Interview with Dan Kruse

I recently had the opportunity to talk to Dan Kruse, a legend in the auto auction business. The Kruse family has set hundreds of record prices in the collector car industry, including selling the first car for a documented $1 million in cash–a 1934 Duesenberg to Tom Monaghan, the founder of Domino’s Pizza.

Dan Kruse is one of seven children of Russell Kruse, and in addition to working as an auctioneer for Kruse International, he runs Dan Kruse Classics. Dan’s daughter Tiffany joined the call, and I also asked my friend Scott Smith to join in, since he has attended quite a few big auctions and has helped to broker the sale of a few high dollar Mopars. You can read the full interview after the jump.

Rob: So what is your role is in Kruse International?

Dan: Well, Kruse International is the parent company owned by my brother Dean Kruse and his wife Kristin Kruse. I auctioneer for them. I also have my own auctions that I run under Dan Kruse classics. I do those auctions here in Texas, and I do one in Cruisin’ on the Coast in Biloxi and one with Vicari Motorsports in Daytona.

Rob: So you focus primarily on the Dan Kruse Classics segment, and that’s a couple of auctions every year, is that correct?

Dan: Well I do sign business for Kruse International. I have been working for that group and owned part of that group from early on and been with it 38 years. So I would be considered a senior auctioneer and senior sales consultant with them. I am involved with them on about 30 auctions a year.

Rob: So I assume this was a natural thing to join the family business?

Dan: Yes, it wasn’t only natural, it was kind of the only way to go. It’s one of those things where you are raised in it. I worked in the business all the way through junior high, high school and college and never really thought of doing anything else.

Rob: I was looking on the website, it said that the first auction by your family was in 1971 in Auburn? So you were right there and you have been doing it ever since?

Dan: That is correct. Labor Day weekend

Rob: How many cars do you normally auction off at the Dan Kruse Classics?

Dan: Typically it runs around 210 to 230. I think we had about 240 this weekend.

Rob: So you sell those is one day or in a weekend?

Dan: Well we did those in a weekend. We do Fridays and Saturdays. We do about 60 some cars on Friday and in this particular situation about 160 on Saturday.

Tiffany: The Biloxi auction is quite a bit bigger than Fredericksburg. Fredericksburg is kind of a little boutique sale and Biloxi is hooked in with Cruisin’ on the Coast, so we usually have about 300 or 350.

Scott Smith: Last year approximately how many vehicles did you auction total in the Kruse Network?

Dan: We do close to 10,000 cars a year. It could be as low as 8,500 or as high as 12,000. It just depends on each year.

Scott: So that includes your online sales like eBay auction and etc.?

Dan: We don’t do a whole lot of eBay auctions, we mostly are live.

Rob: What sorts of cars do you focus on or primarily feature?

Dan: Well we are really what I would call a Ford motor company or General Motors of the auction industry. We really take everything and everybody. We sell probably close to ten times the cars anybody else does in the market, and we have been doing it longer than anybody else, too. We have a network and have built it up over a long period of time.

Rob: How about the Dan Kruse classics, do you focus on a particular segment?

Dan: Not really, it’s whatever comes to us. Every auction develops its own structure of what comes to that particular auction. The Auburn Labor Day auction is the biggest sale Kruse does through that Kruse family network, and it will have about 1,600 to 2,000 cars at auction and about another 2,000 cars privately. It is spread out over 480 acres and it’s a big deal. It’s about the third or fourth largest event in the state of Indiana. Hundreds of thousands of people come.

Rob: I noticed that you didn’t have any Japanese brands listed, is that generally that case?

Dan: We get a lot of Toyotas and we get Datsuns.

Rob: So are you talking about the old ones like the 510s and 240Zs?

Dan: Yes, Right

Tiffany: There is actually a guy here in South Texas that he buys every Land Cruiser that we ever get. Those old ones, he loves them. But we sold a Datsun 280Z this weekend or reserved for a guy. Those are most popular those two models right now. 240Zs and the Land Cruiser from the 70s.

Rob: Have you been seeing those go up in value?

Dan: Oh yeah, we sold one for $20,000 and one in the $70,000 range. So the Land Cruisers are going up in value. I have seen people over restore cars, where you can take the same automobile like a 1970’s Land Cruiser and it could be worth anywhere from $500-1,000 for parts, all the way up to $35-40,000 if it is restored just mint 100% show perfect. So it really depends on the quality and the restoration or the original perfect condition. The value fluctuates all over the place according to condition.

Scott: I couldn’t agree more. You can put $100,000 dollars into a $20,000 car.

