Kruse International

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Kruse International

5540 County Road 11A
Auburn, Indiana 46706
U.S.A.
Telephone: (260) 925-5600
Toll Free: (800) 968-4444
Fax: (260) 925-5467
Web site: http://www.kruse.com

Private Company
Founded: 1952
Employees: 100 (est.)
Sales: $125 million (2006 est.)
NAIC: 453998 Miscellaneous Retail Stores, Not Elsewhere Classified

Based in Auburn, Indiana, Kruse International is a family owned and operated auction house, best known as a pioneer in vintage car auctions. Although other vintage car auction companies have become better known with the general public through live television coverage of their events, Kruse boasts that it sells more vintage cars than all of its rivals combined. All told, the company hosts more than 30 events around the country, selling some 13,000 cars each year. The company claims to have broken more than 250 world record prices in the field. Kruse also offers appraisal services and collector car insurance, and hosts seminars on car collecting. Moreover, Kruse auctions off recreational vehicles and other kinds of property, including real estate, drilling and well service equipment, classic aircraft, collectible tractors, and paintings. Kruse has even sold factories, zoos, railroads, islands, and three complete towns. The company is owned and headed by Dean Kruse, a member of the second generation of the founding family.

COMPANY FOUNDED: 1952

Kruse International began as a real estate auction company in Auburn in 1952, founded by Russell Wayne Kruse and his father-in-law, Lester Boger. Kruse was born on a dairy farm outside of Auburn in 1922, the son of German immigrants. He started out helping his father and then moved on to larger farms before taking on considerable debt to lease 400 acres of land in the area and raise his own herd of 63 Holsteins. Early in the 1950s, however, he was in need of a new livelihood to support his wife and seven children (having married at the age of 18) after consecutive years in which the Wabash River flooded his fields so severely that he claimed he could catch fish with a pitchfork in what should have been a cornfield. In his spare time, Kruse served as a vocal soloist at weddings and funerals, prompting his father-in-law to suggest Kruse consider becoming an auctioneer. Boger was familiar with the business, having served as a clerk at auctions. Thus encouraged, Kruse completed a two-week course at the Reppert School of Auctioneering in Decatur, Indiana, perfected the unique staccato rhythms of the auctioneer’s yodel, and set himself up as an auctioneer.

Kruse’s voice served him well. According to observers his voice could be listened to for hours without annoyance. He was also a natural showman, unafraid of working in front of large crowds, and he possessed the necessary ability to read the crowd, to know who were serious buyers and who might have been shills, and to cajole bidders into going a little higher in their bids than they had planned. He was an immediate success as an independent auctioneer, becoming the top auctioneer in the area after just a year. He handled the usual work to be found in rural Indiana: estate liquidations, farm sales, and other real estate sales. He was also called on to auction off less than ordinary items, such as the complete contents of a funeral home and a 750-foot-deep hole in the ground, which he sold to a garbage company. In time Kruse was assisted by his children. Dean began working for him part time in 1956 and three years later went full time, becoming an accomplished auctioneer in his own right.

FIRST VINTAGE CAR AUCTION: 1971

Russell Kruse’s involvement with vintage cars began in 1971 when the Auburn Chamber of Commerce asked him to help raise money for the town’s annual Labor Day Auburn-Cord-Duesenberg Festival by hosting a fund-raising auction. Although it is virtually forgotten today, early in the 1900s Auburn, Indiana, rivaled Detroit as the center of the U.S. auto industry. It was the home of giant Auburn Automobile Co., which remained a healthy company, especially in luxury cars—Auburns, Cords (the first to offer front wheel drive), and Duesenbergs (built in the company’s Indianapolis division)—until the effects of the Great Depression caught up to the manufacturer. Luxury car sales collapsed and in 1937 the Auburn Automobile Co. closed its doors. It was a bitter blow both to the economy of Auburn and the psyche of its citizens. The glory years were not forgotten, however, honored each Labor Day with a classic car show featuring Auburns, Cords, and Duesenbergs.

When asked to help raise money for the Auburn Cord Duesenberg car club, which sponsored the annual festival but was losing money, Kruse suggested that, since some of the cars were already scheduled to be sold, a consignment auction of vintage cars during the festival could be used as a fund-raiser instead of auctioning off the other goods the Chamber of Commerce had in mind. His idea was accepted and in 1971 the first Auburn Labor Day vintage car auction was held in a field near interstate I-69. After Russell Kruse began the proceedings by singing “Back Home Again in Indiana,” a tradition at a Kruse auction, about 80 cars on consignment were put up for sale. The auction attracted an estimated 17,000 people, although the exact number was difficult to determine. “Half the spectators paid $1 for admission into the auction and the other half jumped the rope and got in free,” Dean Kruse recalled years later in a history published on the company’s web site. The Auburn event received national attention, due in large part to a Duesenberg which received a $61,000 bid that was rejected by the owner.

