By on April 25, 2012

 

Everyone around me is talking at 100 miles an hour. Sometimes it seems like I can’t even get from one place to another without running into a familiar face.

Am I at an auction? Nope. I am at home on a Saturday morning talking on the phone with NPR member-station reporter David Pitman about public auctions.  While my wife and kids get ready for the day in their own noisy way, I am given questions that range from the instructive helper type to, “Oh boy. If I answer this one the Georgia Auto Dealers Association is going to put me right up there with Ralph Nader!” Then again, I am not a member of that group so the pressure on those questions was minimal.

Here is a link to the story on Morning Edition. For those who want to simply read the text of the interview feel free to do so after the jump.

 

For the last few months, new car sales have been on the rise. And that has led to more used cars coming onto the market. Despite the greater supply, used car prices are not coming down. That might tempt some used car shoppers to try to get a good deal at an auto auction. But for most people — auctions are not the answer.

An expert in automotive sales says the biggest myth surrounding public auto auctions is that they’re a great place for people who aren’t car dealers to get a sweet bargain.

“If you don’t have the ability and tools to deal with fixing a car, then you should not be at a public auto auction.”

That’s Steve Lang.  He’s a columnist at The Truth About Cars.com.  He’s also a contributor to the automotive consumer website Edmunds.com.  He runs a small used car dealership about an hour northwest of Atlanta, Georgia.  And every year, he buys about a thousand cars at auction.  Most of those he wholesales to other dealers.  Lang says the number of non-dealers showing up at the auctions he attends has tripled in the last five years.

“It used to be that the only type of people we would get at these events were immigrants, or people who are very knowledgeable about specific types of vehicles.  That has changed dramatically.”

Lang says many of these newer auction shoppers are clearly out of their element.

“The two biggest questions are ‘what’s going on?’ and ‘how much is he asking?’  You get a sense that they don’t know what they’re doing.”

Lang says there are three key reasons why public auto auctions are not the same as buying from a dealer or individual seller. One, there’s little, if any, opportunity for buyers to inspect or test drive vehicles.  Two, the inventory typically consists of cars that other dealers can’t sell, because of their age and mileage.  And, three, Lang says auctioneers are pros at manipulating buyers.

“They try to buy a vehicle and they get caught up in the energy, the excitement, the enthusiasm of the auction.  All the sudden, they now think ‘you know what? Everyone else is bidding more money for this vehicle.’  The laws of economics don’t change at an auction.  But peoples’ minds definitely do.”

Lang says the best defense against getting caught up in the auction frenzy is education.  And that education begins before stepping onto the lot.  Many auction houses will provide a list of cars they hope to move at the next public event.  Those lists will include vehicle identification numbers, allowing shoppers to look up information on AutoCheckor Carfax.

“That can be a good start, because if you can find out if the vehicle was duly maintained for a large period of time, then you’re probably looking at a car that was better overall condition than a vehicle that wasn’t.”

Which, Lang says, is important, since most sales at auction are “as-is”.  The exceptions to the no return or refund policy generally include frame damage, flood damage, or title problems.  Lang says most people should stay as far away from a public auto auction as Mercury is from Pluto.  But he adds that shoppers do stand a better chance at auctions of government vehicles, which are much more likely to have been well-maintained.

 

Note: Special thanks to David Pitman for making my first radio interview on a mass medium far less fearful than I thought it would be. Also thanks to the folks at Edmunds and, as always, the wonderful people at TTAC who have given me as much joy over these last five years than I could have ever imagined back in the day. Click here if you want to see my longer list of folks that deserve honorable mention… well actually it’s just a funny radio sketch.

 

 

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28 Comments on “Auto Auction Advice For The Non-Dealer...”


  • avatar
    OldandSlow

    I for one would be out of my element. In the mean time I’ll stick with dealing with private sellers – where I can look up the car’s history, take time to examine the vehicle, test drive and make my offer, which usually gets a rejection.

  • avatar
    zerofoo

    I look at Manheim’s post sale results weekly and I am stunned at what some people are paying for these vehicles.

    $30k for an 8 year old RX330 with 100k miles on it? Really? How the heck is anyone supposed to sell that for a profit?

    The answer is that vehicle is already sold. Many of the guys at these auctions are shipping cars overseas. The vehicles are sent to countries with lax import rules, retitled with 1/3rd the mileage and sold.

    My friends who resell cars say this is common and it has even infected places like Craigslist. Guys buy cars with very little haggling – one purchaser even admitted that the car was pre-sold to a customer overseas.

    I’m sure that guy is making more money than my friends are.

    -ted

  • avatar
    I've got a Jaaaaag

    I have seen some really outlandish bidding at the Tow Company auctions lately. I can’t quite figure out why they have gotten so popular, it used to be less than 20 people would show up and they would follow the auctioneer to multiple events that day. Now there are close to 100 people there and 100 people waiting at the next auction. Consequently things like a 1st generation MR2 that you used to be able to pick up for for around $700 bucks now co off at $2000 and you cant even check the oil at a tow auction.

    Personally I blame the TV show Storage Wars.

  • avatar
    patman

    I haven’t been to a car auction (I do fantasize about flipping the occasional car if I had the room for it) but the auctions I have been to and the many eBay auctions I’ve taken part in, the keys for me have been figuring out ahead of time as much as I can and determining exactly how much I’m comfortable paying for something (don’t forget to factor in all the fees too) and leaving emotion out of it once the bidding starts. There’s also strategy stuff if there’s multiple items I’m interested in or multiples of the same item but mainly it’s setting a price and letting go as soon as the bidding exceeds it and turning stone cold killer when it comes to the emotional pull of the item and the wave of excitement that washes over the crowd as the auction heats up.