Dan: Yes, I see it all the time. The worst one I ever saw was a doctor in San Antonio that restored an old Ford school bus from 20s and put a half a million in it. The bus was brand new, every nut, every bolt, every sticker, everything brand new. It was hard for me to swallow the fact he had half million in it, I couldn’t imagine him doing that. He is a doctor and he went out a hired it all done, and people put it to him pretty good. He could never sell it. I got him an offer for $80,000. I think he just gave it to the Ford Motor Company, to the Dearborn museum.

Rob: So what is your favorite place to hold an auction?

Dan: Auburn, Indiana has always been a great place to hold an auction. For years it has just been the centerpiece of the marketplace. There are thousands that have been coming there ever since the first sale and are proud to attend and come back every year. It’s one of those things that Auburn is where you bring your family, your son or daughter or the friends that you’ve had for years that like cars and just come back every year and are amazed because you see so many cars in one location that are all for sale. It’s hard to find four or five-thousand cars in one spot for sale. So Auburn definitely is the most interesting sale Kruse holds every year. Now the smaller boutique type sales or the sales that run two- or three-hundred cars, I actually like ours in Fredericksburg as much as any of them. It’s a neat setting, they built the building just for our auction, and it’s just gorgeous. Are you familiar with auction network?

Rob: I am now.

Dan: Auction Network came and they put it on a live broadcast on the internet. They did a fantastic job. They did the staging and brought the lighting and everything. It was a pretty impressive presentation they gave us here for Fredericksburg. The Hilt country is a sweet spot, it has a lot of affluent wealthy people that have farms and ranches up there and second homes and there are a lot of car collectors that have second homes in Fredericksburg. The whole town is just like an antique for sale, it’s amazing. So that’s a neat place to go to and enjoy. Cruisin’ on the Coast is another one we do where we get thousands of cars cruising up the highway. About half of them are for sale. We do an auction there that is real successful and it’s a lot of fun because of the atmosphere, with the casinos and the ocean. There is a concrete pier and last year that is where we put up the tent and had the sale, I mean we were right on the water. If you were driving your car in and out of the tent it looked like you were driving into the water.

Scott: You are discussing the Gulf coast correct?

Dan: Yes, the Cruisin on the Coast in Biloxi. Of course, we do sales in Las Vegas and we do two or three a year in Florida. We do them just about everywhere: Salt Lake City, Dallas, Tulsa, Oklahoma City, Houston. Just about everywhere you can imagine we hold a sale.

Scott: Where are you
seeing your largest growth right now?

Dan: I think the market continues to evolve. Our largest market ten years ago was 50s and 60s cars. Probably the largest market right now is the 70s and 80s and I think you will see that continuing trend. Each generation has cars that they like and have as nostalgia from their generation.

Rob: What do you see now from the 80s?

Tiffany: Well we had an 80s Camaro this weekend, a Z28. That is hard on me because I graduated in ‘89. It’s hard to believe that a car that my friends drove in high school is now a collector car.

Rob: So why does somebody sell at an auction as opposed to a private dealer? And on the other side of that, why does somebody buy at an auction as opposed to from a dealer or private seller?

Dan: Well to me I think people would sell at auction because of two primary reasons. First, in my opinion is that they are familiar with it, they are comfortable with it and it gives them a cash offer. They don’t have to put a classified ad up or have problems with timing on when it could sell. They can go to the live auction, sign it in, get an offer that weekend, and either take it or not.

Tiffany: We qualify all of the bidders, too.

Dan: The other side of that is, a lot of times cars don’t get sold and they get frustrated and there is no other market to go to but the auction market to get a bid to find out what your car is really worth. Like the guy asking $500,000 for his bus. There is an old saying: you can’t make a pickle over night–you have to let the cucumber soak. A lot of times that is what happens to these guys–they have too much in their car and you’ve got to give them time. But as far as buying at auction, I think a lot of people are very aggressive, and auctions provide what I call a real live market. It’s fun to see people bid against each other. If I was buying a car I would feel much more confident and comfortable watching other bidders bid against me. The value I set for this car, other people feel the value too, and I can see that—the interaction would give me confidence. The auction market on the upside, you know the bigger cars, brings cars out of the woodwork because they are bringing half a million to ten million dollars. The normal side of the market are cars from $30,000 to $40,000 up to a $100,000, which is the bulk of the market, which is where we are most of the time. Those cars are a lot more fun to buy at auction, it’s just an experience. Its kind of like going to a football game, it’s an atmosphere, its exciting and its fun to take friends and your family and buy cars. It’s a great experience.

Rob: Do you think the auctions like yours have played a role in some of the crazy prices we have seen over the last five or ten years?

