Selling Your Car at Auction – A Beginners Guide

With many people struggling to make ends meet and TV adverts with catchy jingles tempting you to sell your car for quick cash, it can seem appealing. Your car (next to your house) is probably your most expensive piece of equity and with this in mind, it can be tempting to sell it, purchase a … Continue reading “Selling Your Car at Auction – A Beginners Guide”

With many people struggling to make ends meet and TV adverts with catchy jingles tempting you to sell your car for quick cash, it can seem appealing. Your car (next to your house) is probably your most expensive piece of equity and with this in mind, it can be tempting to sell it, purchase a cheaper make or model and pocket the difference.

Car auctions, whether they be physical or on-line, can be a good way of selling your car, safe in the knowledge that an experienced auctioneer has yours, and the auction house’s, best interest at heart. You may think that these things do not always necessarily go hand in hand but bear in mind that the auction house will take a percentage of the purchase price (buyers fee) as commission so it is in their interest to get you as much money as possible!

So, let’s start with the basics:

What is a car auction?

Car auctions have a long history within the automotive industry with many different types of business using them to either sell excess stock or purchase new stock for resale.

They are extremely popular in the USA and Japan and are gaining popularity in the UK where they are no longer seen as dirty places. This is mainly thanks to the industry making a concerted effort to change the reputation of the sector and make it more appealing to all people, not just those ‘in the trade’.

Car auctions sell cars, commercial vehicles, motorcycles, plant equipment, and some of them will also sell large goods vehicles and possibly caravans and motor homes.

Auction houses do not own the vehicles which they sell. They merely act as a shop front for many different types of seller. These can include leasing companies, fleet management companies, dealer groups, banks and financial institutions, governmental bodies, police, and of course private individuals.

Let’s look at each of these different sellers more closely:

Leasing Companies

Leasing companies rent vehicles to companies or private drivers for a set period of time (sometimes as little as 1 year) so the vehicles put into auction are usually young models with a good mileage and because the cars are usually leased from new, they may have only had one person driving them whilst going to a meeting twice a week! When the lease or rental period ends, leasing companies will enter their old stock into auction as their customers are more interested in leasing brand new vehicles. These companies are usually owned by banks or financial institutions.

Fleet Management Companies

These are similar to Leasing companies in that they lease their stock to organisations but differ in that they will supply their customers with a whole fleet of cars and manage that fleet on behalf of their client. Again, when the rental period for the fleet ends, the companies wish to take advantage of the capital wrapped up in their stock in order to replace it with new models.

Dealer Groups

If you have ever part exchanged your old car at one of the large, glass fronted dealers or showrooms, chances are it has subsequently been put into auction and sold. Dealer groups will also enter old or unsold stock (known as overage) from their forecourts in order to keep their showrooms looking fresh with the latest that the manufacturer(s) have to offer. Of course, buying a vehicle at auction which has been entered by a dealer group can be a bit riskier than the leasing or fleet companies as if someone has part exchanged their old car, you have to ask yourself why did they do it, what sort of person where they, how well did they keep it and how many previous keepers has it had?

Banks and financial institutions

Banks and financial institutions can fall into fleet and leasing companies as many of them have these elements within their respective corporate families and follow the same trends. However, banks can also enter cars into auctions that have been repossessed from their customers after defaults on loan or mortgage repayments. Obviously a car itself is of little or no interest to a bank, they are only interested in the value and the money which can be made from it.

Governmental bodies

Government bodies will run fleets of cars for their staff and key executives and will update this fleet on a regular basis with the old stock being put into auction. Separate Government departments will also enter a wide range of vehicles at auction from ex-defence Land Rovers or staff cars, to lawn mowers and diggers used on the local playing fields or in the local cemetery! Local Government may also enter cars into auction that have been seized by bailiffs follow non payment of bills such as Council Tax (depending on the Local Authority in question, these can be quite high end models).

Police

Police forces will auction vehicles seized from convicted criminals to either compensate victims, break up an illegal estate or regain public money gained fraudulently. The police also auction a variety of other items seized for similar reasons and may do this through an auction house or by holding their own property auctions. As well as these lots, all police forces will also run a fleet of undercover or unmarked vehicles and these will need to be constantly updated, with the old stock being put into auction to raise funds for the force.

