Car auctions are a great way to scout for discounted cars fast and there are many contributing reasons why car auctions are cheap. First of all, there are several different types of car auctions out there. Some car auctions enable everyone to attend, while others only reserve seats for licensed dealers.
Furthermore, car auctions also differ depending on the type of cars they sell. Auction sites such as Copart specialize in auctioning salvaged and unrepairable cars. Others like ACV Auctions or Auto Auction Mall mostly sell pre-owned or dealer overstock cars which are mostly tailored towards private parties or dealerships.
All of this contributes to why auction cars are as cheap as they are. Obviously, a heavily damaged car is likely to be cheap because it was already written off by the insurance company. All auction sites also want a fast turnaround which means that they are focused on selling the cars as fast as possible.
Moreover, auction sites don’t care about cars that much which means that the cars are not looked after all that well. They also offer you no warranties, a limited amount of authorized payment methods, and the cars themselves are also often been repaired or in a general subpar condition.
The value of the car
The most obvious reason why most cars sold by auction sites are cheap is that they are as the word might suggest – cheap. They are often extremely high mileage, have been in all sorts of accidents and mishaps, and are often in a terrible condition This does not mean that these cars are a lousy buy, it’s more about who is willing to invest time in such cars.
Certain high-end cars are in demand for either business company cars or enthusiasts so it’s not often that a brand new Mercedes is hard to sell, even if it is, a discounted rate at a dealer should do the trick. Auctions such as these are mostly reserved for cars which are a bit difficult to sell immediately.
Damaged and repaired cars
As previously stated, sites such as Copart specialize in salvaged cars which means that these cars are junk to some, but gold for others. These cars are the most affordable of them all because they require extensive investments in order to make them usable and valuable.
If a car is damaged beyond recognition and if it’s virtually impossible to repair it, it is likely going to be sold for parts or even for scrap metal. All of this further drives the price down to the lowest level possible. However, if the car is lightly damaged, it should also be relatively cheap in regards to the damages in question.
Service cars and government cars
Another reason why auction cars are cheap is that they were often used by governments and similar services. Cars such as these are not exactly looked after all that well because they are bought to serve a specific purpose. If you consider what it means to be a police officer, it makes more sense why a retired police car costs as low as it does.
Furthermore, government cars are very much the same deal because they are used as tools which is not the way one would use his car. In addition to that, these cars are older, they have lots of miles on the clock and they are not exactly made to be luxurious from the get-go.
Car auctioneers are often selling millions of cars per year, and they don’t want to hold on to cars for a long time because that would increase the operational costs significantly, especially if you scale that with thousands or millions of cars each year.
This means that these cars are there to be sold, they are not there to wait for the best deal. Some cars are even sold without reserve which further increases the turnaround time and makes auction sites a place where one can strike a really generous deal.
Low operational costs
The last, and probably the most important reason why auction cars are so cheap is that auction sites strive for low operational costs. As previously stated, auction houses look for fast turnarounds which means that they don’t have to pay for costs associated with a car sitting for too long. Moreover, this also means that the cars in question can not be driven before they are sold.
No warranties, delivery fees, or returns further decrease potential operational costs as compared to a dealership. The whole system is designed to sell cars fast which means that most of the operational costs you usually associate with a dealership are nonexistent in the car auction business.
Are car auctions worth it if I want to buy a car for myself?
If you are knowledgeable about the market and the way these types of auctions work, then they might be worth the hustle. Keep in mind that you probably won’t be able to test drive the cars or even take an in-depth look at the car before you buy it.
This means that you will have to concentrate on finding any repair or repaint spots, checking if all of the VINs match, or checking the undercarriage of the car from a far distance, or even only through a computer screen.
Which car auction should I attend if I want a car for myself?
The best car auction type to attend is a dealership overstock car auction because these are brimming with new, used, or barely used cars just waiting to be snatched at a discounted rate. However, keep in mind that everyone is aware of that which means that the prices might jump accordingly.
The reason why those cars are being sold at an auction is that they were difficult to sell in the first place. Whether it be because the car was not as popular as everyone hoped it would be or because it was specified in weird colors or interior trims or due to counter other reasons, these are usually the type of cars you want.
What’s the greatest risk associated with car auctions?
The greatest risk associated with car auctions is undoubtedly the inability to inspect the car thoroughly before buying it. Even though many condition reports deem the car in a decent condition, that’s still not a guarantee you are not buying a lemon car.
Furthermore, these cars were difficult to sell for a reason, so when the time comes for you to pass the car to a different owner, these issues could once again be a deciding factor.