Auto auctions
Encyclopedia
Auto auctions are a method of selling new, and most often, used vehicles based on auction
system. Auto auctions can be found in most nations, but are often unknown to most people. This is, such as in the case of the United States
, because this a protected source for used car dealers. Since 1948, the National Auto Auction Association (NAAA) has been helping colleagues in the remarketing community. The NAAA consists of over 300 domestic and international
auctions. This organization demands that its members meet certain requirements and operate secure, neutral auction
settings. In other countries, such as Japan
, auto auctions are well known and used (indirectly) by most people.
A small percentage of the dealers that are members of Japanese auto auctions are also used vehicle exporters
that most often use the auto auctions as their primary source of used vehicles. Other than these exporters, most members are used vehicle dealership that sell in Japan and are used by Japanese people to find a car they want.
In Japan there are over 30 well known auto auction groups and over 200 auto auction locations throughout Japan. Additionally, there are more smaller auctions held for specialized items.
firms to dispose of their large volume of off-lease
returns, for rental
and other companies to sell off their aging fleets and for car dealership
s to dump
trade-ins or other unwanted inventory
. Some auctions in the United States are used by bank
s, the IRS, and other government agencies
to sell vehicles that were repossessed
for failure to make monthly payments or pay taxes, or were seized by the FBI, DEA
, or the police
. Also, there are some that sell US Government
vehicles. Finally, there are those catering to the salvage market where insurance
companies sell totaled
vehicles.
Online auto auctions are also growing in popularity. One of the most popular online car auctions is eBay
. On eBay Motors, any user can create an account and put their vehicle(s) up for auction. There is usually a small fee
associated with selling your vehicle on eBay . Many buyers prefer to look for local car sellers on ebay, within a certain radius so that they can go and do a manual inspection of the vehicle.
Auto auctions are becoming increasingly poplar with the general public looking to purchase a new vehicle. The majority of vehicles entered into auction in the UK are ex-company fleet vehicles and as such usually have a good service history and have been well kept. Car dealer groups also take advantage of auto auctions in order to sell on any excess stock whilst smaller,local car dealers will use them to fill spaces on their forecourts.
Auctions in the UK are also used by banks, local and central Government, private sellers and car dealerships.
British Car Auctions
is the main auto auction company in the UK; however, there are a wealth of national auto auctions, including Manheim Auctions
and Aston Barclay, as well as many locally based auction centres.
.
Millions of vehicle
s are sold at dealer auto auctions every year. These auctions are restricted for the general public and only licensed dealers can participate. Prices of vehicles sold at dealer auctions tend to be lower than those advertised on any dealer’s lot. Sellers forgo a potentially higher sticker price to take their inventory
to a dealer auction where it will be auctioned off for thousands less than retail
for a number of reasons.
Maintaining aging inventory costs dealers both money and reputation. Most vehicles sold are off-lease
returns, replaced rental fleets
, company cars, repossessed vehicles, and trade-ins.
Among these types of vehicles there are a number of quality cars ready to market. Late model
s with remaining factory warranty are not uncommon. The law requires listing dealers to disclose bigger mechanical problems, which may void the manufacturer’s warranty and classify the vehicle as junk
, salvage, lemon/consumer buy-back
, etc. There are special auctions for these types of vehicles (salvage, rebuilt or junk vehicles), sold mostly by insurance
companies. Other types of auctions specialize in the sale of police or government cars; some of those actually allow public access.
Pricing. Regardless of their source, vehicles are sent to auction with the main purpose to be sold quickly and hassle-free, and this usually happens at prices that dealers can easily recoup with a small profit from a resale. Contrary to popular belief, cars seldom sell for unreasonably low prices at the dealer auctions. This may happen if there are not enough interested bidders
or if the vehicle is exceptionally unattractive and should not be taken for granted. Many sellers put reserve prices on their stock specifically to prevent this from happening. The reserve price is not disclosed publicly and a “winning” auction bid
is only considered a sale if the reserve price is met. Sellers have the option to re-list vehicles that did not sell at a particular auction.
Condition. As with any used vehicle, overall vehicle condition varies greatly. Many aspects of the vehicle appearance may suffer in the term of everyday use and result in any of the following damages: stained or otherwise used upholstery
, scratched bumpers, dings on the doors, chipped hood
, dented quarter panel
s. Most of these can be fixed with touch-up paint and/or a dent
removing kit. Scraped wheels and worn tires may cost more to repair or replace.
