Cars & Bids is an online auction site that specializes in cars for enthusiasts. The platform has gained popularity because it offered lower buyer fees compared to its main competitor, Bring A Trailer, making it attractive for those looking for good deals on vehicles. However, recent changes in the company’s structure and staffing have led Cars & Bids to adopt a new fee strategy that significantly adjusts the cost for buyers.
This week, Cars & Bids announced that it is raising its buyer fees. Previously, the buyer fee was set at 4.5%, with a maximum of $4,500 and a minimum fee of $225. Under the new fee structure, buyers will now face a 5% fee with a higher cap of $7,500 and a minimum fee of $250. This means that the overall cost for buyers could increase by as little as $25 to as much as $3,000, depending on the price of the car they are bidding on.
By increasing their fees to match those of Bring A Trailer, which had previously given Cars & Bids a competitive edge, the site is positioned to lose some of its attractiveness to potential buyers. Many bidders might now consider other factors when choosing where to purchase a car, as the main financial advantage of using Cars & Bids has been eliminated.
The timing of this fee increase is particularly notable. It comes after a round of layoffs at Cars & Bids, where the company cut its entire business development team and made reductions in several other departments. This move seems to be a part of a broader strategy for the company to tighten its budget and boost revenue amid a slowing market for enthusiast cars and reduced auction activity.
The old cap on buyer fees of $4,500 was arguably due for an update, especially considering the increasing values of collectible cars. Higher-end buyers often won’t mind paying a few thousand dollars extra in fees for luxury cars, but the raised percentage could discourage those who are more budget-conscious.
With the once lower fees no longer in play, Cars & Bids must now focus on its other strengths to attract buyers. The platform is known for its transparency in disclosing modifications, easy-to-navigate user interface, and a reliable escrow service called KeySavvy. This service ensures secure transactions and can help manage payments and title transfers, offering buyers peace of mind, especially when purchasing vehicles without seeing them in person.
Moreover, Cars & Bids frequently features cars that are still enjoyable to drive but may have some imperfections. While the cost advantage may be diminishing, buyers could still find good deals on certain cars.
In summary, as the market for enthusiast vehicles cools off and online auction sites strive to stay profitable, Cars & Bids’ decision to increase buyer fees makes sense, though it carries risks. The big question is whether these changes will be enough to ensure the business’s stability or whether it will push buyers towards Bring A Trailer. If the private investors behind Cars & Bids lose confidence, it could lead to a less competitive environment, ultimately decreasing choices for buyers and sellers in the enthusiast car auction market.