Dan: Kruse has set probably more world records than anybody ever, thousands of records for different car models and makes over the years. Some of that has also been highlighted and taken over on some of the upper cars of certain types of cars by R & M and certainly Barrett-Jackson and Gooding. For the mainstream I think we still provide the best outlet and we have Duesenbergs like at Auburn, we have had ten or twelve Duesenbergs in the last three years. We still have a lot of great collector cars, a lot of classics that come and I think what’s so neat about Kruse sales is that you can see everything, you can see cars in the teens, cars in the twenties, thirties and forties etc., you see it all. I think that’s why eBay was looking around for a live auction company to buy, they actually bought Kruse, and they bought us because we had such a wide brand and almost everybody knew about Kruse and been to a Kruse sale. (Editor’s note: Dan later bought the company back from eBay.) We probably have had millions of people attend out sales over the last 40 years.

Rob: So the cars that are Scott and I like, our favorites are the 63-71 Mopars and we spend a lot of time on the message boards talking about the values of those cars, and there seems to be a feeling that the prices may have peaked on those about a year or so ago and are starting to actually come down, although a lot of sellers aren’t really recognizing that fact and are still asking for very high prices.

Scott: Well you know my comment on that Rob, I think that first of all, the people that were really entrenched in the hobby were aware of the change probably about two years ago and didn’t go down to the masses till about a year ago and I think its more of a market correction than anything. I think there was a very small percentage of people who were battling for the top shelf cars and outbidding one another to own them and then once they had their cars they backed out of the market and left the crumbs for everybody else to fight over and the fighting stopped.

Dan: Absolutely, I really liked that, that’s the best explanation I’ve heard and I identify with that.

Rob: So do you feel that is roughly correct from what you have seen on the auction floor?

Dan: I think that is 100% correct and I knew several of those cars that traded privately and it was hard. Those private trades and private placements are so difficult to really document and trace because you don’t see a check written for two or three million. You see trades being made and some money being traded, it’s just hard to really document it all.

Rob: So do you feel that the market has peaked at this point?

Dan: I agree with what Scott said, I think there has been market correction and I think a few guys manipulated the upper side of that market which caught the wind of the whole industry and made them a little hot for a while. Barrett-Jackson sold a couple for some real peaked out prices and the real world wasn’t that high. So when the real world started coming out and people started knowing what was going on. It was a very small group of people that made that line, the real world never really caught up to them. That’s how I saw it, and I think Scott, you described it about as good as I have ever heard anyone say it.

Rob: So how do you feel the current state of economy is affecting the auctions right now?

Dan: I feel like the overall market is still pretty decent. Here is what has not happened yet. We have not had six months of high oil prices and high staple food prices to really sink deep into the market, the prices when they were about $2.80 that’s probably livable in our society but I think this $120 barrel oil, with gas getting up to $3.20 per gallon; that along with the basic staples which went up about 30% in the last two years, that is going to make a play and I am just not 100% sure. The other play comes from the adjustment in the market place with all the mortgage deals and that cycle coming around. It is not around yet, little bits and pieces are, but it really hasn’t affected our economy like it might. You know we have a presidential election year and I think the end of 08 and the beginning of 09, whoever gets to be president has all they can handle.

Rob: I was going to ask another one of your questions which is the restrictive EPA regulations and how you see that impacting the classic cars.

Dan: You used the word classic cars, I don’t think it impacts the classic cars at all; the classic cars are a high grade of collector car and people pay so much for them and they are so affluent that I don’t think that is an affect on them. Cars that it might affect are the 70s high performance and 80s high performance cars at some point in time. We will just have to wait and see how it works out. It just isn’t there yet, it’s not showing up. But it could have an affect.

Scott: What I had in mind when I came up with that question was, and I always considered myself as the
example, if I have a ‘Cuda sitting in the garage and I want to take it for a drive and I go to the pump and all I can buy is something it wont run on, then that creates an issue and I don’t know if I want to keep owning a car like that.

Dan: Are you saying they might not have premium fuels at some point in the future?

Scott: You can still rebuild an engine to run on pretty much anything if you are determined, but I would assume it would take a least some percentage of people out of the market place or make them disinterested.

Dan: It’s possible, realistically I think what your saying is that it will affect some, without question it will affect some people. The other key, if they ever dropped off making premium fuels there would be some boutique group doing it because there would be a need. As long as you got old cars you got a need for that. They probably charge a higher price but it’s always going to be available.

Rob: So what are your thoughts on eBay?

