Car auctions are a method of selling new, but more often, selling used vehicles, based on auction system. Car auctions are present in most nations, but they are often unused by most people because in nations such as the United States, car auctions are protected source for used car dealers.
A dealer-only auction requires a car dealer license in all 50 states. This is the main way dealerships rotate excess inventory. Unlike public auctions, dealer-only auctions usually offer close to new cars, new cars, recent trade-ins or just off-lease vehicles. Additionally, many cars have existing warranties and are carefully rated as to condition.
Where do those cars come from?
Most cars at dealer car auctions are off lease returns, replaced rental fleets, company cars, trade-ins and repossessed vehicles.
1. Off-lease cars: vehicles returned to the financial institution at the end of a lease term. Closed auctions are usually the only way for such financial institutions to get rid of a large number of end-of-lease returns. Usually, off-lease cars are returned within 2–3 years, often before their original factory warranty expires.
2. Off-rental cars: normally, rental companies replace their fleets once a year, releasing a great amount of late-model cars to the secondary market. Rental companies rely on car auctions to sell off their used inventory, just like the big financial institutions.
3. Company/fleet cars: all kinds of companies own or lease cars, trucks or vans that they typically keep for two or more years, even though it is not uncommon to see current year models sold at the auctions. These fleet vehicles do not have many extras and they get thoroughly exploited on a daily basis, just like rentals. But, unlike rentals, usage of company cars varies very much from the carefully driven cars to the delivery trucks that regularly mount curbs in city traffic.
4. Repossessed cars: vehicles can be either voluntarily or involuntarily repossessed by financial institutions for delinquency or another reason for recall. In these cases, car auctions are the bank’s only option for deliverance.
5. Trade-in cars: dealer inventory that is aging or does not meet their profile. The overall condition varies greatly.
6. Salvage: cars that have been in accidents, fires, floods or recovered thefts that have been purchased by insurance companies. The insurance companies then sell these cars to dealers or body shops who fix them and resell them.
What about the pricing?
Vehicles are sent to auction with the main purpose to be sold quickly, regardless of their source. This usually happens at prices that dealers can easily recoup with a small profit from a resale. At the dealer car auctions, cars are seldom sold for low prices. This may happen if there are not enough interested bidders or if the vehicle is exceptionally unattractive. Many sellers put reserve prices on their stock specifically to prevent this from happening. The reserve price is not publicly disclosed and a “winning” bid at auction is only considered a sale if the reserve price is met. Sellers have the option to re-list vehicles that did not sell at a particular auction.
Information on Dealers License, LLC
Dealers License, LLC is based in Greenville, South Carolina and helps clients across the country acquire their dealer license. They can assist you whether you are looking for a wholesale or retail dealer license, either of which allow you to access the dealer-only auctions mentioned above as well as buy and sell within the company’s retail network. They will also help you 24/7 with marketing assistance, mentoring and coaching. If you would like to learn more, check out: https://www.dlcnetwork.com/.