Inspection. Pre-sale vehicle inspection
or test-driving is not allowed at some of the auctions. Mechanic
s and guests are not usually allowed to see the cars until after the sale is completed. Some auction locations inspect and prepare the cars for sale if the listing dealer so chooses (at a premium). More extensive reconditioning is also available. Many auctions offer (for a fee) post-sale inspections for qualifying vehicles which can determine mechanical or frame damage issues which allow the buying dealer a window of opportunity to back out of the purchase. On the other end, sellers can also (for a fee) have their vehicles pre-sale inspected which allows purchasing dealers to buy with confidence that the vehicle passed a pre-sale inspection and if free of any mechanical or frame damage issues.
Auction
An auction is a process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder...
system. Auto auctions can be found in most nations, but are often unknown to most people. This is, such as in the case of the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, because this a protected source for used car dealers. Since 1948, the National Auto Auction Association (NAAA) has been helping colleagues in the remarketing community. The NAAA consists of over 300 domestic and international
International
----International mostly means something that involves more than one country. The term international as a word means involvement of, interaction between or encompassing more than one nation, or generally beyond national boundaries...
auctions. This organization demands that its members meet certain requirements and operate secure, neutral auction
Auction
An auction is a process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder...
settings. In other countries, such as Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
, auto auctions are well known and used (indirectly) by most people.
Japan
Auto auctions are the most popular method to sell used vehicles in Japan. Most customers are Japanese seeking a cheap vehicle to start with or replace their older vehicle. There are many also trying to sell their vehicles. Individuals though cannot directly use auto auctions, but must go through those holding auction membership. In Japanese law, only dealerships may become members to auto auctions. The way the system is set up allows people to have access to information, but keep the auctions orderly with only professionals actually able to bid.A small percentage of the dealers that are members of Japanese auto auctions are also used vehicle exporters
Japanese used vehicle exporting
Japanese used vehicle exporting is international trade involving the export of used cars and other vehicles from Japan to other markets around the world. Despite the high cost of transport, the sale of used cars and other vehicles to other countries is still profitable due to the relatively low...
that most often use the auto auctions as their primary source of used vehicles. Other than these exporters, most members are used vehicle dealership that sell in Japan and are used by Japanese people to find a car they want.
In Japan there are over 30 well known auto auction groups and over 200 auto auction locations throughout Japan. Additionally, there are more smaller auctions held for specialized items.
United States
In the USA, auto auctions are relatively unknown to the public at large, but play a major role as a wholesale market for second-hand vehicles. Most auto auctions are closed auctions, meaning only dealers can use them. There are also auctions that are open to the public. These auctions are a primary outlet for financial servicesFinancial services
Financial services refer to services provided by the finance industry. The finance industry encompasses a broad range of organizations that deal with the management of money. Among these organizations are credit unions, banks, credit card companies, insurance companies, consumer finance companies,...
firms to dispose of their large volume of off-lease
Lease
A lease is a contractual arrangement calling for the lessee to pay the lessor for use of an asset. A rental agreement is a lease in which the asset is tangible property...
returns, for rental
Car rental
A car rental or car hire agency is a company that rents automobiles for short periods of time for a fee...
and other companies to sell off their aging fleets and for car dealership
Car dealership
A car dealership or vehicle local distribution is a business that sells new or used cars at the retail level, based on a dealership contract with an automaker or its sales subsidiary. It employs automobile salespeople to do the selling...
s to dump
Dumping (pricing policy)
In economics, "dumping" is any kind of predatory pricing, especially in the context of international trade. It occurs when manufacturers export a product to another country at a price either below the price charged in its home market, or in quantities that cannot be explained through normal market...
trade-ins or other unwanted inventory
Inventory
Inventory means a list compiled for some formal purpose, such as the details of an estate going to probate, or the contents of a house let furnished. This remains the prime meaning in British English...
. Some auctions in the United States are used by bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
s, the IRS, and other government agencies
Government agency
A government or state agency is a permanent or semi-permanent organization in the machinery of government that is responsible for the oversight and administration of specific functions, such as an intelligence agency. There is a notable variety of agency types...
to sell vehicles that were repossessed
Repossession
Repossession is generally used to refer to a financial institution taking back an object that was either used as collateral or rented or leased in a transaction. Repossession is a "self-help" type of action in which the party having right of ownership of the property in question takes the property...
for failure to make monthly payments or pay taxes, or were seized by the FBI, DEA
Drug Enforcement Administration
The Drug Enforcement Administration is a federal law enforcement agency under the United States Department of Justice, tasked with combating drug smuggling and use within the United States...
, or the police
Police
The police is a personification of the state designated to put in practice the enforced law, protect property and reduce civil disorder in civilian matters. Their powers include the legitimized use of force...
