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00:00The collector car market is heating up with auction sales topping $1.15 billion so far this year.
00:07From vintage Ferraris to iconic muscle cars, collectors are paying record prices.
00:12Joining us to talk about that is Hagerty Chairman and CEO, McKeel Hagerty.
00:16And your business has grown to be such a behemoth in this industry, McKeel.
00:22I mean, just give us the origin story because you started out insuring classic cars, right?
00:27And then you did a takeover of the auction business.
00:30Now you're doing a takeover of the media business as well.
00:33So tell us about Hagerty.
00:34Well, I mean, it's all based on this idea that, you know, there's this huge audience of drivers who love
00:41drivable cars that are fun to drive.
00:42And we started in the insurance space, which is a wonderful industry.
00:47It's recurring revenue, kind of snowballs on top of itself.
00:50Passion builds on top of passion.
00:51And the media and events piece was a big part of the story because what we needed to do is
00:56how do you get the word out?
00:58You know, how do you get the word out about the love of the automobile?
01:00How do you bring people to the front door?
01:02And so investing in those things, building those assets were a really important part of our thing.
01:07We have a membership organization.
01:08It's the largest membership group in the automotive space called the Hagerty Drivers Club.
01:13And then the auction world.
01:14And that's both live auctions and digital auctions, our marketplace on the digital side.
01:18And then Broad Arrow auctions, which are kind of setting record after record right now.
01:22And it's all a big flywheel.
01:24It all kind of works together.
01:25If you come to insure with us, you know, we engage with you as a member and in media.
01:29And then hopefully when you go to buy and sell a car, we're the ones that you come to.
01:33And so it's been fun.
01:34Like, I have a really fun job in the car world.
01:37Yes, you do.
01:37Yes, you do.
01:38I mean, I spend a lot of time watching Jason Kamissa's videos for you.
01:43I just talked to Ken Ahn, who runs your Broad Arrow auction business, on my podcast, Hot Pursuit.
01:49And I love the events that you run.
01:52I was just telling your colleague Kevin Fisher here about the time that we went and toured this house of
01:59a guy who had a sweet Mercedes Gullwing and an old Ferrari.
02:04And some Stephen Harris designed with his old Porsches.
02:08And it's just a really cool business.
02:10How much does the other stuff feed into your insurance business?
02:14Like, how many clients do you get from the auction, from the media, from these other parts?
02:18It's all, again, a big part of the flywheel.
02:20I mean, the biggest front door is the garage door for us, and that is insurance.
02:24So, we have all these partnerships bringing both consumers directly and also, you know, through big insurance partnerships.
02:31And that's great.
02:32But, again, insurance is not necessarily the most emotionally engaging product or service.
02:37And that's why the membership thing works.
02:39A lot of people come to us because they're reading our articles.
02:42They're watching those Jason Kamissa videos or Barn Fine Hunter or one of our other video properties.
02:47I mean, our YouTube channel, we have, you know, 4 million subscribers.
02:51And it's all automotive content.
02:53We have a Samsung streaming fast channel.
02:56We're on Prime Video doing real automotive content.
03:00And they help kind of feed the whole thing.
03:02I'd imagine it wouldn't be a stretch to assume that your audience, your buyers, the ecosystem heavily skews male.
03:09And with that, it's maybe not a surprise because so much wealth is in men's hands.
03:14That's going to change.
03:15There's a silver tsunami, and the expectation is that by far a majority of the wealth will sit in women's
03:21hands by the end of this decade or early next decade.
03:23How does that change your business?
03:25Well, it doesn't.
03:26I mean, we're, you know, we love that.
03:28You know, whoever the owner is, whatever generation, you know, whoever they are, we love it.
03:33And our job is to serve up the kind of things that will make that attractive, make it easy, make
03:37it easy to understand and kind of remove the barriers so that drivers can be drivers.
03:41And this huge wealth transfer that we're already seeing, our estimates based on just our book of business and as
03:48we see it, is about 30% of all of these cars will trade hands or come to market by
03:532040.
03:54So almost exactly to your point.
03:56It's about $570 billion worth of cars between now and then.
03:59And many of them will go from, you know, maybe a male principal owner or a first-time collector go
04:05to, you know, a spouse, go to their kids.
04:08And our job is to engage them across ages.
