By on September 7, 2009

Following on from Honda’s loss of Facebook over the Crosstour—or loss of Crosstour over the Facebook— here’s another story where the web pulls the rug from under auto industry types seeking to hide the truth. We’ve been saying it forever (in Internet terms): the collector car market has collapsed. Well, duh. But the mainstream media and specialist press has both been happy to perpetuate the myth perpetuated by the auction houses that their business has been defying gravity. See? Cars are selling for phenomenal prices! Meanwhile, Hagerty’s CARS THAT MATTER (must do, given the shift lock situation) is telling readers to pay attention to the men behind the curtain.

To wit: in an email to subs, the price guide outs an ailing auction house: “The half-empty parking lots of Kruse Auction Park hint at the real story: According to the Fort Wayne Journal Gazette, Kruse faces legal actions in excess of $16 million. It seems that the various companies that make up the Kruse empire have had some trouble paying their bills, including the mortgage on the auction facility, American Express charges, and other loans. Perhaps more disconcerting to car collectors is that Kruse’s many creditors reportedly include over 60 sellers who have yet to be paid for vehicles that were auctioned.” It gets worse.

In his defense, company patriarch Dean Kruse told the Fort WayneNews-Sentinel that he is owed some $6.5 million from previous auctions and just needs to generate some revenue this weekend to keep the wolves at bay. Indeed, the Labor Day weekend proceeds are subject to court garnishment in order to pay the mortgage lender. Clearly, Kruse needs a great sale, however unlikely that may be. As of Saturday morning, the Kruse Web site lists 1,749 vehicles in its online catalog, far shy of a typically inflated claim of “5,000 cars.” Firsthand observations confirm a sparse staging area, and few truly marquee automobiles. To make money as an auctioneer you don’t necessarily need particularly high quality cars, but in that case, you do need numbers. This year, Kruse seems to have neither.

Again, it’s a good time to buy, a lousy time to sell. How hard is that to understand? Of course, it’s not all truth and reconciliation on the web. Edmunds, post-Monterey: “Numbers are down, but things could have been much worse had the economy not recently made a push upward.” Or the auction houses hadn’t managed the quality of the lots to keep the pig smothered in lipstick. Just sayin’. As is our wont.

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29 Comments on “Car Auction Collapse Claims Kruse...”


  • avatar
    Steven Lang

    Kruse is more or less the Chrysler of the Classic Car Auctions.

    They really don’t have the best of anything. Inventory, marketing, auctioneers, buyer base. Even when they got a nice chunk of change working with Ebay they weren’t able to sustain any real competitive advantage in their niche.

    This company is praying for a buyout… which won’t happen. All of the auction houses are having headaches these days and Kruse, even with a generous allocation of goodwill, has a negative net worth.

  • avatar
    GS650G

    It’s bad when you don’t pay your bills but not paying the sellers for their sales is really out there. The money should have been deposited in escrow.

    I know someone with a 67 Chevelle he needs to liquidate to pay some bills and it’s not going to be pretty. He never expected to profit from the restoration but the offers he is getting are rally low.

  • avatar
    ohsnapback

    This article is a great example of why TTAC is singularly unique: They report the truth, whether it’s about the lies regarding the success of ‘Cash for Clunkers’ or the sorry state of high end and collectible car auctions.

    The MSM is either complicit or naively used in spreading poppycock by dealers, manufacturers, auctioneers and others who have a vested interested in suppressing the true state of affairs, and TTAC is one of the few sources I know that dismantles the propaganda.

    Good on you, TTAC, and Mr. Farago!

  • avatar
    twotone

    Didn’t we go through this in the early 1990′s when the collector car market collapsed (again)? Cars, stocks, gold, sliver, real estate, etc. — goes up, comes down.

