Millions of vehicles are sold at dealer auto auctions every year. These auctions are restricted and only licensed dealers can participate. The prices of cars sold at a dealer auto auction are lower than what you would see advertised on a typical dealers lot. Auto dealers will give up potentially higher sticker price to take their inventory to a dealer auto auction where it will be auctioned off quickly but for less than they could get if it was on their lot. This is done for a variety of reasons
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A car auction is a like any other where a commodity is sold to the highest bidder. Most potential customers attend an auction believing that the price of a used car would be substantially lower than the market value. However, this is often not the case. In addition, car auctions are infamous for marketing flooded and stolen vehicles, which are bought by unsuspecting customers
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Buying a car at a dealer auto auction is a tough business for someone with no experience at all ( but not impossible). If you will need capital and know a good car when you inspect it. Buying a car that is worse than you expected because you didn't know what you were doing is a sure way to lose money
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A dealer auto auction is an auction primarily used by car dealers, as they are generally closed to the public, however in rare cases the public do have access to some dealer auctions which is not widely known nor is it publicized, I will talk more about this later.
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If you are bidding on cars, this will be your chance to test drive the cars on show. Generally, this part is only for dealers or those wanting to bid on one of the cars being put on auctioneer. It is up to you if you want to test drive one the cars available, however, if you are buying a car, we recommend that you test drive the cars you are interested in.
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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 panels. 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. Mechanics 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.
