Enthusiast car paradise is going through some trouble right now. This week, popular Doug DeMuro-founded auction site Cars & Bids laid off a substantial chunk of its workforce, with moderators, business development team members, accountants, and human resources all affected.
While a litany of online car auction sites have launched over the past few years, Cars & Bids is one of the few that seemed to break through the noise, gain real traction, and attract some semblance of stability. So what’s going on? While the true situation and reasoning will remain sealed behind boardroom doors, a deeper look into things paints a picture of an injection of cash, an enthusiast car market returning to Earth, and the possibility of reduced revenue.
This comedown arc seems to start in January 2023, when private equity firm The Chernin Group invested $37 million in Cars & Bids. Seeking investment can be a double-edged sword because, on the one hand, founders want to be rewarded for their work, but on the other, outside influence may not want to take things slow and steady, and may be looking for quick returns. At this point, the collector car market was starting the decline towards some semblance of normalcy following the bull market of 2021 and 2022, but it still had a way to fall.
At the time, Cars & Bids was averaging around 25 auctions closing each day, and while auction fees from that sort of churn can easily support a small crew if vehicle valuations are high enough, that number was going to have to increase in order to grow the business. Roughly 14 months later, Cars & Bids managed to increase daily auctions by a few units, not quite breaching the 30 auctions per day mark in early March. At the same time, the industry saw a shift in more vehicles failing to meet their reserves, and since Cars & Bids relies on buyer’s fees for revenue, it seems that some restructuring ended up taking place.
In March of 2024, Cars & Bids alumnus and Autopian contributor Alanis King replied to an Instagram comment, stating that “Unfortunately, Cars & Bids gutted its content team with no warning. I appreciate that you enjoyed my work there.” Along with King and several other team members, last year’s restructuring extended all the way up to CEO Rogelio Choy, who also parted ways with the auction site in March.
Flash forward to Feburary 2025, and daily closings on Cars & Bids seem to have slightly declined over the past two years, with many days in February falling short of 25 auctions coming to a close. What’s more, we aren’t seeing the same sort of craziness we saw in early 2023 when the capital injection happened. The days of flipping brand-new Rivians on the second-hand market are firmly over as people who bought at the top of the market don’t want to sell and lose money, and people who like what they have are more likely to hold onto it.
DeMuro elaborated on this during a recent episode of the Iced Coffee Hour podcast, stating:
End of ’21 was the absolute peak of the craziness, which is when all those COVID shutdowns had really stopped production of new cars, or heavily diminished production of new cars, and so used cars had gotten incredibly valuable, and at the same time, money was cheap. And so used cars were becoming more valuable, new cars were not available, people were getting incredibly low-interest loans, it was Thunderdome. We couldn’t put reserves on cars high enough. People would come in, ask for crazy reserves, we’d give it a shot, it would sell every single time, it was just crazy.
Things are different now. The supply and demand in the market has certainly caught up for most automakers, I would say. Some automakers are still in an undersupply situation that’s carried over from COVID and they’ve never dug out of it, but a lot of the automakers have caught back up. So new cars are cheaper now, capital is more expensive — getting loans is harder, more expensive to finance cars — and so that has made new cars cheaper, which in turn has pushed used car prices back down, and the market is considerably different now. We still have people clinging to values [from] two years ago when they’re submitting their cars, and it’s like uhh, there was a time, but it ain’t now.
As a result of the market swinging back towards normal, we’re seeing a lot of reasonably priced cars transact on Cars & Bids. While this is good for buyers, it means a whole bunch of cars aren’t even coming close to the 4.5 percent buyer’s fee cap of $4,500, and that likely has an impact on revenue.
For instance, Cars & Bids moved around $380,625 worth of sheetmetal on Feb. 11, bringing in what I estimate to be roughly $17,128.13 in buyer’s fees. Flash back to Feb. 10, 2023, and Cars & Bids moved roughly $627,742 worth of cars, good for around $28,248.39 in buyer’s fees. While the cyclical nature of the market makes it hard to directly compare dates, that’s a big swing in a relatively slow part of the selling season, and an overall market decline could be a key reason for the latest round of layoffs. While growth mentality might play a role here, there’s also a possibility that Cars & Bids may also be dealing with lower revenue.
When word of these layoffs hit, we reached out to Doug DeMuro for comment, and here’s his official response:
Cars & Bids is making changes to our organization to better support our buyers and sellers. Sometimes those are difficult decisions, and they never come easy — but we’re confident that the best is yet to come from Cars & Bids.
