With many people struggling to make ends meet and TV adverts with catchy jingles tempting you to sell your car for quick cash, it can seem appealing. Your car (next to your house) is probably your most expensive piece of equity and with this in mind, it can be tempting to sell it, purchase a cheaper make or model and pocket the difference.
Car auctions, whether they be physical or on-line, can be a good way of selling your car, safe in the knowledge that an experienced auctioneer has yours, and the auction house’s, best interest at heart. You may think that these things do not always necessarily go hand in hand but bear in mind that the auction house will take a percentage of the purchase price (buyers fee) as commission so it is in their interest to get you as much money as possible!
So, let’s start with the basics:
What is a car auction?
Car auctions have a long history within the automotive industry with many different types of business using them to either sell excess stock or purchase new stock for resale.
They are extremely popular in the USA and Japan and are gaining popularity in the UK where they are no longer seen as dirty places. This is mainly thanks to the industry making a concerted effort to change the reputation of the sector and make it more appealing to all people, not just those ‘in the trade’.
Car auctions sell cars, commercial vehicles, motorcycles, plant equipment, and some of them will also sell large goods vehicles and possibly caravans and motor homes.
Auction houses do not own the vehicles which they sell. They merely act as a shop front for many different types of seller. These can include leasing companies, fleet management companies, dealer groups, banks and financial institutions, governmental bodies, police, and of course private individuals.
Let’s look at each of these different sellers more closely:
Leasing companies rent vehicles to companies or private drivers for a set period of time (sometimes as little as 1 year) so the vehicles put into auction are usually young models with a good mileage and because the cars are usually leased from new, they may have only had one person driving them whilst going to a meeting twice a week! When the lease or rental period ends, leasing companies will enter their old stock into auction as their customers are more interested in leasing brand new vehicles. These companies are usually owned by banks or financial institutions.
Fleet Management Companies
These are similar to Leasing companies in that they lease their stock to organisations but differ in that they will supply their customers with a whole fleet of cars and manage that fleet on behalf of their client. Again, when the rental period for the fleet ends, the companies wish to take advantage of the capital wrapped up in their stock in order to replace it with new models.
If you have ever part exchanged your old car at one of the large, glass fronted dealers or showrooms, chances are it has subsequently been put into auction and sold. Dealer groups will also enter old or unsold stock (known as overage) from their forecourts in order to keep their showrooms looking fresh with the latest that the manufacturer(s) have to offer. Of course, buying a vehicle at auction which has been entered by a dealer group can be a bit riskier than the leasing or fleet companies as if someone has part exchanged their old car, you have to ask yourself why did they do it, what sort of person where they, how well did they keep it and how many previous keepers has it had?
Banks and financial institutions
Banks and financial institutions can fall into fleet and leasing companies as many of them have these elements within their respective corporate families and follow the same trends. However, banks can also enter cars into auctions that have been repossessed from their customers after defaults on loan or mortgage repayments. Obviously a car itself is of little or no interest to a bank, they are only interested in the value and the money which can be made from it.
Governmental bodies junkyards near me
Government bodies will run fleets of cars for their staff and key executives and will update this fleet on a regular basis with the old stock being put into auction. Separate Government departments will also enter a wide range of vehicles at auction from ex-defence Land Rovers or staff cars, to lawn mowers and diggers used on the local playing fields or in the local cemetery! Local Government may also enter cars into auction that have been seized by bailiffs follow non payment of bills such as Council Tax (depending on the Local Authority in question, these can be quite high end models).
Police forces will auction vehicles seized from convicted criminals to either compensate victims, break up an illegal estate or regain public money gained fraudulently. The police also auction a variety of other items seized for similar reasons and may do this through an auction house or by holding their own property auctions. As well as these lots, all police forces will also run a fleet of undercover or unmarked vehicles and these will need to be constantly updated, with the old stock being put into auction to raise funds for the force.
This is the category of seller that we are really interested in. Private sellers can enter and purchase cars from auction and if their car is not sold first time round, they can tell the auction house to keep putting it in until they receive an acceptable bid. Be warned though, auction houses will charge you for each time they enter the car so if you have sold your car after a couple of sales, you may want to check your reserve price or rethink your options.
How does it work?
Most auctions work on the same principal; your prospective buyers bid against one another, raising the amount which they offer with each new bid they make until their competitors drop out and they are left as the highest bidder. All of your bidders will be in the auction hall (although an online element is becoming increasing popular) and all bids are made in the open. This type of auction is known as an ‘English Auction and its formula applies to the majority of vehicle auctions.