. Also, there are some that sell US Government
Federal government of the United States
The federal government of the United States is the national government of the constitutional republic of fifty states that is the United States of America. The federal government comprises three distinct branches of government: a legislative, an executive and a judiciary. These branches and...
vehicles. Finally, there are those catering to the salvage market where insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
companies sell totaled
Totaled
In motor insurance, a total loss is a situation in which a vehicle is damaged and the cost of repair and salvage would exceed the vehicle's market value...
vehicles.
Online auto auctions are also growing in popularity. One of the most popular online car auctions is eBay
EBay
eBay Inc. is an American internet consumer-to-consumer corporation that manages eBay.com, an online auction and shopping website in which people and businesses buy and sell a broad variety of goods and services worldwide...
. On eBay Motors, any user can create an account and put their vehicle(s) up for auction. There is usually a small fee
Fee
A fee is the price one pays as remuneration for services. Fees usually allow for overhead, wages, costs, and markup.Traditionally, professionals in Great Britain received a fee in contradistinction to a payment, salary, or wage, and would often use guineas rather than pounds as units of account...
associated with selling your vehicle on eBay . Many buyers prefer to look for local car sellers on ebay, within a certain radius so that they can go and do a manual inspection of the vehicle.
UK
In the United KingdomUnited Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
Auto auctions are becoming increasingly poplar with the general public looking to purchase a new vehicle. The majority of vehicles entered into auction in the UK are ex-company fleet vehicles and as such usually have a good service history and have been well kept. Car dealer groups also take advantage of auto auctions in order to sell on any excess stock whilst smaller,local car dealers will use them to fill spaces on their forecourts.
Auctions in the UK are also used by banks, local and central Government, private sellers and car dealerships.
British Car Auctions
British Car Auctions
BCA Europe , is the largest vehicle remarketing business in Europe, with an annual turnover in excess of £4 billion.-History:...
is the main auto auction company in the UK; however, there are a wealth of national auto auctions, including Manheim Auctions
Manheim Auctions
Manheim, Inc. is an automobile auction company. It is the largest one in the world by volume of trade. As a subsidiary of Cox Enterprises, Inc., Manheim provides services including financing, title work, transportation, recovery, auto body repair, dealership management systems, dent repair and...
and Aston Barclay, as well as many locally based auction centres.
Car dealer auctions
A Car dealer auction is a specialized form of auctionAuction
An auction is a process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder...
.
Millions of vehicle
Vehicle
A vehicle is a device that is designed or used to transport people or cargo. Most often vehicles are manufactured, such as bicycles, cars, motorcycles, trains, ships, boats, and aircraft....
s are sold at dealer auto auctions every year. These auctions are restricted for the general public and only licensed dealers can participate. Prices of vehicles sold at dealer auctions tend to be lower than those advertised on any dealer’s lot. Sellers forgo a potentially higher sticker price to take their inventory
Inventory
Inventory means a list compiled for some formal purpose, such as the details of an estate going to probate, or the contents of a house let furnished. This remains the prime meaning in British English...
to a dealer auction where it will be auctioned off for thousands less than retail
Retail
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...
for a number of reasons.
Maintaining aging inventory costs dealers both money and reputation. Most vehicles sold are off-lease
Lease
A lease is a contractual arrangement calling for the lessee to pay the lessor for use of an asset. A rental agreement is a lease in which the asset is tangible property...
returns, replaced rental fleets
Fleet vehicles
Fleet vehicles are groups of motor vehicles owned or leased by a business or government agency, rather than by an individual or family. Typical examples are vehicles operated by car rental companies, taxicab companies, public utilities, public bus companies, and police departments...
, company cars, repossessed vehicles, and trade-ins.
- Off-lease: vehicles returned to the financial institution at the end of a leaseLeaseA lease is a contractual arrangement calling for the lessee to pay the lessor for use of an asset. A rental agreement is a lease in which the asset is tangible property...
term. Closed auctions are usually the only venue for such financial institutions to dispose of a large volume of end-of-lease returns. The terms of a lease normally put a restriction on the number of miles driven, require regular maintenance and penalize for excessive wear. Usually, off-lease vehicles are returned within 2–3 years, often before their original factory warrantyWarrantyIn business and legal transactions, a warranty is an assurance by one party to the other party that specific facts or conditions are true or will happen; the other party is permitted to rely on that assurance and seek some type of remedy if it is not true or followed.In real estate transactions, a...
expires. - Off-rental: rentalCar rentalA car rental or car hire agency is a company that rents automobiles for short periods of time for a fee...
companies normally replace their fleets once a year, releasing a flood of late-modelLate modelA "late model car" is a car which has been recently designed or manufactured, often the latest model. The term is broadly used in car racing, and often appears in common use, as in "The officer was driving an unmarked, late model sedan."There is no precise...
cars to the secondary marketSecondary marketThe page applies to the finanical term; For the merchandising concept, see Aftermarket .The secondary market, also called aftermarket, is the financial market where previously issued securities and financial instruments such as stock, bonds, options, and futures are bought and sold....