Private individuals

This is the category of seller that we are really interested in. Private sellers can enter and purchase cars from auction and if their car is not sold first time round, they can tell the auction house to keep putting it in until they receive an acceptable bid. Be warned though, auction houses will charge you for each time they enter the car so if you have sold your car after a couple of sales, you may want to check your reserve price or rethink your options.

How does it work?

Most auctions work on the same principal; your prospective buyers bid against one another, raising the amount which they offer with each new bid they make until their competitors drop out and they are left as the highest bidder. All of your bidders will be in the auction hall (although an online element is becoming increasing popular) and all bids are made in the open. This type of auction is known as an ‘English Auction and its formula applies to the majority of vehicle auctions.

When your vehicle arrives at the auction centre, it will be inspected by the auctions technicians who will highlight any scratches, dents, scuffs, rust, etc and value the overall damage costs. It can be important to consider this when you think about your reserve as trade buyers will have a good idea of the vehicles value and of the damage costs and will factor this into their bidding. The damage cost will not be shown to any buyers, it is purely for the auction house’s records.

Your car will then be photographed and ‘lotted’, the process whereby your car is entered into a sale. It will be assigned a lot number and will be placed in the auctions yard to be viewed by the buyers.

At the same time, your vehicles details will be published online for buyers to look at before they arrive at the auction. This is a good way of building interest in your car and most auction houses will send our copies of their latest catalogues to their buyers.

You should do your best to ensure that you car is entered with all of the paperwork and material which you have relating to it:

V5c Registration Document
Hand book
Any other manuals (SatNav, radio, etc)
Service book
Historic garage receipts of details of work carried out
Locking wheel nut key (if your car has one)
Any other information or items that came with your car when you bought it

All of these things are important to buyers and if you were buying a car, you would expect to have everything that you could have relating to it so think of these when you enter your car.

Of course, you will also have to leave your key and any spares with the auction.

In the auction halls…

When your vehicle is lining up to be driven into the auction halls, buyers will start to look closely at the car, looking for any damage and they may open the doors to look at the interior. Buyers are not usually allowed to test drive cars or look under the bonnet so this process of final inspection is important to them.

Once your car is in place in front of the auctioneer, the cars details and any special features, such as extra interior features, alloy wheels, etc, will be read to the audience. The auctioneer will then start the bidding with an opening bid below your reserve. If there is a great deal of interest in your car, bids can rise fast with many people competing. Eventually, the auctioneer may drop the increases in size to amounts that the last couple of bidders feel more comfortable with. This could mean that you see increases of £50 for your car rather than the £500s you were seeing right at the start. The buyer with the final highest bid has now bought your car as long as their highest bid was over your reserve. At this point the buyer has entered into a legal contract.

If the final highest bid did not quite meet your reserve, the auctioneer may class this a provisional bid and the auction will then attempt to negotiate between you and the buyer. At this point, you can ask for more money or demand that your reserve be met. If you go too high and the buyer pulls out, the sale will fall through. It is a balancing act between what the buyer is prepared to offer and the minimum amount you are willing to accept.

If you reach an agreement, the sale will go through as normal.

If agreement cannot be reached, you have the option to take your car out of future auctions and keep it, or enter it again in the hope of getting a better bid. Hopefully this won’t happen and you will sell your car but if you have to consider this you should remember that many auctions are used by motor traders who attend most weeks and if they see the same car go through each week, they will be less inclined to offer a high bid. Auctions will also charge you for each time you enter your car, with some also charging storage after a certain amount of time and sales, so you should consider these costs when thinking of the money you intend to make from the sale.

How much will it cost?

The fee to enter your car in an auction can range from £15-£30 depending on the size and reputation of the auction house and will be deducted from the total sale value of the car. This fee will be payable each time you enter your car in to a sale if it does not sell.

On top of this, there will also be commission deducted from the sale price. This will be on an increasing scale and will depend on the sale price of the vehicle in question. Always check with the auction house before you enter your vehicle and shop around the auction houses local to you to get the best deal.

After the sale

Assuming that a deal has been reached or that your vehicle sold straight away, the auction will not give any of the vehicles paperwork to the new buyer until full payment has been made. Once this happens, the auction will pass all material relating to the car to the buyer.

