Australian Car Auction Overview.
Each week there are literally thousands of motor vehicles going under the auctioneers hammer. These include motor cycles, cars, vans, trucks and damaged vehicles such as we have written about the Brisbane hail sale auctions. Car auctions are a feeding ground for second hand car dealers to source stock for their vehicle yards or where private buyers are looking to pick up a bargain. With auctions there is a chance for customers to save thousands, sometimes there are large lot sales going through as we mentioned in Brisbane, auction bidders saved thousands on vehicles that were easily repairable but were thousands from a new car price. Sometimes theres a few lemons as in some cases you cannot inspect the vehicle beforehand and perhaps the buyers underestimated the extent of repairs that after repairs the market value of the vehicle was less than the cost of repairs.
Here’re a few pointers on dealing with vehicle auctions in Australia, no matter where.
The different types of motor vehicle auctions.
You may see at the auction centres different types of auctions. Sometimes these may be “dealer only” car auctions where those with a motor vehicle dealers licence participate. Then there’re public auctions of vehicles which are open to everybody attending. The public vehicle auctions are usually categorised into various types as you see advertised, i.e.,
Government vehicle auctions: Government used vehicle auctions are cars sourced from government departments such as city councils, state and federal government vehicles. These vehicles may be largely exed government lease autos which have low kilometres, sometimes extremely low milage such as less than 10,000 kilometres. There may be some with high mileage as well. Sometimes specialised vehicles are auctioned, e.g., Emergency services vehicles, ex-ambulances, etc.
Repossessed vehicle auctions: These types of vehicles, ie. Repossessed cars for auction are again sourced from finance and leasing companies. These have been where people or corporates who have had the vehicle on finance have defaulted on their repayment obligations to the financier. It is then the auto finance company is recouping their debt interest in the vehicle. I tend to shy away from these types of vehicles as you never know if the owner, knowing that repossession was about to take place may have caused some damage to the vehicle.
Cars that are Ex-Lease (Ex-Lease Vehicle Auctions): These are generally sourced from the larger corporates that have leased vehicles from finance companies or the vehicles manufacturer eg. Toyota finance etc. These vehicles have usually been well maintained in terms of their upkeep and keeping of a regular service manual. Often you will find that the sale is timed around the expiration of the vehicles warranty or if the lease has terminated. Sometimes there is a small amount of factory warranty left on the vehicle. Buyers of these types of vehicles at auction are usually getting a good buy on a car that may still have a warranty left but are getting good savings on the price vs a new vehicle off the dealer showroom price.
Commercial and Four Wheel Drive 4WD auctions: These may feature less stock than your standard vehicle types, and there may be other types of vehicles in the mix such as luxury vehicles, classic cars and other forms of prestige vehicles on the day of the auction. Sometimes there may be a number of 4WD vehicles auctioned off by various companies such as mining companies or government departments such as the Department of Natural Resources and Environment. Condition of these vehicles is generally mixed as some of these organisations do a lot of rough off road work and four wheel driving and you don’t really know the extent or experience of the drivers over the terrain and whether the 4WD vehicle has been submerged in water etc.
Damaged Cars Auctions – Salvage Car Auctions: We discussed these type of auctions in respect of the hail sale Brisbane car auctions and the massive Brisbane storm that occurred. There were thousands of cars auctioned by Brisbane auction houses Pickles and Manheim auctions. These comprised vehicles written off by insurance companies as a result of storm damage or the vehicle being in a flood, flood damaged vehicles. There may also be hail damaged cars or vehicles that have been stolen and trashed by car thieves. The vehicles may be classified as “repairable” write-offs or “statutory” write-offs. Statutory write-offs cannot be reregistered and the auctioneer has to disclose before the auction whether the vehicle has been written-off as our article here discussed.
At damaged vehicle auctions you usually can get thirty to as many as one hundred vehicles going under the auctioneers hammer. Damaged vehicles have been sourced from insurance companies and the vehicles have been deemed too uneconomical to repair them. In this case, it was easier for the insurer to pay out the insured vehicles owner the agreed replacement value or cost depending on the type of policy than paying for the vehicle to be repaired.
