David Edmonston, founder of used car news website PistonHeads.com, is involved in a new venture. He’s now a minority shareholder in CollectingCars.com, a British automotive marketplace for collectable cars sold by online auction.
The model is having a significant impact on auction houses, dealers and automotive marketplaces.
CollectingCars.com was inspired by Bring a Trailer (BaT) in the U.S. which sells thousands of cars annually through online auctions. CollectingCars sold around £30 million ($39 million U.S.) of cars in the first nine months of 2020 and sold its 1,000th lot in mid-October.
The idea emerged in 2017 after Edmonston tried to sell a collectable car and assessed his three main options:
- Sell it via a classified site and hope for a sale but potentially have to deal with time-wasters
- Go to a traditional auction house and suffer buyer/seller fees with a wait of a few months
- Give it to a dealer with the risk that the dealer could go bust and you lose your vehicle.
Edmonston, aware of the success of BaT, which was acquired by Hearst Autos in June, realized the model could transfer to the U.K. He and his business partner, founder and MD Edward Lovett, started CollectingCars in late 2018 and began trading in May 2019.
The site caters for collectible car enthusiasts. Both buyers and sellers get expert help throughout the process.
It follows the BaT model, so sellers store cars at home, reducing storage costs and 90% of cars are sold sight unseen. “Its simplicity and the 5% buyer commission fee being capped at £100,000 mean the seller gets the exact price the car sold at auction for and pays nothing,” said Edmonston.
No changes were required for the U.K. market, “but as we start selling in Europe, we have to be careful of language issues and local taxes. We don’t see Brexit having a major impact.”
Each car featured includes around 150 photos for enthusiasts to check specifics and the cars are in good condition.
How does it work?
Buyers and sellers arrange delivery or collection themselves and cars can be paid for by mobile device on collection. The website takes 5% commission from buyers, up to a £100,000 sales price limit. For cars valued above £100,000, the commission is slowly reduced.
Edmonston believes the boom in online auctions for classic cars is not due to Covid-19. Users were beginning to get comfortable with high-value online sales before the pandemic, he said.
“Traditional auction houses charge high fees, we charge less,” he said. “They are a good alternative to classifieds. Covid-19 just happened to coincide.”
Lockdown did trigger a switch in how people access the site, from 60% from mobile to the same percentage from laptop, but has now reverted back. Dealers benefit from getting stock in front of thousands of new eyes.
Sales have been good, up to 200 per month currently, including about 25% of regular number plated cars that vary in price from hundreds to occasionally tens of thousands of pounds. September saw 200 sales, including £1 million in a day. The average sale price is £44,000 on £6 million of cars per month.
“Our biggest sale was of a Ferrari Daytona for £444,000. The buyer paid just £5,000 commission,” said Edmonston.
In early 2020, CollectingCars.com sold on average one vehicle per day. Now it sells around 9 or 10 per day.
“We hoped for growth and built a platform to scale for that purpose,” said Edmonston. This was helped by a feature on the podcast of Chris Harris, U.K.’s Top Gear TV show presenter.
How is the model impacting traditional auction houses and dealers?
“Traditional auction houses have had a tough time this year and many are looking to go online with different results. There will be winners and losers, said Edmonston. “We are not a threat to dealers, just another channel.”
However, the cars sold on CollectingCars.com would otherwise have been sold on classified sites.
Edmonston sees the online auction model as “a game-changing new model. “In 10 years’ time we’ll wonder why it took so long.”
He does not see the U.K.’s dominant automotive marketplace, Auto Trader, as a direct rival but anticipates online auctions for classic cars growing, “so we may cream of the best of the classic cars sites like that have for sale.” He expects more classified sites to try online auctions.
Edmonston comes from a technical and automotive background. He built the PistonHeads website and CollectingCars.com.
“We worked through prototypes and now have a scalable platform that is car agnostic, so could be used elsewhere,” he said. “We built it with a view to working with other companies and providing white labels and a technical platform.”
In the coming months the team hopes to roll out the platform across Europe, starting with the Netherlands. “We will learn what we can and decide when is the right time for possible further roll-outs to other territories,” said Edmonston.