Yep.
Very briefly (and I'm typing from memory), The Lotteries and Amusements Act 1976 (as amended by the National Lottery etc. Act 1993) effectively made it illegal for commercial lotteries, i.e. buy a ticket(s) in a game of chance, to operate unless they were for charitable purposes, in support of sporting endeavours, and a few other exceptions as well.
The way to 'sidestep' the legislation would be to change participation in the auction from a game of chance as it is presently, to entry on the basis of a game of skill. For example, the seller could ask an entry question of, 'What year was my car manufactured?', the participants would know it was 1994 from the advert and that would then constitute a game of skill, not a lottery.
Of course, it's rather unlikely that the 'authorities' would even be bothered with him even if they were aware of it.
A more pressing concern for him, though, should be how he's going to handle the administration of his auction. What if he doesn't sell all the tickets on this current auction? Does he run another after that? What if they don't sell then? How long does it try to keep it running?
He's also got to keep copious amounts of records to ensure that he can prove that everyone who purchased a ticket was actually entered in the draw, etc.
It's not so much selling a car but buying a major headache instead!