At times insurers may pay out automatically to the insured without needing quotations for repairs such as water damaged or stolen and recovered vehicles. Again, these types of vehicles will end up at the auction centre. You don’t have to have a dealers licence or be a dealer to buy from these types of auctions, these are open to the general public for bidding. Generally though, a large number of people that are bidding at these auctions are parts recyclers, also known as car wreckers who will buy the vehicles for dismantling. There are also panel beaters or run of the mill mechanics who intend to make good the vehicle for personal use or flipping the vehicle on the open market for profit.
When it comes to buying at a damaged car auction you really need to know your stuff. The vehicle in most cases needs to get back on the road and there may be substantial savings or you could get a lemon that makes getting the vehicle back on the road a lot of trouble. Remember, stolen vehicles as pointed out in another post of ours have been trashed in a lot of cases and there may be more problems “under the hood” hidden than can see at the time. You don’t want to be one of those people that got burnt by a rotten deal.
Water Damaged Cars for auction: Cars that have been submerged in water can be particular troublesome. Queensland especially the inland areas experiences a lot of flooding each year and there are a lot of cars that make their way into the cities and onto the market. Water damaged vehicles may appear perfect in condition from the outside but in a lot of cases the vehicle faults can be well hidden. At most auctions where there are salvage water damaged vehicles there won’t be any real way to check how well the vehile is running or operating. Late model vehicles especially don’t take kindly to water inundation and theres highly likely chance that the vehicles computer system and electronic components have been damaged. Repairs to late model vehicles electronics can be very costly especially if you cannot locate parts from the car wreckers. Buying new from the manufacturer will be a costly exercise for genuine bits and pieces.
Another problem with water-damaged vehicles is that of water in the engine, transmission and driveline. Water into the transmission and driveline may be salvageable, but water into the engine is more serious. As the vehicles may have taken a long time, perhaps months to make it to the auctioneers hammer there may be rusting and seizure happening in the motor. The next problem will be cleaning the vehicle and this will involve going through the entire interior of the car, seats, carpets and getting rid of the grime, mould that may have been sitting and cooking for months.
Panel Damaged Vehicles: In a lot of cases these vehicles are of interest to panel beaters where there are panel damaged vehicle auctions. You need to have some experience in being able to evaluate the cost and time for work to get the vehicle repaired.
Hail Damaged Vehicles: As mentioned in our other articles on this site such as the Brisbane hail sale vehicle auctions you can get a lot of car for a significant discount on price. But remember, you will need a Written Off Vehicle Inspection and as also discussed in that article there may be some issues to deal with such as getting insurance for the vehicle.
Where can these vehicles mentioned above be found?
You really need to be familiar with the types of auctions and what the vehicles are on offer. You may end up getting a bargain car at the auction or you may get a lemon. You really need to know what trading ground you are dealing with such as, if you are after a cheap vehicle for a family member the last thing you want to do is to pick up a vehicle that has been stolen, trashed and is unsafe to drive and has body damage and is at risk of rollover when brakes are applied.
Many of the cities have large auction houses selling vehicles on a regular weekly basis. The big hitters in the car auction business are generally Manheim Auctions and Pickles. Manheim and Pickle Auctions have auction showrooms in each state of Australia. These two companies generally have the market for selling large lot sales of vehicles like listed above ie. Ex-government, ex lease, insurance and car finance companies. They put on a lot of vehicles in fact the “Brisbane hail sale” auction of vehicles were putting through about 400 vehicles at an auction event.
There are many other smaller auction houses and some of them deal with specialised auctions eg. Classic cars and vintage cars. Southbank auto auctions based in Melbourne are also a smaller group but offer vehicles for auction and also allow pre inspections of vehicles. There are some organisations that offer online auctions such as Grays Online. You can generally find the listings for vehicles for upcoming auction on the Pickles or Manheim website itself or all the other auction company websites. They will also give the terms and conditions and the times for previewing. The auctions are also advertised in the papers eg. The Brisbane Courier mail newspaper has a prominent section for auctions.
Bidding at the auction.