. Like the big financial institutions that underwriteUnderwritingUnderwriting refers to the process that a large financial service provider uses to assess the eligibility of a customer to receive their products . The name derives from the Lloyd's of London insurance market...
car leases, rental companies also rely on auto auctions to sell off their used inventory. These vehicles tend to be well maintained and driven for only one year. Mileage tends to accumulate quickly on a rental car. Optional features are limited to an A/CAir conditioningAn air conditioner is a home appliance, system, or mechanism designed to dehumidify and extract heat from an area. The cooling is done using a simple refrigeration cycle...
and automatic transmissionAutomatic transmissionAn automatic transmission is one type of motor vehicle transmission that can automatically change gear ratios as the vehicle moves, freeing the driver from having to shift gears manually...
, but these cars are otherwise as close to the base model as they can get. Usage of rental cars is rough; it is safe to assume that during that first year each rental car will be driven by a normal distribution of all types of drivers in all kinds of conditions. - Company/fleet cars: companies of varying sizes own or lease cars, truckTruckA truck or lorry is a motor vehicle designed to transport cargo. Trucks vary greatly in size, power, and configuration, with the smallest being mechanically similar to an automobile...
s or vanVanA van is a kind of vehicle used for transporting goods or groups of people.In British English usage, it can be either specially designed or based on a saloon or sedan car, the latter type often including derivatives with open backs...
s that they typically keep for two or more years, although it is not uncommon to see current year models sold at the auctions. Adequate maintenance and large volumes of similar vehicles are typical characteristics. Like rentals, these fleet vehicles do not have many extras and get thoroughly exploited on a daily basis. Unlike rentals, usage of company cars varies greatly from the executive luxury sedan driven slowly and carefully on occasion to the delivery truck that regularly mounts curbs and gets abused in city traffic. - Repossessed: vehicles can be voluntarily or involuntarily repossessedRepossessionRepossession is generally used to refer to a financial institution taking back an object that was either used as collateral or rented or leased in a transaction. Repossession is a "self-help" type of action in which the party having right of ownership of the property in question takes the property...
by financial institutions for delinquency or another reason for recall. Auto auctions are again the bank’s only option for deliverance. Repossessed vehicles can feasibly sell for less because the financial institution disposing of them only seeks to offset its losses (also restricted by federal regulations). The condition of such cars may be compromised by neglect; if the owner can't pay the loan, repairs could also be neglected. There is also the potential for sabotageSabotageSabotage is a deliberate action aimed at weakening another entity through subversion, obstruction, disruption, or destruction. In a workplace setting, sabotage is the conscious withdrawal of efficiency generally directed at causing some change in workplace conditions. One who engages in sabotage is...
from ill-meaning previous users (e.g., extensive keying or tearing of the interior). - Trade-in: dealer inventory that is aging or does not meet their profile (e.g., an old Toyota AvalonToyota AvalonThe Toyota Avalon is a full-size car produced by Toyota in the United States, and is the flagship sedan of Toyota in the United States, Canada, Puerto Rico and the Middle East. It was also produced in Australia from 2000 until July 2005 when it was replaced in November 2006 by the Toyota Aurion...
that was traded in for a new CLK350 Cabriolet at a Mercedes-BenzMercedes-BenzMercedes-Benz is a German manufacturer of automobiles, buses, coaches, and trucks. Mercedes-Benz is a division of its parent company, Daimler AG...
franchisedFranchisingFranchising is the practice of using another firm's successful business model. The word 'franchise' is of anglo-French derivation - from franc- meaning free, and is used both as a noun and as a verb....
dealershipCar dealershipA car dealership or vehicle local distribution is a business that sells new or used cars at the retail level, based on a dealership contract with an automaker or its sales subsidiary. It employs automobile salespeople to do the selling...
). Traded-in cars may have useful extras and sometimes even after market modifications. The overall condition of such vehicles varies greatly. Some may be considerably older and out of warranty. - Salvage: vehicles that have been in accidents, floods, fires or recovered thefts that have been purchased by insurance companies. The insurance companies sell these vehicles to dealers or body shops who will fix them and resell them, or auto recyclers who will part out the remaining parts of the vehicle that haven't been damaged.
