At first glance the notion of a car dealer auto auction seems strange to many people. Why would a used car dealer, or a main dealer, for that matter, want to take cars from the forecourt and sell them, usually at less than their market values, to their competitors?
Most vehicles that are sold at car dealer auto auctions are vehicles from other dealers such as:
- off-lease returned lease vehicles
- replaced rental fleets
- company cars
- repossessed vehicles
- older trade-in vehicles.
Why Would They Sell Cars at Below Book Value to Their Competitors!?
These are auctions where car dealers get together to sell some cars and look around and buy other cars. How can that make any sense you say? Isn’t a car dealer auto auction a waste of time? Yes, that’s quite likely what you might think! But, you would be wrong.
Say you drive a five year old Peugeot 207, but you’ve made some money and at your next car purchase you trade it in for a new Special Edition Mini Cooper, for example. You part-exchange the Peugeot for the new vehicle, jump in your “fab” new your car, and drive it home. That leaves the garage with a 207 which is rather beaten-up, and if it was sold at that garage it would be standing on their forecourt against a backdrop of new and recent retro ‘70s Mini’s. Of course, the Peugeot is not a bad looking vehicle, this is not a pretty sight. There is a clash between it and the other vehicles, both in style, and age. Is it unexpected that the Peugeot would take a long while to sell?
Each Car Dealer is a Specialist and Sells Best to Their Own Specialist Market
In short, car dealers understandably need, above all else, to make a good first impression when the public sees their cars on the garage lot. Any vehicle which does not fit into their business image, they want to get off their property as soon as possible. The people who will go for a new car, should not as a matter of marketing common-sense, be underwhelmed by a showroom of old used vehicles. The result of that would be lost customers. Not just once, but time and time again.
So want does the upmarket Mini dealer do with the Peugeot? The answer is that he offer’s it as soon as possible to another dealer at a Car Dealer Auto Auction, when it is sold along with cars from other dealers the dealer has cash to buy a much more suitable vehicle for his business. The effect is one of creating a large pool of cars of all makes, from which each dealer chooses the cars that they know they can sell easily. Due to their diversity this collection of vehicles each auction will usually contain some good examples of the vehicles of the mark that dealer sells new. Our dealer would probably seek out Mini to take back to his garage.
The result is that the dealers have the ability to offload cars that they would find hard to sell, and buy others that fit their style of business much better, and as a result they will be much more likely to shift cars off their forecourts sooner rather than later. Space for vehicles is always at a premium so a large part of making money for a car dealer is, turnover their investment – to sell fast.
The cars sold at a car dealer’s auto auction on average sell for less their motor industry pricing book value. In the event that the cars bought are in good working order already a dealer may be able profit from each one to the tune of £500 to £3,000 per car. The successful car dealer will have developed the skill of knowing just which vehicles he can turn a good profit on, without having to wait too long for the sale.
Can the Average Car Owner Attend a Car Dealer Auto Auction and Bag a Bargain?
If the general public, who only change their vehicles once every few years, attend these auctions and seek to buy, they usually find them to be over in a flash, and to provide very little time to think while the bidding is in progress. They find that they have to make their purchase decision without first taking a test drive, and that there are or no not usually any returns allowed if they make a mistake.
It is Called Buying “As Is” which Should Actually also be Called “Buyer Beware”
In the car trade auctions business they usually call this buying “as-is”. It is a case of “buyer beware” because unlike almost any other purchase you are taking a risk, and getting something cheap. Don’t expect the usual cooling off period within which the buyer can change his or her mind. If the car proves to be a dud, it is the buyer that will lose out, and not the auction house.
Is It a Scam? No. Some Do Get Cheap Vehicles This Way
But, don’t assume that all the cars at an auction will be wrecks. There will be good cars there and of course the dealers know how to spot them. If you identify one of these little gems and have the knowledge to be reasonably sure of your judgement, you can quite possibly bag a bargain. But, don’t expect the bidding to be easy because you can be sure that if you found a good vehicle, so will a number of dealers have found it, and will bid competitively for it, as well.
Check First – Don’t Just Turn Up at a Car Auction!
Before you go to a Dealer Auto Auction check first that the general public are allowed to bid, because many of them are dealer’s entry only.
So, now having read this article to the end, you should now know a lot more about car dealer auto auctions.
Bidding on Cars Father Joes Dealer Auto Auction Part 1
http://www.1ownercarguy.com This is a 2 part video down at Father Joe’s Auto Auction in San Diego CA. They do have some cool stuff here today and maybe I will find a good deal. Thank You for watching and please Share my Videos Comment on the Like them and Make sure you are Subscribed..;-)
Nathan Wratislaw AKA 1 Owner Car Guy
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