London Auction

[Rothman]

Wondered if anyone had any insight into the poor sales at the RM Auction in London last week?
104 lots, 3 withdrawn prior and 45 unsold even after the usual haggling after the event when close to reserve.
Most of the sold vehicles were no reserve and went for low amounts. Majority of those with a reserve either didn't get a bid or sold for low estimate or under, the odd one mid estimate and nothing close to high estimate. Struggled to get any bids at all on some of the no reserve cars, one Dakar rally car estimated at £30-50k hammered at £4k! A 1961 Lightweight EType estimated at £350-£450k hammered at £160k. Apart from an Enzo none of the star lots sold, even the Peter Sellers Aston and the Jim Clark Lotus got little to no interest. No real surprises with the estimates, Gullwing and DB5 were at the usual estimates but no bids. Was actually a good turnout with hundreds there, all paid £100 to get in and £150 to bid - but they didn't. Can't remember seeing such poor results before. A one-off or market slowing up?

[JJC]

Market slowing down. Typical of any market...never in a straight line, one way , or the other. If it continues to slow, or decline, in time, it will find a level that might draw a new age group to the collector car market. Fresh blood ($$) always welcomed, always needed. No worries here, time is the cure . Sorry for the sellers, but I might guess the money that was sought by owners, was a ton more then they paid.

JC

[cactusman]

And wrong end of the year for selling classics with the winter looming....and the looming brexit cock up can't be helping either....better to drive them than sell them maybe.....

[Rothman]

And wrong end of the year for selling classics with the winter looming....and the looming brexit cock up can't be helping either....better to drive them than sell them maybe.....

Weirdly they have moved the London auction to November for next year!

[christopher storey]

The huge cloud hanging over the market at present is that even if JD Classics survives, which looks very questionable unless a buyer is mug enough to take it on, there is likely to be be a fire sale of its stock , and the effect of this is unpredictable, with some traders known to me fearing that this will be a line of dominoes where the first one to topple will take the rest with it. As I have been saying for years ( and I make no apology for it ) this whole market has been redolent of the South Sea Bubble - or indeed the Wall Street crash - and has just been waiting for an event like the activities of Mr Hood to destroy it. Sadly, as well as the rotten apples, it is likely to take a lot of perfectly decent traders with it

In those circumstances, the hesitancy at RM, particularly given the quite ridiculously inflated estimates , seems wholly reasonable

[cactusman]

Exactly Chris....could not agree more. I had heard JD had problems but did not know they were at risk of collapse....hopefully sanity will return to the market and people can get back to buying cars because they like them rather than because they think they can make a fast tax free buck....

[ALAN COCHRANE]

I’ve had a look at JD Classics website and see that they’ve taken on a new CEO, coincidence or not?
The court case has been brought by a multi- millionaire investor who thought JD Classics were acting as middle men and sourcing the cars for a 10% commission. The dispute seems to revolve around the fact that they were actually selling their own stock directly to him.
It would be nice to think that the end result would be a realignment of the market allowing enthusiasts to once again be able to own and enjoy them, rather than have them stashed away as an investment.
Maybe all profits should be made taxable? Ok may be I’ve taken that too far.

Cheers Alan

[cactusman]

If you sell cars as a business then your profits are taxable so I'd imagine the government got their slice when JD sold cars. If you sell your old banger in the small ads you don't need to pay tax should you be lucky enough to sell for more then you bought. The gov't assume that cars are a depreciating asset so most people won't sell for more then they bought....which is generally speaking correct. I guess the grey area is in the high end classic market where some perceive there is a gain to be made buying a car and then moving it one later...there is I believe a threshold for number of cars sold per year....exceed it and you are regarded as a trader. You then become liable for income tax and VAT etc....not sure what that threshold is though.

[Simon P]

Positioned strangely close to the Bonhams Goodwood Revival auction. Might that have been a factor?

[christopher storey]

I’ve had a look at JD Classics website and see that they’ve taken on a new CEO, coincidence or not?

Yes, a complete coincidence. The sucker was the Chief of Lotus believe it or not, and joined in about May or June , presumably having agreed to do so just before the storm broke. I imagine he is anxiously putting out feelers elsewhere, but with the stench now attached to anything remotely associated with JD - none of which was his fault - it will be an uphill struggle

Bids were sought for the whole setup in about mid-August , and you can gather the degree of panic involved from the fact that as I understand it the final day for bids was 28th August .! Whether this was Charme II that was seeking bids ( the investment vehicle which holds about 2/3 of the equity ) or whether it was effectively mortgagees in possession, ( Lloyds Bank is said to be in for 25 million ) I don't know

[Herzeg]

I've watched the case with interest and it smells. I remember walking around there during the 2016 E-Type run. It was a definite case of "kid in the sweet shop" as building after building revealed yet more delicacies! My E-Type looked positvely rubbish compared to what was there.

What a turn around and I guess firmly in the category of "if it looks too good to be true". At least my car is bought and paid for.

John

[malcolm]

Sorry, I've missed all this about JD!!
What is the issue?

[christopher storey]

In a nutshell, Derek Hood who was one of the co-founders, was found by a High Court Judge in the early part of the summer to have been defrauding a client he was purchasing cars for on commission, essentially by representing that the price the customer was paying for the car was what the seller was asking, when in fact Hood had bought the car for much less. The Judge only made a ruling on one particular transaction, leaving many others to be dealt with in separate hearings which start in October, but he branded Hood as completely dishonest . Hood was sacked in July ( it took them long enough! ) but the vultures are gathering

[Gfhug]

Malcolm, more about it here: viewtopic.php?f=2&t=12161&start=20 (post no. 36)

[malcolm]

Thanks both of you. Interesting.

[44DHR]

I understand JD Classics have gone into administration today.
In a sale document, administration firm Alvarez & Marsal said: "the opportunity to acquire JD reflects the need to return value to stakeholders following the discovery of certain financial irregularities within the business."Whilst an investigation into these matters is ongoing, a new management team is now in place and the individuals associated with these irregularities are no longer working in the business."
Regards,
Dave

[Simon P]

Indeed. See here:

https://www.pistonheads.com/news/genera ... tion/38743

Whilst it's clear what shenanigans led up to it, you've got to feel sorry for all the undoubted fine race and restoration specialists who work there and who currently face great uncertainty about what happens next.

[1954Etype]

Its a sad time indeed and nobody wins. I think some people are too quick to forget the good that JD have done for the industry and when I see the gloating going on on other forums, it saddens me. 60 good guys are worried about their futures (one has 4 years left to go for retirement) and it will be these individuals who will suffer and not the guys at the top.

I think this could have a massive negative effect on the whole of the Classic Car business - hopefully the good guys will shine through.

[cactusman]

Their website says the same. It is indeed a shame for the employees and other businesses owed money. As said, let's hope the good guys shine through and it is taken on as a going concern. I guess it depends on exactly what irregularities are present. Equally though it does appear that they were involved in some dubious business practices with former employees at the helm and they were found out. It seems those involved have left the business in the lurch. At least they are no longer involved with JD classics.

[Heuer]

It is a poisoned Chalice so I doubt there will be anyone interested in buying it as a going concern. There is no goodwill in the name so all you are left with is 110 cars, several buildings, 60 workers and no customer base.