Automotive auctions have been around since the late 1930s, and much has changed since that time to make the process safer, more efficient, and a lot easier for the average buyer. There are approximately 2,245 auto auctions across the United States, from small single-owner operations to large franchises stocking thousands of vehicles. Whether you are looking for a rare and priceless Mercedes-Benz 300 SLR Coupe or want a low-mileage Honda Odyssey for the family, there is an auto auction that will cater to your needs.
One thing that has remained the same over the years is the potential for significant savings compared to buying from dealers and other resellers. However, as always, the term “Caveat Emptor,” meaning buyer beware, applies here. We examine the pros and cons of buying vehicles at an auction and assess whether it is a savvy alternative to going through a dealer.
We focused on the auction buying process for relatively new vehicles rather than the rather specialized world of classic car auction houses. Our aim here was to assess whether buying a vehicle for personal use from an auction house was a viable option for the average consumer.
Pro: Huge Range Of Cars To Choose From
Auction houses tend to have a vast range of different makes and models on offer at any one time. This makes them a great one-stop shop for those looking for a few different vehicles that wouldn’t usually be found at a dealer. It also means that potential buyers can usually pick from a large selection of similar models and select the one that fits their budget the best. So, if you are after a Mazda Miata for the weekend and a Ford F-150 for work, an auction house is a great place to buy both on the same day.
Con: Test Drives Aren’t Always Possible
Auction houses are all about offloading hundreds of cars in quick succession. Many are packed into large warehouses, which makes moving them about a logistical nightmare. That’s part of the reason why test drives are not offered before an auction takes place. The next best thing is a thorough visual inspection of the vehicle. Start by checking for any available vehicle reports from the auction house and whether the car has a clean title.
If possible, carry out a visual inspection. If you have access to the key, start the engine and check for excessive smoke from the exhaust, strange sounds from the engine bay, and whether the electrics work as they should.
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Inspection checklist |
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Bodywork |
Rust, dents, scratches, signs of accident damage |
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Tires and Suspension |
Uneven tire wear, worn suspension components |
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Interior |
Check condition of pedals, seats, and steering wheel |
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Engine Bay |
Check fluid levels and look for leaks |
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Electrics (if key is available) |
Check for warning lights, start engine and listen for strange noises |
This checklist becomes more important on older vehicles and ones with high mileages. If you are considering a nearly new vehicle, it is less likely that it has engine or suspension issues. If you are buying online, or cannot see the vehicle in person, examine any available photos and check for evidence of a solid service history.
Pro: Great Deals Can Be Had
Auction houses get their stock from a variety of sources. Some are from impound lots, which could be vehicles that have been repossessed, seized, or towed for various reasons. Other sources include ex-fleet or demo vehicles and rental cars. In many cases, these vehicles would have been serviced and maintained to a decent standard, but don’t assume this without checking the service records first. Fleet vehicles tend to be offloaded by larger companies and are often sold at large discounts, the same can apply to vehicles from municipal lots, as these vehicles owe nothing to the seller other than taking up valuable storage space.
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Something else to look out for is reserve pricing. Vehicles are either sold with or without a reserve price. A reserve price is the minimum the seller wants to get. Bids under this figure will not be sold. No-reserve vehicles will be sold to the highest bidder, regardless of the amount. Salvage title vehicles have been in an accident and are deemed uneconomical to repair by an insurance company. They tend to be great deals, but only if you are an expert at assessing vehicle damage and are sure that you can get it repaired, insured, and registered for the road again.
Con: Generally, There’s No Warranty
Dealers inevitably charge more for a car, but some sort of warranty is usually included in that price. There is also some recourse if the car you have bought turns out to have a major issue. Not all warranties are the same, though, and in many cases, they don’t cover much, but they provide at least a little peace of mind. Auction houses tend not to offer any warranty at all.
This may be a deal-breaker for the more risk-averse car buyer, but you can mitigate some of the potential risks by doing thorough research on the cars that you are interested in bidding on.
Pro: Good Option For Car Enthusiasts
As we have mentioned, auctions tend to have a huge variety of different vehicles on offer. Some may be bread-and-butter family cars, but there are often rare and desirable sports cars mixed in with the regular stuff. Check the online listing beforehand to see whether something like a BMW 1M has snuck into the auction lot in among a sea of Camrys and Accords.
Dedicated sports car auctions can also yield some surprises, especially if there are many of the same models on offer. While a dealer may only stock the more mainstream, popular models, you could find a rare engine/color combo of your favorite sports car at an auction.
Con: You May Be Buying A Lemon
Once again, thorough research is key to ensuring a happy auction experience. Unlike a dealer, auction houses are not bound by federal law to disclose major issues with a vehicle. State laws vary on this point, but in all cases, auctioned cars are sold as-is. This means that any mechanical or structural damage will be up to the new owner to rectify.
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Pro: Exciting Buying Process
Driving down to your nearest dealer to be accosted by a pushy sales assistant who wants to upsell you at every turn can be a tiring experience. Of course, not every dealership is the same, but at the end of the day, they are there to sell cars, and a soft sell approach only gets them so far.
Bidding at an auction has a certain element of excitement and risk to it. The masses of cars and people add to the buzz, and the only pressure you are under is from yourself. The uncertainty of what the hammer price will be is also an exciting aspect of the process, especially if you manage to secure your vehicle for far less than you initially budgeted for. Many large auction houses offer an online buying process as well. This removes some of the face-to-face excitement, but it does make it much more convenient to find a suitable car, even if it isn’t in your State.
Cars bought at auction tend to sell for well under what a similar model would go for on a dealer’s lot. However, you may need to pay a fee to be eligible to bid, and auction houses also charge both buyer’s and seller’s fees upon completion of the deal. Then there may be administration or transport fees, so make sure to read the small print before buying. Another requirement by auction houses is for full payment to be made on the day of the auction. Ensure you have the required funds ready, so you do not lose out on the vehicle or incur a non-payment penalty.
Pro: Can Be Quicker Than Buying Through A Dealer
Buying a car from a dealer often involves arranging financing, haggling over the price of the vehicle you want to buy, and a potential trade-in. Then, you need to fend off the “valuable extras” they try to sell you, like extra floor mats, wing mirror insurance, or something equally pointless. An auction house makes it as easy as possible for you to bid on a car; there are no extras to add, and many offer an online bidding process so you can purchase your next vehicle while watching reruns of Miami Vice at home. Just remember that buying a car sight unseen is not always a good idea, but more on that below.
Con: You May Overbid In The Heat Of The Moment
Auctioneers are trained to get the crowd pumped and push up the bidding prices. Sometimes, a particularly desirable car may spark a bidding frenzy that pushes prices way above what it would normally sell for. To avoid falling foul of these situations, always stick to the following rules:
- Set a maximum amount (including fees) that you will bid to
- Select and research the model/s you will be bidding on
- Do not bid on a vehicle that you have not researched beforehand
- Let others bid first on the car you want – this will prevent you from inadvertently pushing up the price
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Sources: National Auto Auction Association, Copart, Hagerty, Classic.com