At this point, we’ll have to wait and see what the future holds. If the enthusiast car market continues to depreciate and Cars & Bids can’t compensate for that with significant additional volume, the online car auction landscape might look a bit different.
Right now, my thoughts are with the employees who were downsized, as working alongside enthusiast cars often requires passion, and having a steady gig involving something you’re passionate about disappear is gut-wrenching.
(Lead photo credit: Cars & Bids)
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THAT’S WHAT HAPPENS, DOUG!
😉
How the hell does a car auction site that only moves 20 cars a month and generates under half a million in revenue a year get or even need a $37 MILLION cash infusion? It’s not like they’re creating some crazy new and innovative product here—they’re selling freaking cars.
Unless I’m missing something big, it seems like it was never a viable business, and declining car values were just the nail in the coffin they built for themselves.
Seems like alot of commenters think “layoffs” mean “Chapter 11 bankrupcy”. Dont put the nail in the coffin yet for Doug.
The moment a private equity firm gets involved, that’s usually the kiss of death for a business.
Meanwhile GuysWithRides.com just announced $1 to list and 1% buyer’s fees with a $500 cap for classic car auctions. We can offer such low fees when you self-fund your business rather than make a deal with the Private Equity Devil: Press Release
Give three examples of instances where private equity improved an existing product or service. Cite your sources.
..that’s all I got. There may be more, but they’re definitely few and far between and absolutely the exception. I think the strongest defense of PE I could steelman is that the companies they wreck were often already circling the drain (Toys’R’Us, Radio Shack, Kmart, Red Lobster, Sears, etc). 99% of the time they’re gutting the company for quick cash, whether it was viable or a rotting zombie.
Those of us who remember buying Dells back in the 486/P5 era would disagree. It dropped off a cliff in quality and value shortly after that, and it has never regained its previous excellence. But you’re right, it is a somewhat unique case but only because it was PE partnering with the founder with severe restrictions on what it could and couldn’t sell rather than PE just coming in and buying it outright. That’s not how it usually works.
Sears/Kmart were not circling the drain until PE got involved at which point they were intentionally sunk. They were doing fine in 2004. Then in 2005 the PE hedge fund merged them, saddled both brands with massive debt to fund stock buybacks, and the guy running the PE, Edward Lampert, became a multi-billionaire while thousands of workers lost their jobs.
Red Lobster was also doing fine until PE got their claws in them back in 2014. The PE firm immediately sold the land the restaurants were on and, instead of applying that money to growth or even just paying rent on the land they were now leasing, the $1.5 billion went straight into the PE firm to finance the Red Lobster purchase. In other words, as is very common, the PE firm used Red Lobster’s money to buy Red Lobster and in doing so saddled Red Lobster with a $200 million per year rent bill, increasing at 2% per year, not to mention making the ludicrous claim that Red Lobster, the company they bought, owed them money to reimburse them for the purchase price.
This is like adopting an 8-year-old kid and then explaining to the kid that he owes you the adoption fees, with interest, and if he doesn’t pay you by the time he’s 10 you’ll kill him, oh and by the way his paper route money has to go to paying the apartment lease, not his debt. If you think that’s a ludicrous notion, then you understand why PE should not be allowed to exist.
The exact same thing happened to Toys R Us – PE bought it, sold the real estate to fund the purchase, saddled it with massive debt and then laughed while it collapsed and the PE vultures walked away with fortunes. The business would have been fine if PE hadn’t gotten involved.
Most if not all of the PE-owned businesses which were “circling the drain when they were bought” actually only started circling the drain immediately after they were bought, because their buyers flushed. They launched very effective PR campaigns explaining to gullible journalists who do not understand finance that the debt load was just too high. What they did not mention is that the debt load was intentionally installed by them so they could suck money out of the company and run away from the collapse.
PE firms are parasites and should be illegal.
PE’s job is not to improve existing products or services. PE’s job is to buy low and sell not quite as low.
THIS… is capitalism.
I love C&B and am amazed it hasn’t stolen more of BAT’s listings.
C&B made simple (pretty obvious) improvements to the listing format that I’m shocked BAT hasn’t copied by now. When reading BAT listings it’s just super-annoying to have to comb through the dense paragraphs to find basic info that’s clearly bulleted at the top of C&B listings. Also C&B helpfully organized the photos by category. The BAT listing format seems really dated and like they aren’t trying very hard.
