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
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.
Dealer Groups
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
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
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.
Private individuals
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.