is a classic private equity strategy—fuel the engine aggressively and hope for a boom, then try to exit before the momentum wanes. If the expected explosion doesn’t occur, they cut losses and pivot, which seems to be the current state of play at Cars & Bids.

Cars & Bids stands at a crucial juncture. Built on the robust foundation of Doug’s community, they should focus on carving out their own niche rather than attempting to mirror Bring a Trailer and others. They could dominate the market segment for unique cars priced between $10k and $200k. Leveraging quirks and features to sell the brand could be a smart move. Additionally, collaborating closely with dealers to facilitate transactions in this price range could tap into substantial volumes. Let other platforms scrap over the super high-end vehicles like Bugattis.

Currently at a crossroads, Cars & Bids faces a pivotal decision about its direction. It’s especially challenging when a private equity firm is at the helm, typically focusing on spreadsheets, while businesses like these thrive on passion and community engagement. The path they choose next will undoubtedly be fascinating to watch.

Summarizing the broader market, Car & Classic in the UK firmly holds its ground. They consistently list and sell cars predominantly at the lower end of the market, though they do have some higher-end transactions. It appears they have no ambitions to expand stateside, focusing instead on enhancing their listings and improving sell-through rates within their established markets.

Hemmings, a name I've often discussed here in TDV, remains an enigma. With a brand that could have propelled them to market leadership, they've missed numerous opportunities. Their recent attempt to revamp the website hasn’t exactly hit the mark; placing competitor ads (see below) smack in the middle of their listings is baffling. Without dramatic changes, I don’t see them becoming a key player in the online auction arena.

Hagerty also leaves much to be desired. Their user experience is underwhelming, their listings lack excitement, and their choice to use the Broad Arrow team instead of hiring experienced online auction professionals was a misstep. Their latest partnerships show some promise, but with recent organizational layoffs, they might be better off focusing on their live auctions rather than the online marketplace.

SOMO has gradually improved from a shaky start. With a sharp CEO at the helm and some notable sales, they're on an upward trajectory. Their recent UX overhaul has made the platform more intuitive and appealing, drawing in more compelling listings. SOMO is definitely one to watch.

PCarMarket has been steady, focusing on their niche without making waves. The constant market buzz about them seeking a buyer makes sense, as expanding further might be challenging given their current scale.

On the periphery, platforms like Autohunter, Clasiq, Bonhams, ACC, and a few others are all potential dark horses I’m monitoring. SBX is too new to evaluate fully, but from my vantage point, the key for all these platforms is to carve out their own path rather than mimicking others. Selling cars online is a relentless hustle, fraught with ups and downs. To the many platforms emerging or evolving, I’d advise not underestimating the challenges, no matter the backing or reputation. Consider how long it took for BaT to establish itself—it’s a tough journey for anyone in this space.

Spotlight On Auctions Ending Today

This 1975 911S was originally a US delivery car. It seems beautifully presented in Germany, where it has lived for at least the past 5 years. The 1975 and 1976 cars with new smog equipment and early catalytic converters were traditionally less desirable, but a good example is a good example. The fact that it is a 911S Targa and for sale this week adds it to this list and although it is likely to sell for less than the other two listings above, it will provide a (roughly equivalent) open top aircooled experience, for a fraction of the price.

Is your track car not ready for the season? This track prepped Integra may be a great, and affordable, backup. If this were closer to me, I would consider it myself. It is stripped and barebones, but still has a title if you choose to make it streetable again. Looks like a fun build and, at no reserve, it is anyone's fair chance to bring it home. 

Another affordable and no reserve listing is this FJ Cruiser located in Chicago. It looks relatively clean for a vehicle with over 200K miles. It seems to have come from an original owner in Maryland. I would love to see more maintenance documentation. Even the Carfax is light on details, but these are relatively indestructible. 

OK, so you missed out on last week's featured 993 sales. Well, this one may have been worth your wait. Beautiful colors, tasteful interior modifications, and what seem to be amazing engine upgrades (3.8 build by Patrick Motorsports), make this listing really stand out. That and the exhaust sounds great. 

These original Tesla Roadsters hold a special place in my heart. Like many early EVs and Hybrids, the Tesla Roadster was meant to be an indication of what was a promising evolution that promised revolution for the automotive space.

Many of these cars were odd. Some were engineering delights. Almost all focused more on the green side and less on the passion for driving and automotive design. And then the Tesla Roadster showed up. It was small and light, but it was engineered to provide a great driving experience. It even offered open top driving to enjoy all of that clean air. I remember raising funding for my startup around this time and I realized that the common thread between a number of the angel investors and VCs that I spoke to, the ones who were truly focused on innovation, is that they had one of these in their garage. These rarely trade hands still.

This one is still in the hands of its original owner, has been carefully stored for the past 10 years and even has decent capacity left on its original battery. They are still marvels of engineering and a pleasure to drive. If you are looking for one of these rare rides to collect, this would be one to watch, for sure.

This seller sent me a photo of this car a while back and I had hoped that I would get to see it in person before it sold. At first, I thought that the POV driving video was made with the new Ray Ban Facebook glasses, but then Michael reached out and put on his sunglasses. Great to see the car on real road and at real RPMs. It would have been great to get a mic on the tail to capture more of the exhaust note.