Oh no! I hope those at the private equity firm are not negatively impacted by this. That would be a shame. a real shame.
Are they renaming it crash & burn?
So they got rid of Alanis and went with Kenan? A cool woman with an interesting take compared to another smarmy rich white guy who has the presence and personality of unbaked bread.
I did learn last week that Alanis has her own youtube channel. So she is still out there giving reviews.
Yeah, I follow her on IG and youtube. I love her Bobs guy stories, lol
Yeah. I am subscribed to her YT channel. But I suspect it doesn’t pay as well as a job, job. You know, with health and retirement benefits.
Kennan started in another role in the company and Alanis only worked for a short time as content only afaik. She parted ways almost a year ago. I enjoy her personality as well but Kennan is a fun foil to Filipo and I understand the decision.
I really liked her Content at Cars and Bids and her and Doug had such great back and fourths. The problem was it seems like the views were working for doug style reviews of cars on the site done by Alanis, Kenan or people like Zack from Smoking Tire. They stopped making that content and let everyone go from their content contracts and took the content to the podcast, and the stuff they do on the channel. I actually liked the old stuff, but the new stuff is great too. Good for them
Maybe this starts to bring Uncle Doug back down to Earth. I really enjoyed his content years ago when he was bumming other peoples’ cars and was kind of the nerdy car geek friend that a lot of us have (or are that guy.) And it was funny watching a kid of the 1990s try to fully understand 1980s car tech. But when he got big, with a staff, and Cars and Bids, the channel changed for the worse, and hard. There was a video he posted that really changed my opinion of his where he sat down with his spoiled friends and they were discussing/arguing about what supercar they were going to buy next. Right there, that told me they lost the plot. They had become the worst of what YouTube has to offer. All of the videos became a commercial for Cars and Bids. Normal cars became rarer. His “studio” was a nuclear bunker with a $750K Porsche as a backdrop and a Lamborghini in the corner. He took the private equity money and changed into a rich kid monster and the content suffered.
Having lost a job a decade ago caused by a private equity firm cashing out and stripping us for parts and the data, I know about the destruction these firms cause. They don’t provide a service, they don’t build anything, they don’t seem to do any good except to delay the closing and they just want to gut everything and leave it for dead. I’m saying this is the end of Cars and Bids because once the negative media coverage starts, it’s over. And maybe this will force Doug to become a normal, down-to-Earth human again making content that all of us can relate to. I compare it now to Regular Car Reviews where he started the same way, and still seems grounded, but lately the content doesn’t seem as good as it once was and hoping that they can right the ship.
The wildest change from his channel is that it seems that Doug’s opinions have become more vocal, due to him not really needing the Youtube views anymore. His GAF’s are gone.
He won the lottery and the PE money is in his accounts earning interest. He never HAS to work again.
I’ve always hated his review videos. I semi-liked his Jalopnik stuff back in the day, but it was always clear in the videos he had no idea what he was talking about.
I like his reviews because he spends a lot of time inside and outside the car pointing out the different “quirks and features.” The road tests and DougScore are weak points though.
his reviews are exactly the same, he still does review regular cars all the time.
Is the enthusiast car market coming back to earth?
Or is the internet car auction market simply consolidating with Bring a Trailer, which currently has nearly 800 listings on any given day?
Companies which can’t compete going out of business is simply how Capitalism works.
BaT is so damned big that I never feel confident that I am seeing all there is – which militates against me ever bidding over there.
Also, why don’t they have a JDM tag or category so that I can search and find what I seek?
You are definitely not seeing all there is.
I just did a search for “JDM” and here’s what I came up with:
https://bringatrailer.com/search/?s=jdm
I think values are just declining a bit overall. When money is cheap, people spend it. Same thing happened in 2006-2008 when muscle cars started selling for a quarter million for the first time. Then values dropped in 2009-2010.
It’s cyclical, but right now it’s certainly trending downward. Even from a year ago, prices are lower on performance cars.
$37MM for an upstart car auction site? If it was the eighties I’d blame cocaine, but in this situation? Love see PE partners fail but they do tend to leave a trail of bodies in their wake…
It’s private equity. Cost cutting and layoffs are just standard operating procedure. The idea is to maximize short term profitability as quickly as possible to position the asset (or parts of the asset) for sale or public listing.