The success of the Auburn auction was also not lost on vintage car collectors around the United States, in particular Thomas Barrett in Scottsdale, Arizona, a man who had assembled one of the best private car collections in the world. Owning 80 cars, Barrett decided the time had come to winnow down his collection, and inspired by Kruse’s success decided to hold his own auction. He brought in Leo Gephart, a Phoenix used car dealer who dealt in both used and rare cars, and they invited the Kruse family to participate. In late 1971 Dean Kruse flew into town and the three men agreed to hold a consignment auction at the Safari Hotel in Scottsdale in hopes of attracting car collectors from around the world. Barrett then brought in a Scottsdale friend to help organize the event, Russell Jackson. Barrett and Jackson had worked together previously on a pair of successful car show fund-raising events. The Scottsdale auction was a two-day event held in January 1972. It was attended by 3,000 people and generated almost $600,000 in sales volume. Its success established the auction as an annual event in Scottsdale, with Kruse remaining involved until the mid-1970s, when Barrett and Jackson decided to go it alone, establishing the Barrett-Jackson Classic Car Auction, and giving birth to a major rival to Kruse International: the Barrett-Jackson Auction Company L.L.C.

COMPANY PERSPECTIVES

Kruse International is one of the world’s leading auction firms and the largest collector car auction company, selling more vintage cars than all other firms combined.

Later in 1972 Kruse held its second Auburn auction, which was relocated to DeKalb High School. Among the 150 cars put on the block was Greta Garbo’s 1933 Duesenberg Victoria, which fetched a record-breaking $90,000. The following year the event auctioned 250 cars, one of which, a 1932 Duesenberg, became the first $100,000 car. By the 1975 Auburn auction, total bids reached the $7 million mark and 100,000 people attended. Of the 430 cars bid upon, 58 percent were actually sold, because a large number had a “reserve,” or a minimum price the seller would accept. (“No reserve” cars were guaranteed to be sold to the highest bidder and generated a great deal of action, which is why the major car auction houses provided discounted fees to encourage more “no reserve” cars.)

The success of Kruse International, both with classic cars and its real estate and oil field equipment sales, caught the attention of International Telephone and Telegraph Corporation, which bought the company in 1975. The auction house, now known as I.T.T. Kruse International, continued to be run by the Kruse family, with Dean having succeeded his father as the driving force. The Auburn sale became a three-day event in 1976 and continued to grow through the rest of the decade. With I.T.T.’s backing, Kruse also became the major auctioneer for the sale of classic car collections around the country. In 1980 the Auburn auction saw 754 cars put up for bid, followed by 860 cars the following year, when John Lennon’s 1956 Bentley was sold for $325,000.

COMPANY BOUGHT BACK: 1981

The Kruse family bought back the company in 1981 after six years of I.T.T. ownership. The collector car business continued to flourish and then enjoyed a further surge following the October 1987 stock crash. A large number of investors felt uncomfortable with the stock market and began to put their money in art work, collectibles, and classic cars. As a result, vintage cars fetched ever increasing amounts of money. At the 1988 Auburn auction, a 1929 Cord L29 Murphy town car once owned by actor John Barrymore sold for $1 million. A Duesenberg J Walker LaGrande Torpedo Phaeton also received a bid of $950,000.

In 1989 the Auburn auction was moved to a new facility, Kruse Auction Park, where three Duesenbergs received bids of more than $1 million each, led by the $1.8 million paid for a 1933 Duesenberg J 386. The event was also noteworthy because the Financial News Network aired three hours of the auction. The following year, the 20th Auburn auction featured 3,000 vintage automobiles and a separate collectibles auction. The event expanded further in 1991 to include three other auctions: the Marhanka Antique Truck & Tractor Collection, the Wayne Sawyer Collection, and the Fitterling Collection & Farm.