Among these types of vehicles there are a number of quality cars ready to market. Late model
Late model
A "late model car" is a car which has been recently designed or manufactured, often the latest model. The term is broadly used in car racing, and often appears in common use, as in "The officer was driving an unmarked, late model sedan."There is no precise...
s with remaining factory warranty are not uncommon. The law requires listing dealers to disclose bigger mechanical problems, which may void the manufacturer’s warranty and classify the vehicle as junk
Scrap
Scrap is a term used to describe recyclable and other materials left over from every manner of product consumption, such as parts of vehicles, building supplies, and surplus materials. Unlike waste, scrap has significant monetary value...
, salvage, lemon/consumer buy-back
Lemon (automobile)
A lemon is a car, often new, that is found to be defective only after it has been bought. Any vehicle with numerous, severe issues can be termed a "lemon", and, by extension, any product with flaws too great or severe to serve its purpose can be described as a "lemon".-Origin:The use of the word...
, etc. There are special auctions for these types of vehicles (salvage, rebuilt or junk vehicles), sold mostly by insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
companies. Other types of auctions specialize in the sale of police or government cars; some of those actually allow public access.
Pricing. Regardless of their source, vehicles are sent to auction with the main purpose to be sold quickly and hassle-free, and this usually happens at prices that dealers can easily recoup with a small profit from a resale. Contrary to popular belief, cars seldom sell for unreasonably low prices at the dealer auctions. This may happen if there are not enough interested bidders
Bidding
Bidding is an offer of setting a price one is willing to pay for something. A price offer is called a bid. The term may be used in context of auctions, stock exchange, card games, or real estate transactions....
or if the vehicle is exceptionally unattractive and should not be taken for granted. Many sellers put reserve prices on their stock specifically to prevent this from happening. The reserve price is not disclosed publicly and a “winning” auction bid
BID
Bid may refer to:*Bidding, making a price offer in an auction, stock exchange, or card games*Bid , a British home shopping channel...
is only considered a sale if the reserve price is met. Sellers have the option to re-list vehicles that did not sell at a particular auction.
Condition. As with any used vehicle, overall vehicle condition varies greatly. Many aspects of the vehicle appearance may suffer in the term of everyday use and result in any of the following damages: stained or otherwise used upholstery
Upholstery
Upholstery is the work of providing furniture, especially seats, with padding, springs, webbing, and fabric or leather covers. The word upholstery comes from the Middle English word upholder, which referred to a tradesman who held up his goods. The term is equally applicable to domestic,...
, scratched bumpers, dings on the doors, chipped hood
Hood (vehicle)
The hood or bonnet is the hinged cover over the engine of motor vehicles that allows access to the engine compartment for maintenance and repair. In British terminology, hood refers to a fabric cover over the passenger compartment of the car...
, dented quarter panel
Quarter panel
On an automobile, a quarter panel is usually considered the body panel that covers the section between the rear door and the trunk; however, the front section, between the door and wrapping around the hood, is also considered a quarter panel...
s. Most of these can be fixed with touch-up paint and/or a dent
Dent
- People :Surname* Andrew Dent AM, Australian doctor and humanitarian worker* Bucky Dent, American baseball player* Charles Dent , multiple people with the name...
removing kit. Scraped wheels and worn tires may cost more to repair or replace.
Inspection. Pre-sale vehicle inspection
Vehicle inspection
Vehicle inspection is a procedure mandated by national or subnational governments in many countries, in which a vehicle is inspected to ensure that it conforms to regulations governing safety, emissions, or both. Inspection can be required at various times, e.g., periodically or on transfer of...
or test-driving is not allowed at some of the auctions. Mechanic
Mechanic
A mechanic is a craftsman or technician who uses tools to build or repair machinery.Many mechanics are specialized in a particular field such as auto mechanics, bicycle mechanics, motorcycle mechanics, boiler mechanics, general mechanics, industrial maintenance mechanics , air conditioning and...
s and guests are not usually allowed to see the cars until after the sale is completed. Some auction locations inspect and prepare the cars for sale if the listing dealer so chooses (at a premium). More extensive reconditioning is also available. Many auctions offer (for a fee) post-sale inspections for qualifying vehicles which can determine mechanical or frame damage issues which allow the buying dealer a window of opportunity to back out of the purchase. On the other end, sellers can also (for a fee) have their vehicles pre-sale inspected which allows purchasing dealers to buy with confidence that the vehicle passed a pre-sale inspection and if free of any mechanical or frame damage issues.
See also
- Most expensive cars sold in auctionMost expensive cars sold in auctionThis is a list of the most expensive cars sold in auto auctions through the traditional bidding process, consisting of those that attracted headline grabbing publicity, mainly for the high price their new owners have paid...
— A list of record prices achieved in auto auctions