Most auction companies will also deal with the legal change in ownership on your behalf and will communicate the sale to DVLA Swansea with the vehicles V5c Registration Document on your behalf, as you do not know the buyers details. Some auctions charge for this service so check at time of entry.

Car auction companies are usually pretty quick in sending you the money for your car and can be as quick as a couple of days after the sale, usually by cheque or bank transfer. The entry charges and commission taken by the auction will usually be details on a remittance advice sent to you once your money has been sent to you.

Other things to consider:

When you are thinking of putting your car into an auction, you may want to think of these things which can increase your chances of getting a sale:

Is the interior clean?
Having crisp packets, drinks bottles or cigarette ends n the ashtray is not appealing and you would not by a car like that so why would anyone else?
Do you smoke in your car?
If you smoke in your car, try to banish the smell of stale smoke as best you can. Smoking in cars can also lead to burns on seats, trim and just about anywhere else so be aware of them.
Have you got a complete or good service history on your car?

Buyers look at the service history on your car to see how it has been kept. A good service history usually mean that the rest of the car has been looked after properly. Main dealer stamps are highly sought in service history but your local approved garage will suffice.

Is there any tax left on your car?

Selling a car with tax allows the buyer to drive away with that car on the day they bought it. If your car does not have tax, they buyer will need to insure it, then sort out the tax before they can drive it. Since auction houses will not pass any vehicle documents to the buyer before full payment is made, this can lead to a great deal of hassle for the buyer as they will have to go away, sort the insurance, come back and pay for the car, go away and sort the tax (now that they have the MOT certificate), come back and finally drive away.

Trade buyers buying many cars will not worry about the hassle factor too much as they will get their new cars delivered by transporter, it mainly matters to them for the resale value which tax can add onto their forecourts.

When does the MOT run out (or does it even have one?)

Selling your car with MOT gives your car a boost in auction as buyers will just see it as an added expense if it does not have one. Your buyer will also need to have a valid MOT before they can ensure the car!

Are there cosmetic things that could be tidied or corrected before you enter it?

Are there stains on seats or interior trim that can be removed? Is there a brake light bulb that could be replaced? Are there stickers on the windows that could be removed?

Is it worthwhile sorting out that scratch before you enter it?

Getting a small scratch or dent repaired before you enter your car can increase the chances of it selling as it will not be noted on the damage report (as long as it is a good job!)

Do you have a spare key, SatNav disk, or old garage bills in the back of a cupboard somewhere?

You should do your upmost to ensure that you give everything associated with your car to the auction along with your vehicle. Things like spare keys add to the value and old garage receipts let your buyer know exactly what has been done, added, changed or mended to their new car as well as who done it.

Car Auctions in Japan: An Overview for Car Importers

Car importers know that car auctions in Japan are a great place to find low mileage, high quality used cars at good prices. My aim in this article is to help you understand these car auctions in Japan better so that you can make a good, informed decision about whether to buy from them or not, and how the whole process works.

Why consider buying from Japanese car auctions?

This is a good place to start. After all, right now where you sit reading this article is probably many thousands of miles away from Japan. So why would you want to import cars from a country so far away?

There are two excellent reasons to consider buying cars from used car auctions in Japan.

First of all, the selection is immense and you can view all these cars remotely online. Auto auctions outside Japan may typically have a few hundred used vehicles, but only the tiniest auction in Japan would have such a pitiful selection.

In terms of individual auction locations, we are usually talking about over 1,000 cars per location, and sometimes over 10,000 cars (in the case of USS Tokyo) all in one place and being auctioned there weekly. Put all these individual car auctions together on the Internet, and over 30,000 on a single day is really not at all unusual.

So there is a huge breadth of choice. But that is not all. There is also a great depth of quality. The fact is that Japanese people just do not drive as much as people in other countries. An excellent public transport system and high levels of neighborhood walkability, in addition to the simple fact that urban driving speeds in Japan are incredibly low, all works together to keep people from using their cars very much.

Then on top of this the Japanese are fastidious in caring for their vehicles and yet it does not take long before the car they have seems old to them and they want a new one.

So, cars that are low mileage and well maintained are a dime a dozen. But the ironic thing is that the Japanese themselves are really not into secondhand items, so they don’t really want these used cars for themselves.