By the time of the 1991 Auburn auction, a recession struck the country and had an adverse impact on the classic car industry. Values plummeted and several years would pass before investors regained their losses. Despite poor conditions, Kruse was able to carry on. In 1992 the Shop-At-Home Network broadcast some of the Labor Day event, allowing home viewers to bid on the 1,500 vintage cars put up for sale. The top selling car was a 1948 Buick Saoutchik Drophead Coupe, receiving $275,000, a far cry from the amounts paid three years earlier. While collectors may not have been willing to pay as much for vintage cars, there were plenty of enthusiasts willing to pay the price of admission to admire them. In 1986 nearly 300,000 people attended the Auburn Labor Day festivities.

In 1997 Kruse dabbled with the Internet, as the Auburn auction was made available on both television and online. The company’s connection to the Internet would become even strong in 1999 when eBay Inc., the premier online auction site, bought Kruse International for stock worth $165 million. At the time Kruse was generating nearly $130 million in annual sales. EBay had been formed just four years earlier when French immigrant software programmer Pierre Omidyar created an online auction service to help his fiancée indulge in a peculiar hobby: trading Pez candy dispensers. EBay became a broker for sellers, receiving a listing fee and a percentage of the sales price for hosting an online auction. It quickly became one of the great Internet success stories, achieving growth by paying attention to what users of the site were trading the most, then creating categories to serve that sector, thereby reaping even greater rewards. One of eBay’s business development people, Simon Rothman, was responsible for taking eBay into automobiles, the result of his searching the site for die-cast models of Ferrari sports cars and finding that a full-size Ferrari was up for sale. He soon discovered that other cars were also for sale elsewhere on eBay. A car enthusiast who had restored Fiats as a teenager, Rothman was put in charge of the new unit. EBay Motors acquired Kruse as a way to gain credibility with collectors, encouraging them to auction their cars on the site and making it known that top vintage cars could be bought online.

KEY DATES

1952:: Russell W. Kruse begins auctioning career.
1971:: First vintage car auction held in Auburn, Indiana.
1975:: Company sold to I.T.T.
1981:: Kruse family buys back company.
1999:: eBay acquires business.
2003:: Dean Kruse buys company.
2007:: Founder Russell Kruse dies.

EBay did little to build on Kruse’s offline business, but the auctions at Auburn, Scottsdale, and elsewhere continued to thrive as the vintage car market finally won back the value lost a decade earlier and enjoyed a new surge in interest. However, under eBay, Kruse was not able to take advantage of this renewed enthusiasm, and in fact the company closed auctions in a number of cities, leaving them to the competition. By the fall of 2002, eBay elected to focus on its Internet business and sell Kruse, which had seen its revenues cut in half since the 1999 acquisition. EBay kept its promise to offer the company back to Dean Kruse, and in early 2003 he bought Kruse International for an undisclosed amount of money, although it was reported that he borrowed $22 million to complete the transaction. He also told the press that he was overjoyed to be back in charge. “When I sold it, I thought I was happy,” he said, “But I was like a racehorse put out to pasture.”

Dean Kruse moved quickly to rebuild the business. To make up for the sales shut down by eBay, annual auctions were launched in New York City; Biloxi, Mississippi; Tampa, Florida; Billings, Montana; and Monterey, California. Kruse also invested in improvements to the Auburn facilities in order to make greater use of them. Given that it was much less expensive to host an event in Auburn than elsewhere in the country, the investment led to increased profits. In a matter of two years three auctions were added to the Auburn site, making a total of five annual sales. They included a noreserve auction for collector cars, recreational vehicles, and motor coaches, the National Corvette Show & Auction, and an auction for street rods and customer cars as part of an event called the Annual Fun Run Nationals. The Auburn grounds were also rented out for vehicle shows, such as the Sports Car Club of America and the American Truck Historical Society.

Although it lost some of its luster in the vintage car market to the likes of Barrett-Jackson, which benefited greatly from its television contract with the SPEED channel, and Canada’s RM Auctions, Inc., whose events were covered by the ESPN channels, Kruse International remained a major force in vintage cars while enjoying greater diversity, involved in real estate sales, drilling and well service equipment, classic aircraft, collectible tractors, and paintings.

An era came to an end in May 2007 when Russell Kruse passed away at the age of 85 following a stroke. Until the very end the farm boy who turned auctioneer and conducted sales throughout North America and Europe lived a colorful life. Divorced, he decided to remarry despite being well into his 70s. In 1998 he picked out a Russian bride from a catalog, Lyubov Koutsova, and flew to St. Petersburg to meet and then marry her. At every auction he attended he sang “Back Home Again in Indiana,” and at some of the larger auctions he added “The Star-Spangled Banner.” In his honor, the family announced that it would play a recording of him singing his signature song before each Kruse auction.