    Twotone

  • avatar
    jpcavanaugh

    This is too bad, really. IIRC, Kruse pretty much started the classic car auction in the early 70s to capitalize on the Auburn-Cord-Duesenberg national meet on Labor Day weekend in Auburn, Indiana. Before that, they were a typical small community auction company.

    I grew up about 30 miles south of Auburn and spent many, many Labor Day weekends soaking up automobilia of every kind. It was a wondrous place where you could see up close and personal virtually anything from Duesenberg SJs to a Tucker Torpedo. Before they built the big auction park, the auctions took place at the football field/track of the DeKalb County High School. How many people ever got to see a Duesenberg stuck in the mud?

    As I recall, they had some problems in the late 70s or early 80s which resulted in a takeover by ITT. I think they bought themselves back sometime later and had some strong years. But it has been several years since I have attended any of their auctions, so have no recent knowledge about the company, other than this recent turn of events which I caught in my local paper a couple of days ago.

  • avatar
    educatordan

    Wow, I just checked out Kruse’s website and looked over their catalog for this weekends auction. It just made me wish that I had money to take advantage of the soft market. Of course I wouldn’t be going after the supper rare stuff, I was drooling over the 1975 Delta 88 Oldsmobile convertible, 1977 Corvette, 1953 Hudson Super Wasp, and 1948 Packard that someone had dropped a Cummins diesel into. (Hows that for a repowering job?!?!)

  • avatar
    seabrjim

    People who buy low and sell high whether houses or muscle cars are getting the shock of a lifetime. So it cost you $70,000 to restore your 69 coronet convertible. It wont sell at $45,000. What do you do? If you are smart you cut your losses as people cant buy toys anymore. I dont mean the hyped, phoney Barrett Jackson where the market looks fine because the multi millionaires are buying their 10th toy for a heated garage. I mean the AVERAGE Joe making $50,000 a year. The carsonline ads I look at are a great example. One particular car, a 69 coronet is still listed 2 years later at $28,500 (yes, I am a mopar man!) Dont people realize if you cant get the money in 07 and you dont get any hits, 09 wont get you but half the money? The people who like to talk about the changing market and had no problem tripling their money on a house refuse to accept the market has gone the other way and the gamble they made didnt pay off this time.

  • avatar
    NickR

    When Barrett Jackson bites it, I will do a little jig of despair.

  • avatar
    h82w8

    With regard (but not respect) to the collector car auction industry:

    The business is all about separating rich fools from their money, so it’s not surprising that they’d be totally blind to a basic truth:

    “Never, ever believe your own bullshit.”

  • avatar
    panzerfaust

    The fact that most collectors ought to know is that no car has an intinsic vaule, it’s only worth in cash is what any two people are willing to pay for it. The only honest answer to why anyone paid 250,000 for a hemi cuda three years ago is they wanted it that bad. Calling it an investment is just a way of justifing the purchase to your wife.

    Of all people, I thnk Craig Jackson is able to read the handwriting on the wall, 2009′s auctions were already showing signs of a huge drop in prices.

  • avatar
    John Horner

    Muscle cars became the Beanie Babies for aging men. Look what happened to the so called collectible Beanie Baby market.

    Collectibles bubble markets never end well.

  • avatar
    seabrjim

    Well put panzerfaust.The problem arises when the guy with the rm23 roadrunner sees this and figures he will list his “sorta restored” 383 car and expect $40,000 for it. I see it every week in the news letter i get from the site. They cant admit they held out too long and now its game over. Sure, everyone wants a killing but some sell at the right time, some dont. They forget the guy paying double what that ‘cuda was worth wasnt the guy who fixes cars at the local garage like they do. He had the money to buy his dream at any price.

  • avatar

    I attended my first auction a few months ago, although not as a buyer (and with only a precursory knowledge of classic cars in hand), I saw 1 out of every 5 or 6 even get bids. Lots of ground-up rebuilds. I was shocked to hear $50-75K starting prices be whittled down to the $20-25K neighborhood and maybe sell for $31K after the auctioneer badgered the seller to waive the reserve. The moment the reserve was waved, 9 times out of 10 all the buyers but one bailed.

