Two out-of-state collector car auction companies failed to secure Arizona used-car dealer licenses before conducting their high-profile auctions last month.
The licenses were required for the first time this year following a change in state law prompted by Craig Jackson, president and CEO of Scottsdale-based Barrett-Jackson Auction Company.
By law, a perfectly restored 1934 Packard is considered just another used car.
The two companies, Kruse International of Indiana and RM Auction of Canada were permitted to conduct their auctions with pending applications, said Cydney DeModica, spokeswoman for the Arizona Department of Transportation.
Both companies, however, will be required to obtain current licenses before conducting additional auctions in Arizona, DeModica said.
Two in-state auction companies, Barrett-Jackson of Scottsdale and Russo and Steele of Phoenix obtained their licenses years ago.
Previously, classic and collector car auction companies that did not operate permanent dealerships in Arizona were allowed to conduct annual auctions without usedcar dealer licenses.
Rob Myers, the founder of RM Auction, said Jackson sought the change in state law to hinder competition with Barrett-Jackson.
“Every year he tries to prevent us from doing auctions. He has little tricks,” said Myers.
The RM Auction spent about $10,000 in legal fees to meet the new licensing requirements, he said.
Jackson said the new regulation simply makes good business sense for the state.
The license allows Arizona to tax sales made to Arizona buyers. Barrett-Jackson and other car auctions must obtain similar licenses in other states where they conduct auctions, Jackson said.
“The only thing we did is make it an even playing field. I have a dealer’s license. I pay sales tax,” Jackson said.
“Why should someone be able to come in from out of state, run an event in our community and pay no sales taxes?” he asked.
Rep. Andy Biggs, R-Gilbert, the chairman of the House Transportation Committee, said Jackson and others asked him to introduce the legislation.
RM submitted its used-car dealer license application on Jan. 12, eight days before its auction started at the Arizona Biltmore Resort & Spa in Phoenix, DeModica said.
Kruse turned in its application June 13, which was 13 days before its auction began at Phoenix International Raceway in Avondale, she said.
Transportation officials sought a legal opinion from the Arizona Attorney General’s Office when it became apparent RM and Kruse were not going to complete the licensing procedure before their auctions, DeModica said. The licensing process generally takes three to four months to complete, because it requires background checks.
Officials decided to allow a one-time exemption for companies that had licenses pending, DeModica said.