I published an article on this very subject over 10 years ago in an attempt to understand why the application of POA (price on application) was being used so widely in the high-end automotive industry. At that time the classic and historic car market was in a very different place. The 2009 post-recession years drove the classic car ‘asset class’ to very heady heights with a clear supply and demand situation fueling unrealistic price increases on literally, a daily basis. Certain makes and models were so hard to get that they could increase in price by a third in a few weeks. From a seller’s point of view, the use of POA allowed the asking price to keep up with the market without having to explain why an advertised price had been significantly increased in that short period of time.

Fast forward 10 years and we find ourselves in a very different place with the whole classic car movement. Prices, note I don’t use the word values, have softened significantly in many areas. The sheer volume of interesting cars which have been restored and are now available has dramatically altered the previous supply and demand balance. Add to that, the generation change in the buyers of such cars and even further pressure by the interest in electric conversions, you have a very different price landscape.

The historic car market is undoubtedly under pressure and finds itself at a level it has not experienced for over 30 years, combined with the changing demographic of buyers which may be creating an environment that is difficult for the traditionalists to understand or even want to. So, is today’s use of POA now the reverse of its use 10 years ago? Is it used by the seller to establish what the true price of the car is to a buyer, rather like a house sale, where offers are considered in ‘excess of’ and the ultimate price is open to the market to decide? After all, the buyer is far more market educated and savvy than he or she was a decade ago and has become the leader in the market.

The increase in so many auction platforms may also be putting the traditional dealer in a tricky pricing position, although we all agree, the safest place to spend your money is an experienced dealer environment. With so many high value motorcars being sold on consignment, maybe the POA approach enables a dealer to manage the often-high expectations of the vendor who paid top of the market money 2-3 years ago. To try and unravel the enigma, I felt I should take the view from both sides of the argument.

The dealer point of view.

I spoke to two market leading dealers of high value cars who both essentially gave a similar independent rationale behind their use of POA. Generally, it is deployed when a car is especially rare in either model or condition or has extra special features that may not be immediately obvious to a potential buyer. The assumption is that listing the car as POA will open a dialogue where any important and special information about the car can be thoroughly explained and hence the price is more justifiable. To expand on the rationale a little more the sentiment was also that the seller would try and gauge from the enquiry as to what a client would potentially pay and hence be able to price the car accordingly. If you are a serious buyer, we disclose the asking price, if not we will not. There are credible situations when the use of POA is a legitimate way to establish what the market will pay and the car is worth.

As an example of this point, this very special and what could be considered a unique model of a Porsche 964, may be an explanation of a dealer’s approach. When we enquired as to the sale price with the dealer, a guide price was given between £1- £1.2 million pounds (obviously open to offers). This particular car was previously offered for sale at a well-known auction house in 2021 with a guide of £950 – £1.1 million pounds and apparently with little interest at that level. We understand that bidding didn’t even get close and the car remained unsold. The same car has re-entered the market and listed as POA, potentially to allow the dealer to gauge the market price by the tone of the enquiries he is receiving due to the historic uncertainty surrounding its expected guide price?

The potential buyer’s point of view.

Once again, I selected two known buyers of high value cars, I mean by that, clients we have known for many years and are mature car buyers. Immediately there was a negative vibe towards the use of POA by dealers. “If a car is advertised for sale, it has a price – right, so why not at least list it?”. There is a definite dislike towards its use and quite understandably. The difference today, as opposed to a decade ago when I wrote about the same subject, is that buyers are far more educated to market conditions and have access to so much more market information. The internet allows a potential buyer to perform a detailed search on a particular car, its previous sale history and current value and compare it with similar models for sale. Both of my commentators suggested it was not a motivator to make the call but rather the opposite and had both experienced a scenario where they just didn’t bother.

Having been in the industry for many years I can see both points and take a personal view that a decade ago POA was used to defend against losing out on price inflation, but today it could be a way of managing price deflation. The numbers at certain levels of the specialist car sector have become staggeringly high yet the industry remains unregulated, and in many areas, unsophisticated. Compare this to the property market, where house prices match or are often lower than the price of some cars, legislation now ensures the consumer is protected from the use of Price on Application, deeming it unlawful. 

The Financial Conduct Authority (FCA) is currently looking closely at how Franchised Motor Dealers use finance to sell their new and nearly new cars and how fair their offering has been to the consumer, focusing on their process in exercising Consumer Duty rules. How long before Trading Standards follows suit and looks at the clarity of how the price of a car (especially at the higher level) is presented to the consumer?