As its an auction meaning its up to what the buyers are willing to offer on the day and what the sellers are willing to get rid of the vehicle for (this depends on the motivation of vendor and the situation the vendor is, perhaps theres not much finance owing and they just want to get rid of the vehicle and cash out the finance), who knows, its all variable at the end of the day but sometimes there are situations where people pay too much for a vehicle, perhaps for a reason and sometimes vehicles go for a bargain. When bidding its always best to know your values for the cars before you bid. This might take a bit of research but going into the auction armed with what the cars are selling for on the open market will avoid you paying too much for the vehicle. .Theres enough advertising out there to gauge an opinion of “worth” to avoid paying too much for a vehicle. You can even go to dealers yards and see the equivalent vehicles on offer and what they are asking at the dealers yards – this will set a top end price that you won’t want to go over. Theres also private for sale advertising in the papers or online such as the online car websites eg. Carpoint, carsales.com.au etc.
Value is affected by many things, age of the vehicle, kilometers travelled, external and internal condition etc. There are also the factor of the vehicle not having a warranty and getting the car registered and/or on the road. If its damaged, you need to factor in repairs such as repairing of glass and panel work and in some cases the hail sale car that you bought may be unroadworthy eg. Damaged windscreen, lights etc.
Also factor into the equation the differences in models eg. Some models of petrol driven vehicles are cheaper than the equivalent diesel-powered vehicle. That bargain you thought you got may not be and the 2.0 litre version may be a touch higher in value for a reason over the 1.8 litre model of the same vehicle. This is where you have to do your footwork and find out some pricings as a guide before bidding.
Auction pre-inspections: There are some auction houses that allow pre-inspections of motor vehicles and you should take advantage of the pre-inspection times. You need to know what likely cost of repairs might be, roadworthy and registration expenses of the vehicle before purchase so you can factor this into the price on bidding.
Conditions of sale: This is important and you need to read through the conditions of sale and ask the staff any questions if you are unsure, there are extra fees and taxes that might be applicable and you need to be aware of these changes. I will write more on the costs of buying and selling at auction in other future articles.
Auction houses may offer pre-inspection eg. Southside auctions in Melbourne provide pre-inspections, and this will allow you to inspect the vehicle, and ideally you can bring a mechanic if you aren’t mechanically minded. Again if you can establish what “work” is to be done on the vehicle you need to factor this into the price eg. Changing of seals, fixing of oil leaks, changing the brake pads etc. These are all the added costs after you take ownership of the vehicle that could end up making the bargain become a high priced car if you don’t research the price of the vehicle and end up paying too much for the car and then have to outlay yet more money to fix and repair, register etc.
Be sure when bidding you know who your playing in the pool with. You might have seasoned dealers and bidders you are bidding with. As seen on the likes of storage wars (tv show), they may use tactics to try and intimidate other bidders such as bidding aggressively against you pushing the auction along at speed. Others may sit quietly in the crowd then move in aggressively as if to pounce when the hammer is about to fall. You need to just keep a focus on what you are doing and the price you are prepared to pay for the vehicle having properly done your home work beforehand. Don’t let the other bidders bid you up that you lose all focus and then pay a higher price than you wanted. Remember, be prepared to walk away from the deal rather than end up paying a higher price than what you intended.
If you buy the vehicle – ie. If your bid for the car was successful then you will have to pay a small deposit and then make arrangement with the auction house for making final payment for the vehicle usually within a set period of time. More on this in future articles.
Lastly, tips for buying at auction:
- Get a feel for pricing and values in advance of the sale. There is no point buying a car at an auction that could have been purchased elsewhere at a far less price say from a dealer or another auction coming up in the future. Its best play it safe and not pay too much for the vehicle.
- If you are serious about buying a car at the auction, arrive early and register as a bidder. Double check with the auctioneers that they have all your correct details as if you buy a vehicle your registry auction details are passed to the licencing authorities and having incorrect details may cause some problems with getting the names or address details recorrected.
- Inspect vehicles thoroughly. Some auction houses offer pre-inspections, and it’s here you look for any scuffs and damage and take this into account, so you don’t go overboard with your bidding price for the vehicle.
- Check if the vehicle has a vehicle owners and servicing manual.
- When bidding allows for the auction house fees as this fee is added ontop of what your final price for the car you bid for.
- Getting your bid noticed is also important. Having eye contact with the auctioneers spotters is important to minimise any chance of dispute as to whose bid is current.
- If you are buying a common “fleet” vehicle but miss out… relax; there will likely be more vehicles offered in the following week with similar mileage, colours, age, etc.