04:10And whether it's, you know, engaging them through a video game, whether it's engaging them through high-quality content, whether
04:16it's events.
04:17Like a lot of our events, we really position them to be great couples events.
04:21So we try to engage people across, you know, family and generational lines.
04:26And I think it's critical as we get ourselves ready for that future.
04:29By the way, I first, I met your wife before I met you because she was working at Lamborghini.
04:34Sue and Hagerty used to run their PR.
04:37Let me ask about the auction business and the growth that we've seen this year because the numbers have been
04:42astounding.
04:44In terms of especially cars from just the 90s or the early 2000s that are selling for double-digit millions,
04:51how much growth has that seen?
04:53And how much is that fed by the success of this stock market?
04:57Yeah, well, of course, I always go back to the root cause, which is where does the money come from,
05:02who's buying it, buying these things.
05:04And it's often stock market wealth.
05:06You know, it was crypto.
05:07There's lots of different pieces when people feel like they have extra resources and they want to go buy really
05:13fun stuff in their lives, not just another home.
05:16A car is often one of the first things that they do decide to buy.
05:19And you're right.
05:19Like, we're up 36 percent in that high end of the auction transaction world this year.
05:25A lot of it driven by Ferraris.
05:27A lot of it from the late 80s, 90s, and even early 2000s.
05:31And, in fact, there are some cars that are even just a few years old that are selling for multiples
05:34of what they sold for right off of the dealership floor.
05:37Internal combustion engines.
05:38They are.
05:38They're not electric Ferraris yet.
05:40Not yet.
05:41Not yet.
05:41Could you see that?
05:42Could you see an EV become a collectible?
05:44Absolutely.
05:44And we see them already.
05:45I mean, there are some great EVs out there.
05:48If they're high performance and they look good, you know, that tends to drive collectibility.
05:52I'm very agnostic about what drives cars.
05:54You know, I always remind people in the history of cars, there used to be steam-powered cars.
05:59You know, there were electric cars 120 years ago.
06:02There are electric cars now.
06:03And I think there will be a lot more of them in the future.
06:05But I also like the fact that these more aspirational car companies, like Porsche, like Ferrari, like others, remain committed
06:11to building great driver's cars.
06:13And if people want to buy internal combustion, it's great.
06:15I always remind people, these cars are not driven much.
06:19You know, many of the cars that we insure, well, they're driven sometimes 1,000, 1,500 miles a year.
06:24And so, you know, these are limited use.
06:26It's a special car for that weekend drive or if you want to go show off to your friends.
06:30And that's kind of where we sit.
06:33And in great times, you see these rise in things like all these Ferraris and other things selling at the
06:38top end.
06:39And when things get kind of wobbly and there are headwinds, let's face it, in the economy, people tend to
06:44hang on to what they have.
06:45And so it's a very durable market.
06:48It's a very durable business for us.
06:49And that's why I always tell people, like, building a cool lifestyle business on top of an insurance business has
06:56been an awesome way to do it.
06:58You don't have any friends, clients who bought a Luce yet.
07:02Do you expect that someone would be able to insure a Luce through you?
07:08For sure.
07:09For sure.
07:10I mean, Ferrari, there is no brand at the top end of the car market that, you know, both vintage
07:15-wise or even almost brand-new cars, that has driven more demand, more interest.
07:20You know, think of their public offering and their stock price since then and their, you know, F1 racing and
07:25all of it.
07:26And I also remind people, like, Ferrari has designed a lot of different kinds of cars through the generations.
07:32They've built cars that look slightly more like a sedan.
07:35They have the Pearl Sangue, you know, an SUV.
07:39And I get it.
07:40Like, not everybody's loving the design of this new car, but they're testing some things.
07:44They're trying a new market, and I will just wait and see.
07:48Yeah.
07:48No, I think that's fair.
07:49I'm still thinking about, like, the next romantic date that me and the hubby are going to go on.
07:53It's like something Hagerty involved.
07:55I'm still thinking about, like, the couple's events.
07:57Yeah.
07:57That being the romantic night out.
07:58Maybe you go to an auction.
08:00Yeah.
08:00Come to an auction.
08:01Go for a drive.
08:02We have all these driving events, and it's all meant to be fun, and it's meant to engage people.
08:07And it's not just kind of gearheads being gearheads, and that's what makes it awesome.
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