    If only I had a little cash on hand…

  • avatar
    Commando

    cnpota said: “The moment the reserve was waved, 9 times out of 10 all the buyers but one bailed.”

    In case this went over anybody’s head, 90% of the bidders are shills. That’s why I never, EVER, will buy a car at auction. Brick & motar or internet, doesn’t make a dif.

  • avatar
    Rusnak_322

    @Commando -

    what is the difference if there are shill bidders. You put a top price on the car and then bid up to that point. Same thing if you went to a private seller or a dealer. The only difference is at an auction, you start the bidding low and work up to your price. at a dealer or in some guys driveway you start at a high number and haggle your way down.If you think that car is worth $25k tops, who cares how you get to that number.

  • avatar
    sfdennis1

    The ‘bursting’ of any bubble (muscle cars, real estate speculation, the tech bubble in the Ca. Bay Area, etc) is never pretty…horrific, in fact, for many involved. Greed and bad timing can result in catastrophe.

    I do feel sorry for the good faith sellers who are struggling to get their money…but c’mon people…maybe it’s just me being pissed that I can never seem to capitalize in the ascendent side of a bubble…but muscle car prices had gone completely INSANE!

    Seabrjim had it exactly right…junkers being advertised for a small fortune, lumps of mass-produced Detroit iron (admittedly, beautifully restored) selling for classic Ferrari prices, or for multiples of the price of a classic Jag E-type? Insanity…

    A Hardees or McD’s big angus burger may be tasty, but only a fool would pay more for that, than a Filet Mignon meal at a fine reataurant…yet that was happening at every auction. Reality prevails, eventually.

  • avatar
    educatordan

    Yeah that’s one of the things that pisses me off about some of the ludicrous reserves or buy it now prices on eBay. I’m not a strict/Libertarian type capitalist but I believe the car is worth whatever someone is willing to pay and if that’s less than what you bought it for, then so be it. To bad so sad, sucks to be you.

  • avatar
    Syke

    So you can’t get the money you were hoping for on the car? What next? Uh, maybe just keep it, drive it, enjoy it?

    Long ago, I was advised, “Don’t ever ‘invest’ in a vintage car unless it’s something that you really want to own, for the joy of driving and ownership.”

    Said advice has always stood me well over the decades.

  • avatar
    mikey

    @ Syke Yeah I couldn’t agree with you more. I paid half of the the original MSRP for a used fourth gen 6 cyl Firebird convertible. I don’t give a rats ass if I ever recover a single dime of my money.
    I like driving the car! Maybe we are going back to those days?

  • avatar
    mkirk

    mikey: I think most guys who buy cars to drive them are usually upside down. I am into my 90 Miata for more than I could unload it for. Damn the luck…guess I’ll just have to drive my money out of it.

  • avatar
    obbop

    Invest…

    depreciating asset.

    Diamonds.

    Cars.

    Washing machines

    Wife.

    Except, perhaps, the rarest of the rarest of the rare.

    And you mere commoners will never afford those goodies.

  • avatar

    @Commando

    Indeed. I was there with 2 other guys and we all felt there was something shaky or even shady going on. We could see the auctioneer getting frustrated because cars that actually sold early were going for 1/2 or 1/3 of asking but later sellers didn’t seem to take notice. But after a while, like I mentioned, the auctioneer really began to browbeat sellers. I don’t blame anyone, I/we had no dog in that hunt. Just an observation. I will say that had it been a car lot, I’d have walked.

  • avatar
    ohsnapback

    obbop, you forgot house in the Hamptons, Florida, Vegas, Phoenix….well, house just about anywhere…

    …no matter what Realtors and stealth realtors hanging out on forums claim about real estate (“Oh, it’s rebounding now! Now is a great time to buy! You won’t regret catching that falling knife in 5 or 10 years from now!”).

