Lots of vehicles are sold at dealer automobile auctions annually. These public sales are restricted to the common public and only certified dealers can partake. As with any general market exchange, prices of cars sold at dealer auctions are lower than those publicized on any dealer’s lot, which begs the question, why would anybody decline a possibly higher sticker price to take their list to a dealer public sale where it will be auctioned off for thousands less than retail? One might also wonder if there is something wrong with vehicles that end up at the auctions – why else wouldn’t a dealer go after a bigger margin by selling those vehicles at their own lot?
Obviously, there are a number of junk cars near me that dealers have tried selling on their lots for some time to no avail before determining to cut their losses short by disposing of them quickly at the public sales. Maintaining aging inventory costs dealers both money and status. Though, old or otherwise unpleasant inventory accounts for a tiny portion of the cars sold at auctions.
Let’s look at these sources exclusively and examine the benefits or risks associated with each of them:
- Off-lease: cars returned to the bank at the end of a lease term. Closed auctions are usually the only venue for such banks to dispose of a large volume of end-of-lease returns.
- Advantages: the terms of a lease usually put a restriction on the number of miles driven, need regular maintenance, and reprimand for extreme wear. Usually, off-lease vehicles are returned within 2-3 years, often before their original factory warranty expires.
- Risks: off-lease cars are older – two or three years are standard terms of the lease.
- Off-rental: rental companies usually replace their fleets once a year, releasing a flood of late-model vehicles to the secondary market. Like the big financial institutions that countersign car leases, rental companies also rely on car auctions to sell off their used inventory.
- Benefits: these cars are well maintained and driven for only one year.
