Column: Is cheap also expensive?

Is cheap also expensive?

We are regularly asked whether buying at auctions is wise. Auctions are trendy and seem to be a good sales and purchasing channel for trade, but recently also for private individuals. The range is large, no hassle and pinging, the car can often (in the case of online auctions) stay with its owner and most importantly: the turnaround time is short. At least, as long as we are talking about online auctions. Traditional auctions often have a much longer lead-up, both in terms of sourcing and marketing, are also usually physical and linked to an event.

Selling and buying at an auction hinges on the clarity of the information provided. A summary listing of only mileage, year of manufacture, some accessories and about 10 photos, unfortunately does not say much. Perhaps enough for a 13-in-a-dozen ex-lease car, but a good photo report with at least 100 photos of all the sensible (and sometimes nonsensical) details and a clear description of the car's condition often already gives an excellent picture of a car outside the standard bandwidth. If then the history of owners and maintenance/damage history is also mentioned, there is often a nice overall picture on which anyone can base their value. Most of the time, the necessary information can be found online to back up the story.

Everyone wants a car with no history of damage, maintained down to the last kilometre and, if possible, from the first (NL) owner. If it is also a special model with low mileage, it is completely "finished". 
Unfortunately, cars like this don't come along very often. Not in sales and not in auctions. These cars are often treasured by the owner, who usually either doesn't want to sell, or wants the top price.

The other extreme is a car that has had many owners in recent times and an unclear maintenance history. Often revealed by large gaps in (or lack of) maintenance history, tyres with an old DOT code or of a B-brand (lots of profile but no grip). Usually nicely polished and nice from afar, but far from.......
For these kinds of cars, the viewing day, which most auction houses do have, is a godsend. The buyer can then decide for himself what he really thinks of that car. If the price is right in relation to the expected costs to come, it need not be a bad buy at all. The problem is often that the owner (if not a dealer) often has a completely different amount in mind. Thanks to the internet, of course, you can find all kinds of things to form a price picture.

Recently, we were offered a car that the owner thought should be able to fetch at least around 120-140k. That was what most "average" ones were for sale too. A quick inspection showed that a) the colour was not original, b) the engine was running but leaking a lot of oil, c) the underside had advanced rust in a number of places, d) the thickness of the paint could not be measured at all in some places, e) the odometer read a respectable amount and f) the necessary maintenance had been done, but no more than that (despite all "revision" invoices). A nice car to look at and even to drive, but turning it back into a neat classic will require serious investment. For a handy guy it might be a profitable challenge, but as an investment it is really not interesting because it remains a car with high mileage that will eventually cost a lot of money. In short, if the car brings in half the expected amount, that's already a good score.

What I mean by this is that a bright and well-maintained car may sometimes seem expensive, but it often pays off in the long run. The new owner only has to continue the meticulous maintenance, so it remains a bright car and therefore pays for itself in the event of a sale.

We regularly have real gems in our auction, cars from true enthusiasts who have taken good care of them. Last year, we auctioned the Dark Rush collection. All cars with few kilometres and neatly maintained annually at the dealer. Even preventive maintenance, such as connecting rod bearings (a well-known BMW fault) as early as 40,000 km, was done. Not really necessary at all, but it gives the buyer a lot of confidence. The buyer paid quite a hefty price compared to what is asked in the market, but is buying a carefree and clear car.

We also auctioned off a Porsche 930 Turbo. Looks like a nice car, with unfortunately a big hole in the history. Lots of recent maintenance and overhaul work, though. That one went away for a reasonable price by today's standards. For the seller a good price, but also for the buyer a nice car to give some love and attention.

In short, cheap does not have to be expensive, provided the buyer realises it and knows that the necessary attention needs to be given to get the vehicle in top condition. On the other hand, of course, the buyer can also just accept the car as it is, drive it nicely and take future repairs for granted. There we have an immediate point. Some cars are almost too good to drive, disappear into a garage and are taken out for the drive to the MOT. All in the name of increasing or decreasing value. 

In general, classics that meet the requirements (including good brand name, sporting successes, small production numbers and if possible, low km and few owners) become more valuable over the years. But there are also downward trends. In the long run, things (almost) always work out. But if you have just invested a considerable amount of money and have to say goodbye at some point because you either have something else in mind or because you need the invested money for, say, a renovation or an unexpected expense, things can go wrong when the market is just in a slump.

Therefore, buy a toy on the side with your mind. I.e. no bottomless pit (it was so cheap), no borrowed money or your last euro, but mainly because you like it or find it special or because you like driving it. A return is a nice bonus, but not a certainty. Insurance, storage, maintenance and tax will always be costs that recur every month, unless you have the space and no longer drive it, of course.
Buying at auction is exciting, but there too: use your wits and, if in doubt, just go and look at the car before bidding, especially if the description is brief. Sometimes it is disappointing (everyone has a different standard), but often it is not that bad because details have been captured that are normally hardly noticeable or disturbing.

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