The big news from Monterey last weekend was the Ferrari NART Spyder that sold for $27.5 million. That’s a whole lot of coin for a car, but that’s just where the bill starts. Before that car leaves the state, the costs required to own it are staggering.
The number everybody’s throwing around for that car isn’t what the bidder raised his paddle for. It actually sold for $25 million. But when RM Auctions agrees to consign a car, it assesses a seller’s commission on that vehicle. There isn’t any information on how much – specifically – the sellers commission is on a sale. Nor is there any information on the buyer’s premium.
What you need to understand is that the auction house is collecting money from seller – usually about eight to ten percent of the sale – and from the buyer – generally about the same percentage.
On a $25 million dollar car, RM stands to pocket $2.5 million from the seller, and another $2.5 million from the buyer.
Five. Million. Dollars.
Now, RM Auctions has significant expenses when it puts on an auction. It basically takes over the Portola Plaza, and has cars spread out all over the place for two days. It rents the biggest ballroom the hotel has, and spreads drinks and food around pretty liberally for the bidders.
But it also runs the chance of making $5 million on the sale of one car. Over the course of the weekend, RM sold $125 million in classic cars, netting about $25 million in fees, not including the entry fees charged to spectators, which are generally around $150 and includes admission for two and a catalog.
If you live in one of the 45 states in the United States that charge a sales tax, you’re responsible to pay that at some point. According to RM Auction’s FAQ: “RM Auctions is required to collect tax on all sales.” Individuals shipping their cars out-of-state must provide a copy of the ICC Bill of Lading to RM Auctions to avoid paying sales tax.”
So, if the new owner of the NART Ferrari lives in California, RM Auctions was required to collect the state’s minimum sales tax of 7.5%, or in this case, $1.875 million.
If you live in another state, RM’s FAQ states, “Individuals shipping their cars out-of-state must provide a copy of the ICC Bill of Lading to RM Auctions to avoid paying sales tax.” You avoid paying it on the spot, but typically, when you register the car, the DMV will be looking for its pound of flesh.
Even in states where sales tax isn’t charged, the state is the big winner in an expensive classic car sale. For example, in the state of New Hampshire, registration fees are charged at the city level, and are levied to the tune of $3 per thousand dollars of the purchase price. So in the case of our NART Ferrari, in “tax-free” New Hampshire, you can be expected to pay a fee of $75,000 to the city in which the vehicle is registered.
The big winners here, of course, are the states in which cars are registered, since they never had to rent a stage or pay an auctioneer like RM does. Owning any car is an expensive proposition, but it’s exponentially expensive when you purchase a classic.