Under the hammer, overseas: Russo and Steele explores classic-car auction in China

It's ambitious, it's unprecedented and it's loaded with pitfalls. But if it can be pulled off, it could serve as a template for international growth for American auction houses.

Russo and Steele is expanding into China and has announced plans this fall to form a joint venture with a Chinese company as a foothold. The short-term goal: promote the Russo and Steele brand overseas. Long range: think a real-deal auction in China, with shiny cars and gaudy selling prices.

At least that's the idea, Russo and Steele owner Drew Alcazar told AutoWeek. It would be perhaps 2011 before an actual event could take place, and locations such as Beijing or Shanghai--where there are population bases and money--are possible sites.

The sale itself likely would be more of a salon, an exposition or even a road rally, because as Alcazar notes, a “mosh-pit, America-style auction” might not suit international tastes.

Car lust, however, is universal, and Russo and Steele expects that will translate fine in China and perhaps other markets, such as Buenos Aires or a site in the Middle East. It's all about the sheetmetal, and Ferraris, Lamborghinis, Bentleys and other European brands are expected to play well in China. The same goes for large, classic American cars from the 1950s.

Though Russo and Steele has an idea of which cars could perform well on the auction block, it also knows some cultural phenomena never crossed the ocean.

“If you showed up with a sublime Plymouth Superbird, it's like showing up from another planet,” Alcazar noted.

Price points also are a variable, he added, and the auction house still must figure out whether rare, $100,000 cars are what the Chinese market will bare. Or, will $50,000 to $70,000 Mustangs, Camaros and GTOs carry the day?

The event also needs to be exclusive.

“Not everyone's going to be able to have a 350GT Lamborghini,” Alcazar said. “There's only one in the country, and you have it.

“It's not about the dough; it's about having something that someone else can't have.”

Russo and Steele
Russo and Steele also must consider a format for an auction in China. A “mosh-pit, America-style auction” might not work, company owner Drew Alcazar said. A Lamborghini Miura is shown above at a Russo and Steele auction.

Other hurdles loom

Additionally, there's the matter of getting the cars into the country, navigating political, economic and cultural barriers--not to mention logistics.

“The complexities of trying to achieve that goal are almost endless,” Alcazar said.

That's were his partner comes in, a company called China Auto Logistics Inc. He said he believes he's found a firm that knows the ground rules of the market and can share in the sizeable risks of taking a classic-car auction to a foreign land. And China Auto Logistics is traded on NASDAQ, offering some degree of credibility for its American counterpart. It's one of the top sellers of high-end luxury imports in China and claims more than 3,000 clients in that nation. It also offers a Web platform for Russo and Steele.

Will it work out? Even Alcazar can't say for sure. But he's betting it will. In his words, “It's a world market, there's is no question about that.”

By Greg Migliore