National classic car dealer chains spreading their reach

From Walmart to Home Depot, we’ve all become accustomed to nationwide chains of retail stores. It’s the same with car-dealership groups, such as Autonation or Penske.

So it seems only natural that we’re seeing the proliferation of retail chains selling collector cars. The recent growth of national classic car dealer showrooms adds another layer of ways to buy and sell vintage vehicles in competition with auctions, local dealers and individual sellers.

Two of the most-prominent collector car dealers, Streetside Classics and Gateway Classic Cars, recently moved into the Phoenix area at about the same time, vying to take advantage of the active whirl of collectors, hobbyists, street rodders, restorers and customizers who live and work in the dry, temperate climate.

Arizona is also home every January to one of the busiest collector car auction weeks of the year, dominated by the ever-popular Barrett-Jackson auction in Scottsdale, and with six other major auction events as well. It’s that churn that attracts buyers and sellers to the Phoenix/Scottsdale area all year long, and that brings the latest round of collector car retail chains to spread into the area.

“When I see bigger markets, that’s where we start targeting,” said Ashley Rogers, director of marketing for Gateway, which is based in O’Fallon, Illinois. “Our eyes have been on this market for years.”

Gateway recently moved into a huge warehouse-style building in north Phoenix, although the company refers to it as its Scottsdale store. This is Gateway’s 16th location and the one that’s farthest west in the U.S. All of the showrooms are located in major metropolitan areas where there are the greatest opportunities to attract private sellers of classic cars and trucks, Rogers said.

For Streetside, the Phoenix location is the company’s sixth store and its western-most expansion. The showroom is located in Mesa, just east of Phoenix.

“We wanted to go out west, but we didn’t want to go to California,” said Streetside’s owner, Donna Robbins. “We have a place in Dallas so this was our next step. We knew this was a great classic cars market.”

Gateway and Streetside have similar business models, moving into key collector car markets with gigantic showrooms that hold 175-200 vehicles. There needs to be a strong contingent of people who are regularly selling cars in and around the locale, both Rogers and Robbins explained, because the vehicles in the showroom are essentially all on consignment by private owners.

“When we choose a market, it’s where the cars are because our business is consignment of classic cars,” Robbins said. “There’s a lot of research that’s behind it. You can go on websites and go by zip codes. Most of the cars are going to come from about a 200-mile radius, a majority from a 100-mile radius of where you’re at.

“We pick various cities and compare. Phoenix definitely had the most classic cars for sale by owner than the other cities we were looking at.”

Rogers strolled around the 40,000-square-foot Gateway space on a recent morning, presenting a tour of the car collection to a couple of visitors. Gateway, which has been in business since 1999 and advertises itself as the world’s largest seller of classic vehicles, has added several stores to its collection in recent years.

“We dabble in a little bit of everything,” Rogers said. “You’re going to see custom cars, you’re going to see base models, you’re going to see some of the newer stuff. We also deal in celebrity vehicles. We’ve had a few movie cars as well.”

Both Gateway’s and Streetside’s showrooms contain primarily midrange domestic cars with a smattering of European and Japanese vehicles. American muscle cars and customs have a strong presence. Each space can accommodate up to 200 classics, the companies said.

The general feeling is like that of any new- or used-car dealership, except that these are collector’s items, not needed for daily transportation or getting to the grocery store, but as something extra, an indulgence to be enjoyed.

“This is a want business, not a need business,” Rogers said.

Robbins said the consignment model for the sale eliminates much of the risk of selling cars. This is part of what attracted her to start the business in 1999 with a partner. They opened the showroom in Charlotte, North Carolina, in 2005 and she took it over completely in 2008, she said.

“The thing that caught my attention is that you have no money involved, no upfront capital involved because you’re not buying those cars, just consigning them,” Robbins said. “There are hundreds of thousands of dollars of assets sitting out there that you don’t own. It’s a service business.”

Gateway and Streetside do much of their advertising for the dealerships in the same fashion, through online and in local publications. There’s also lots of outreach to local classic car clubs and enthusiasts.

Gateway recently held the grand opening of the Scottsdale store by sponsoring a cruise in with food and refreshments, with several hundred owners driving their vintage cars, muscle cars and street rods for the get-together in the broad parking lot. Most of the visitors also moved inside to peruse the classic car inventory.

“This is a happy business,” Roger said. “We try to build relationships with the car clubs.”

Streetside also will be hosting cruise-ins and club events at its Phoenix site, Robbins said.

Dave Kinney, a vehicle-value appraiser and long-time observer of the collector car market, as well as a collector himself, said the expansion of dealerships is part of the process of commodifying collector cars, which makes sense since they hold their value and can be sold with some regularly at a profit.

“I think it’s a new phenomenon and something we’re not going to see go away,” Kinney said. “Let’s be honest, selling a car on eBay is a pain in the neck. And buying a car on eBay is a pain in the neck as well.

“Certainly, I don’t think this is a bad thing. But it is unusual that it has taken so long for this to happen. You have Autonation and Carmax and Penske and a number of other dealers that have branded for new and used cars, so this is just another step toward branding classic car sales.”

The two companies make their profits by charging the consigners a commission that is included in the price the buyers pay. The seller and the showroom determine a value that would be acceptable to the seller, and the company adds its take to the asking price.

The slightly higher price compared with private sales benefits both the seller and the buyer in terms of ease of use and confidence in the transaction, said Bob Mueller, marketing director for Streetside.

“The advantage over an auction is that we reduce the cost load on the consigner,” Mueller said. “With auctions, you have to take into consideration the cost of getting it (the vehicle) to the auction. Because auctions are singular events, sometimes they have to ship across the country. Whereas with Streetside, they can ship it to a nearer location.

“When I look at what their (the sellers’) takeaway price is, we can actually get them more in pocket,” Mueller added. “We don’t charge any entry fee, we don’t charge a storage fee. So whatever they want for the vehicle, they get the full amount.

“Technically, our commission is paid for by the buyer. We mark it up so the consigner ends up walking away with more.”

What the showroom stores also provide are advertising and floorspace to hook in car shoppers.

“At the auctions, you don’t get to do the kind of examination that you do here,” Robbins noted.

Both Gateway and Streetside are settling in nicely in their latest locations, according to the company officials. There has been plenty of foot traffic and consignments have been solid, as has the reception from local car collectors and clubs.

“We’re doing well here,” one Gateway sales rep said as he watched the crowd from the opening-day gala swarming through the collection. “We’re getting them in and getting them out.”

Robbins, the owner of Streetside, said she has been surprised and delighted by the growth of her dealerships across the country. When she first started out, she noted, she had a much more limited view of the possibilities.

“I thought it would be a really cool business; I love classic cars,” Robbins said. “I never dreamed it would be such a successful business.”