  • avatar
    daveainchina

    Great post and glad you were on NPR, one news organization I still respect.

    Not too many of those left.

  • avatar
    Chicago Dude

    Can you go to one of these auctions and stand silently in the corner, watching the chaos and mayhem? Or will they run you out if you are not participating?

    It sounds like some good, cheap entertainment (if you are into Schadenfreude, that is).

    • 0 avatar
      jeoff

      My dad used to take me to these all the time. Mostly the one on 78 in loganville, GA. I am sure Steve goes there. Never bought anything, never was run out. BTW, my dad sold used cars back in the 50s-60s in Atlanta on Captial Ave., before the original Atlanta Fulton County stadium was built. Funny, he really didn’t know very much about cars, and Lord knows that he did not know how to work on them, but he knew how to buy cars and read people (plus he had a good mechanic) and that was good enough back then.

    • 0 avatar
      redmondjp

      Sure you can, it’s great entertainment and you may even learn something. The most important thing is to learn to emotionally disconnect from any cars or a perceived “great deal”, and to never, ever get caught up in a bidding war. This means doing your due diligence beforehand and having a firm number in your head for what you are willing to pay for each of the cars that you are interested in.

    • 0 avatar
      Steven Lang

      Yes. Some places require that you register and leave a deposit.
      But there is no rule against someone just coming by for the show.

  • avatar
    DenverMike

    Part of the problem is buyers for used car lots that need to buy 25 cars, regardless of price and don’t have time to buy from 25 private sellers. I’ve met buyers from everywhere. Mexico, Ireland, Australia, you name it. They’re just here for the week and ship 100 cars or more. Then it’s pretty obvious ‘ringers’ are in the crowd, driving up the bids. When a ringer gets a winning bid, the auctioneer stops and asks the second highest bidder if he wants it or starts the bidding all over again. It’s totally legal too. They may rerun a car minutes after it’s “sold”.

  • avatar
    wstarvingteacher

    Used to go to these with my stepson (formerly a dealer). I got a great deal of entertainment and he got a commuter for me that worked out pretty well. He approached it very methodically and was very successful. Went with another friend and it worked out far less well.

    Once again Steven, you hit the heart of the matter and wrote a very enjoyable article. I automatically click when you are the author.

  • avatar
    Sir Tonk

    Heard this on KUHF on the way to work a few days ago and when they mentioned it was you at the end it all made sense. Great segment and welcome the the world of radio, I do a few shows in Houston and it’s good fun.

  • avatar
    nikita

    My brother buys at auctions, but he is looking for very specific, usually government fleet vehicles that never show up on retail dealer’s lots. We needed a wheelchair lift van for my dad, a city-owned Chevy Venture with low miles and broken A/C was there. It looked like it was parked instead of fixed, as happens sometimes with fleets, then sold when the requisite number of years passed. Retail dealers dont want something like this and dont bid up the price.

    • 0 avatar
      Educator(of teachers)Dan

      I drive fleet vehicles on a semi-daily basis. (My ride today? An 05 GMC Yukon with 109,000 miles on it and a severe need of shock replacement.) A few days ago I was assigned a 2000 Jimmy/Envoy (yes one of the last built before the “Trailblazer” type models came out) and when I went out to the lot to fire it up the key simply “clicked.” Motor Pool was contacted but there it sits with less than 60,000 miles on the odometer. I wonder if the boys will come with the tow truck and then just shove it to the back of the lot till the next auction comes around?

  • avatar
    mitchw

    Your recorded voice sounds just like your written one, Steven. That’s not bad writing, right there.

  • avatar
    NormSV650

    I’ve been to an auction as late as last year and thought the prices were outrageous compared to internet specials for sale. There are much better deals to be found if your looking for mainstream or the extreme.

    The high prices along with auction fees should drive enthusiasts away. It might explain why lot prices are so high, bidders driving up inflationary prices and some smuck willing to pay it on the lot.

  • avatar
    GoesLikeStink

    I have bought 4 cars at auction. 2 blew up. One a head gasket, the other literaly blew the engine, BAM! smoke and parts all over the freeway.

    One was a early Hyundia, just to lame to keep driving when we could afford something more.

    One was a great car, a Toyota Corolla wagon. No one wanted the manual station wagon at the time. Bought it foe 1800 drove it for 2 years, did nothing to it and sold it for 1600.

  • avatar
    robc123

    I looked at dealer auctions years ago- 10-15% net profit if sold exactly at retail, big deal or if buying 10-15% savings? 100% capital risk for 10%? No thanks, I just buy new now its cheaper.

  • avatar
    MBella

    My father used to buy cars at one public auction. He always did pretty good for the car he bought. The key was patience. I also bought a car their nine years ago. We went back their last year to find a car for my sister. Everything was going a crazy mark-ups. I didn’t understand it. 15 year old Luminas poring out oil, smoking, rattling, etc.. going for $1500, plus all the fees. Are you kidding me. I wonder when the prices are going to get sane again.

  • avatar
    colin42

    So if public auction prices are so high how would one go about selling their own car, sounds like a low hassle quick process from a sellers POV

  • avatar
    Lumbergh21

    Government vehicles are well maintained? Not in my experience. At least not if the vehicle was in a field office away from the main garage, typically in the state capital. So now we’re looking at a questionably maintained vehicle that was driven like it was a rental. That’s a recipe for disaster.

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