    Hey, the auto market and housing market are parallels.

  • avatar
    TonyJZX

    how is mecum in the midst of this?

    i like their auction videos on tv but it seems the market there is pretty depressed as well

  • avatar
    TaurusGT500

    Rusnak_322 :
    ….what is the difference if there are shill bidders. You put a top price on the car and then bid up to that point. Same thing if you went to a private seller or a dealer.

    Uhhh….not the same thing …. the diff is that a shill bidder is – in essence – robbing you.

    At a dealer or 1:1 all the cards are on the table. You offer X but are willing to go up to Y.
    The dealer may try to persuade, cajole, badger, or insult you into raising your price. That’s offensive but it’s not dishonest.

    A shill bidder is someone who has no intention of buying the car at any price. You are led to believe one thing – that are an independent bidder like you – when in fact they are in on the sting.

    They are in a conspiracy with the seller – and are trying to dishonestly draw out your top price. Totally unethical and dishonest.

    On a related note… was at BJA a few years ago. Ford and Chrysler had fairly big sponsorship invetments. GM wasn’t a player at the time but I’m guessing Craig Jackson was putting the hard sell on over the shrimp and wine.

    Anyway, there was a late model Caddy (an ’06 CTS I think) on the block that had been “designed” for Paul McCartney. It’s “hook” was that it was built with no animal parts or pieces of any kinds-au natural. (No leather, no spotted owl bits or pieces in the fabric, etc.)

    Proceeds were going to charity and one or two shooters for GM were there with CJ.

    But the car itself was totally unremarkable.

    The bidding stalls out in the low 5 figures…very low … embarrasingly low.

    No doubt, Craig Jackson sensed a major PR fiasco unfolding right before his eyes on SpeedTV no less – as it related to his courting of GM

    Well, next thing you know, CJ, who was had been hyping the deal as best he could, announces that this is such “an important car” or some such giberish that he’s going to personally bid on it! Himself! With his own money. …he’s in essence bidding against his customers.

    Well, it worked… they got some knuckleheads who were probably intoxicated with too much free booze, too much money, too many trophy wives, and too much Speed TV exposure to bid it up. …Ended up getting somewhere around six figures for it I think.

    But this just blew me away – as in “this is really shamelessly dishonest” – watching what Jackson did.

  • avatar
    Rusnak_322

    @TaurusGT500

    that would be a crappy deal if it wasn’t so well known. the fact that it is known by so many people makes it really a worthless act. If you are buying a car at an auction, and you don’t know this goes on, then you are a fool with money and we know what happens next.

    Ever start to negotiate on price and a seller or dealer pulls the old ” I have a guy coming later today with cash” story? We all know that he doesn’t and you can’t really get upset.

    the shrill bidders are more to fool the sellers then the buyers. If people saw BJ not selling 75% of the cars that come across the stage because they don’t meet the reserve, they may not sign up to sell there car there next year.

    If you get taken by a shrill bidder, then you didn’t do your homework, set your limit and stick to it. People just get pissed because they think that if it were not for shrill bidders, you would get awesome deals. That is not going to happen.

  • avatar
    obbop

    I once bid 2 bucks too much for a cake at a cub scout cake auction to raise money for the pack.

    Damn tasty cake.

  • avatar
    User261483

    What did Kruse do with all the millions Ebay paid him? I wouldn’t trust them with anything.
    Buyers beware…..

  • avatar
    Rodney

    My name is Rodney, and i too am a victim of Kruse Auctions. They chose to, and still after over 4 months, have not payed me for my car they sold. This seems to be quite a re-occurring experience, them not paying people. I have posted my story in my blog where i hope more people can post their experiences and eventually get something done about this ongoing saga. I welcome anyone here to come read it, and or post your Kruse auction experiences. Look forward to hearing from you.
    http://www.kruseauctionripoff.com


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