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Tips For Buying Stock At Physical Car Auctions

By Richard Withers »
Richard Withers | Head of Asset Security at LE Capital

It’s possible to buy stock for your car dealership at both online and physical car auctions. While the process is similar for both, there are important differences. Here, we offer expert tips and advice to second-hand car dealers for getting the best deal at physical car auctions.

Before The Auction

Research Best-selling Vehicles & Their Features Online

It’s always good practice to check with The Society of Motor Manufacturers and Traders (SMMT), who publish regular used car data, to find out which are the best-selling models and colours and in what geographical location these particular vehicles sell well.

Savvy second-hand car dealers will also look at the SMMT data to find out what models are starting to slow down and become less popular, as these are the vehicles that will be coming up for auction across the board.

Visit Specific Auctions Before Bidding

You should aim to visit a new car auction house ahead of when you want to bid to get a feel for how they operate. Some physical auctions are more thorough than others in terms of scrutinising the condition of the vehicles up for sale and identifying inherent issues.

Create A Car Auction Shopping List With Lot Numbers

Most, if not all, car auctions will advertise the contents of lot numbers by email ahead of the event. Check through this in advance so you can arrive with a clear idea of what vehicles you want to bid on and which lot they are in, like your own shopping list.

At The Auction

Arrive Early To Evaluate Stock

Getting to the physical auction early will give you enough time to properly evaluate the cars up for auction before you start bidding for the day.

When evaluating a vehicle, consider the following tips:

  • Check the car’s bodywork for obvious signs of damage (dents or scratches) and corrosion.
  • Ask for a copy of the scrutiny report or download it before attending the auction.
  • Check under the bonnet for fuel, water or oil leaks. Remove the oil filler cap and check for discoloration from oil stains. Keep an eye out for gunged up areas which could indicate issues with the engine.
  • You won’t be able to test drive a vehicle but most auctions will let you turn on the engine. Always carry a long-handled screwdriver or stethoscope with you and listen around a running engine for knocking or unusual sounds like a misfire.
  • Check the exhaust output for excess smoke and the colour. Too black and the engine may have an over-fueling issue. Too white and the engine may be running too lean, which would indicate an emissions problem.

Preparing For Bidding

Networking & Sharing Information

Networking at car auctions can be a useful way to learn more about the market and what bids might get competitive. Do share any vehicle faults you have found with others in the crowd ahead of bidding, so the message gets around. This can help prevent overbidding.

Be aware that when other dealers seem keen to network, they may have ulterior motives. Always ask more questions than you would answer and listen to the things that are not being mentioned.

Decide On Your Fair Max Bid

Ahead of your lots, consider what your max bid will be for each vehicle in order to achieve a healthy profit margin, bearing in mind the likely cost of preparation and repairs for resale. Bidding can be fast and competitive and you don’t want to overpay in the heat of the moment.

Check online advertisers, like Auto Trader, and media companies, like Kelly Blue Book, to find out the current market value of the vehicles you are bidding for. Don’t be tempted to pay more than your max bid or you might risk your profit margin.

Consider The Seller & Why They Might Be Selling

There can be any number of reasons why a vehicle is being sold. For example: A private owner may be upgrading their car to a newer model OR they might be getting rid of a vehicle near the end of its life and hoping to make back some money. Another dealer might not have demand in their market for a particular vehicle but that doesn’t mean it won’t be right for yours.

Look out for large numbers of similar or the same makes and models; these vehicles may be ex-fleet vehicles. Try to discover what type of fleet user owns the vehicles because some fleet owners will care for their fleets better than others and some industries have a reputation for poor driving habits. For example, there are differences between mobility, taxi and courier vehicle drivers.

During Bidding

Listen Attentively To The Auctioneer During Bidding

Aside from making sure you are paying attention so you hear when you lot numbers are called, you should be attentive to the auctioneer during bidding as they will offer further information on the vehicles at this stage. Key details they might mention at this point include: number of owners, service history, MOT test, number of keys and mileage.

Be Clear When Bidding & Avoid Bidding Wars

Ignore the movies and subtle nods, be clear in your bidding so the auctioneer knows when you are bidding on a vehicle.

Don’t be afraid to lose out on a vehicle that has gone beyond its value during bidding. Consider the competition in the room and try to keep an eye on anyone bidding on similar lots to you to avoid bidding wars.

After Bidding/Setting Up Payment

If you are set up for stock funding with LE Capital, you can make your purchase request at the end of bidding. Typically, we will arrange a same-day payment, direct to the auction house.

Alternatively, you can use your personal funding and settle with the auction house directly.

Physical Car Auction FAQs

When Will You Get Your Vehicles?

This will be dependent on the relevant auction house’s policies and also the dealer’s specific circumstances. The payment process can vary, but it often involves settling the winning bid amount, auction fees and any other applicable taxes or fees. Some auctions might allow for immediate pickup, while others may have scheduled pickup times or days. Remember, with LE Capital, 100% of invoices are financed, with all fees, delivery charges and vehicle costs included.

Will Your Vehicles Get Delivered To You Or Will You Need To Arrange Transport?

In most cases, you will need to arrange for the transportation of your vehicles. Some auctions provide on-site pickup options, while others may require you to arrange for your own transportation. How the vehicle is transported from the auction house is up to the purchaser; whether through a tow truck, trailer or, if the vehicle is in working condition, driving the vehicle away.

What Type Of Vehicles Are Sold At Physical Auctions? Do They Have Mixed Vehicles?

The majority of physical auctions offer a mix of vehicles from various categories to attract a broader range of buyers. However, certain auctions will tend to specialise in particular categories of vehicles, such as:

  • Government Auctions
  • Police and Impound Auctions
  • Classic and Collector Car Auctions
  • Luxury and Exotic Car Auctions
  • Salvage Auctions
  • Commercial and Industrial Equipment Auctions

If you are looking for particular vehicle types, auctions have been known to host special events or themed auctions that feature specific types of vehicles or special promotions.

What Are Reserve Prices?

Reserves are minimum prices for vehicle sale. Sellers set the minimum price they want to meet before allowing a sale. This is not typically disclosed before or during bidding.

If the vehicle has a minimum/reserve price, the auctioneer will often declare something like “the reserve is not met” or “this vehicle is not sold” if the final bid does not meet the reserve price. At this point, the seller will decide whether to accept the highest bid below the reserve, or they can decline the highest bid and take the vehicle off the market. The seller and highest bidder may decide to negotiate a price from this in order to reach a deal.

Will The Auctioneer Start The Bidding At The Minimum?

Not necessarily. The auctioneer will either start the bidding with an opening bid he feels is suitable or ask for an opening offer from the audience.

Is There A Best Time Of Year To Buy Stock At Auctions?

Not necessarily. Factors such as market conditions, seasonal preferences and economic trends can all impact the availability and pricing of vehicles.

Economic conditions have a huge impact on the prices of vehicles at auctions. It is best practice to continually monitor the overall market in order to identify favourable buying opportunities.

There are some seasonality factors you can consider:

  • Sports cars might be in higher demand in spring and summer, while four-wheel-drive vehicles may be more desirable approaching and during the winter months.
  • Manufacturers tend to release new models in the late summer or early autumn. You may therefore find good deals on previous-year models at these times.

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