Dave Rahardja

Time for some #Porsche #cars gossip.

There was a recent thread on Rennlist that has made the rounds. In short, user “chicagomarketing” scraped the Porsche GT car auction results on Bring-a-Trailer and discovered an interesting phenomenon: many of the buyers *and* sellers of Porsche GT car auctions are dealerships, but using proxy individuals to hide their identity. In many cases, the cars were “sold” back to the same dealership, then resold to customers.

Why do this elaborate scheme? Several reasons. First, Porsche is cracking down on dealers that flip car allocations, so dealers “sell” the allocation to an individual that happens to be a friend of theirs. This person immediately lists the new car on BaT, wherein the dealer places the highest bid. It doesn’t matter how much the bid actually is, because BaT charges a flat fee for each auction. Once “sold” back to the dealer, the car is put on the lot at a price even higher than auction, as a “Certified Pre-Owned” unit. The dealer pockets all the profit.

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5:29amWeb
Show threadDave Rahardja11h ago

Second, the prices set by the auctions become raw data for aggregate car pricing. Companies like Kelly Blue Book, Mannheim, AutoTrader, and Black Book (owned by the same company that owns Bring-a-Trailer, coincidentally) use auction results to set prices on new and used cars. By raising the auction prices, dealers can point to these books to justify their inflated asking prices, even though the cars were never sold to individual buyers.

This scheme seems to me like a scam to raise the price of goods by concealing information from consumers. Will bidders bid as high as they do if they know that they were competing against a dealer—much less the same dealer selling the car in the first place? I think this information is material to the market.
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Show threadDave Rahardja11h ago

I know Porsche GT cars are $200k–$600k toys for the rich, but the same scheme can be at play for ANY consumer goods sold at auctions, at ANY price point. Most auction sites don’t actually ensure that a sale takes place once the auction is over. All they do is facilitate the auction, take a cut, and bow out. On BaT, the auction fee is capped at $7.5k regardless of the final price, so it’s worth “selling” your $1M car on the site, then getting a friend to “buy” it at $1.5M; all it costs is $7.5k BaT fee; the “sale” is recorded for posterity even if the car never changed hands. It’s an easy way to make your assets seem more valuable.

I hope regulators look into how auction sites can be used to launder the open market values of consumer goods, maybe by making disclosures of conflicts of financial interest legally required when listing or bidding on auction items, with appropriate audits.

/end

Show threadDave Rahardja10h ago
The Rennlist thread: https://rennlist.com/forums/992-gt3-and-gt2rs-forum/1506502-bat-and-gt3-prices-a-study-in-manipulation-by-chicagomarketing.html
Show threadScott Miller 🇺🇦 🇺🇸10h ago

@drahardja All very good theories. I’d add the possibility of places like BaT with a fixed commission being a great place to launder money.

ETA: as has allegedly been done with things like luxury watches, artworks, and NFTs.