Dan: I like eBay; I think it is a great company and a great community. I feel like probably this last six months with Meg Whitman retiring was a pinnacle. She did an unbelievable job for a long period of time of troubleshooting the relationship between the eBay community and the eBay corporate. The new guy has got his work cut out for him and they just went through a big round of trying to push their commissions and structures up a little bit and of course the cost of everything goes up, it’s just one of those things. I think they have gotten a little bit hammered on that. A lot of the people don’t like the new commission structure and the bump ups on the fees and I don’t know if there is a saturation point for that or not. I guess if enough people complain and switch over to competitors it will probably affect eBay’s business a little bit, but they are a giant.

Rob: So what cars interest you the most?

Dan:  I have always liked a couple of the classics. I will give you two or three cars that I really like. One of them is a 1932 Auburn 4-door convertible sedan V12. They call it the baby Duesenberg. I owned one for about seven or eight years, had it in the museum up at Auburn and ended up selling it. My motivation at that time was that it was just sitting in a museum and I was going to build a house. I like the ‘58 Impalas. I tried to drive them back and forth to work and it only worked out for me for a while and then you get tired of driving an old car and you drive a new car because the conveniences are so nice. The car that I want to buy, that I will probably buy here in the future is a Camaro. I really like the 68-69 Camaros. I will probably end up getting one of those. I think they are a neat car, you can drive them everyday, they are just one of those automobiles where it’s kind of a muscle with unique design, you know that era. I owned one of those when I was in school so that’s something I would like to get again.

Rob: A friend of mine is doing a conversion on a ’69. He’s doing the full swap with the late 90s Camaro running gear into the ‘69 body. You get the best of both worlds that way, and he is documenting it pretty nicely on our site. I will send you a link to his ride page if you are curious.

Dan: Yes, I would like to see it.  I would say that is something we haven’t talked about that is a big market growing by leaps and bounds. The retrofitted market, that’s moving really big and a lot of that is based on what you just said. You get the old body nostalgia, the car itself, with all the modern conveniences and ride. That really is the best of both worlds. It’s a big market place that is a sleeping giant and growing all the time.

Rob: You see those perform well at the auction too when they come up for sale?

Dan: I think they perform fairly well, it just depends whether it’s a real sophisticated guy doing it. Some of the cars can get up to the $100,000 range but I think the middle range between $45,000 somewhere up to $80,000 is where the sweet spot is. I think you could sell a lot of cars in that area if you could make them.

Scott: I think that one of the biggest factors in that whole thing is that it becomes just like a custom hot rod–it’s a matter of personal taste, and how much demand there will be for that particular example when it comes across the blocks, right?

Dan: Yes, no question about it. The fact that more people can drive them, like young people coming in their late 20s or early 30s, it’s like they are available to anybody. But they would probably like something like that, because if you put those new engines in there and they can service it at their local dealer that eliminates all your problems.

Rob: So what do you own currently?

Dan: I drive a Lincoln Navigator. A black on black with a little wood trim on the inside, I like it.

Scott: What do you like Tiffany?

Tiffany: As far as cars, or what am I driving? We all drive Lincolns because my brother in law is one of their top salesman. He is a good salesman he sold his whole family.

Dan: He was the number one salesman at the biggest Lincoln retailer. He personally sold over 300 cars last year, but how do you say no to family?

Scott: Do you have a classics favorite Tiffany?

Tiffany: I’m with Daniel on the Auburn, that’s a nostalgic thing for me, we used to drive it to church on Sundays and it was a cool car and I still like those a lot. We also had a little Jag when I was younger.

Dan: The ‘59 Jag 150S. I drove it for a number of years.

Scott: What’s the Hemi Cuda of imports when the younger generation turn forty? What are they going to look for?

Dan: Always in the car market, you can reflect to the past and see it forward. My brother was quoted in the Wall Street Journal, “when the top goes down the price goes up.” You know convertibles, and they will always be a valuable collector. Then you have to two door hardtops and the coupes with big engines. I don’t think it matters who made them necessarily, I thank the lower the production number, the more valuable it will be–if you have a low produced convertible with a big engine and it was made in 1990 or 2003 it will have its greatest return value 30 years from now. Like the Shelby 500s they are making right now, which is defiantly a future classic car. Those things set you back in the seat. They got some power. Hertz came out and we sold about forty convertibles for them in the $50k range. There are a lot of cars and I think what you have to look at is everybody has an individual taste. But what will always escalate to the biggest number probably is a convertible with a big engine with a low production number. Or a special edition with a low number or something likes that. It could be a Ford or it could be European car or it could be a Chevy, it doesn’t matter, it’s just those special cars.

Rob: Well Dan, thanks a lot for talking to us. We’re looking forward to covering some of your auctions this year.

Dan: Thank you. We look forward to having you guys come out and see us.