You can see where this is going: The car auctions in Japan have a great selection of great condition, low kilometer cars, but the Japanese people are really not that interested in buying them, so prices are relatively low and there is all the more opportunity for buyers from outside Japan to compete.

Car auction groups and locations in Japan

In Japan individual auctions are rare. They are usually part of a larger auction group. Here are just some of the more prominent groups:

USS
TAA (Toyota)
Honda
JU
JAA
CAA

USS Tokyo is the largest single used car auction location in Japan. This car auction runs once a week on Thursdays, and at peak season can have up to 20,000 vehicles all being auctioned on one day.

One auction group that does not have multiple auction locations (called kaijo in Japanese) is Aucnet, who hold their auctions on Mondays. Their model is a little different in that they do not have a physical auction house where all the cars are gathered.

Instead, they send out inspectors to car dealers who then keep their cars on their lots until they are sold. Since these dealers are still hoping to sell to a regular consumer at retail price, their reserve price at auction is often a little high compared with what a similar car might fetch at a regular auction.

How can you access the car auctions in Japan?

So far, so good. But wait a minute: How on earth are you going to be able to get a car from some used car auction way over there in Japan? You don’t know anyone there. You don’t speak Japanese. Even if you could buy the car, how would you ship it?

You need a Japanese car exporter to help you with this one.

Car exporters in Japan are set up to handle the process of bidding at the Japanese car auctions, transporting the car from the auction to the port, doing the paperwork and shipping the car over to you.

There are many car exporters shipping used vehicles from Japan, so this then begs the question of how you find yourself a good one. After all, we are not talking about trivial sums of money here, so it is vital you find one who is going to do a good job for you.

Here are some things to look for:

How many auctions can you buy from, and can you access them all from one place online?
Can you deal with a native English speaker who is also fluent in Japanese? (Nothing is more stressful than trying to overcome language barriers.)
Does this exporter offer professional translations of the car auction inspector’s reports and help you really understand the condition of the cars in the auction?
Does the exporter in Japan have good communication skills, keeping you in the loop about what is happening with your vehicles so you don’t worry?
Does the exporter work hard to ensure your cars get to you from the car auction in Japan as quickly as possible?

Who will bid for you at these car auctions in Japan?

In order to buy from a car auction in Japan, the first thing you need is to be a member of that auction.

This usually entails being a registered business in Japan as well as having property as collateral and having a guarantor. This precludes regular consumers accessing these car auctions directly, so they tend to be a place where Japanese car dealers and Japanese car exporters buy at wholesale prices.

Japanese car exporters are usually registered Japanese companies and therefore have access to the car auctions in Japan.

Japanese car auction vehicle inspections

Car auctions in Japan have a strict inspection regime. Obviously the quality of the inspection can vary a little between auction houses since they are independent companies, but in general the grading system they use is very similar and easy to understand.

The cars and other vehicles are registered for the following week’s auction, after which they are inspected by inspectors who are qualified mechanics.

Now, it is important to bear in mind that these inspections are very thorough, but they do not involve any dismantling of the vehicle, nor do they involve test-driving it. They will often pick up mechanical issues very well, although problems which would only come to light if the vehicle is driven at anything more than the kind of speed you would expect in a parking lot can be missed. This is no fault of the inspectors, just a limitation of an inspection that does not involve a road test.

The inspector writes his report on an auction sheet. He gives the car an overall grading as well as a grading of the interior quality. He also writes details of issues that he has found. Some comments he writes in Japanese, and then issues like scratches and dents that relate to the car’s exterior condition, he writes on the “car map” – a diagram of the exterior of the car.

Remember you should not need to just rely on the overall grading when buying from Japanese car auctions: A good car exporter should give you detailed translations and help you understand what the Japanese car auction inspector has written on his report.

How does bidding work in these car auctions in Japan?

As we have noted above, only members of these auto auctions can actually bid. They do so in two ways: Either at the auction location (kaijo) itself, or online from anywhere.

The computer bidding system is the same whether bidding at the auction house on one of their machines or remotely online.

Bidding is very fast. Generally a car will be sold in anything from 10 to 45 seconds or so. The actual process may just look like pressing a button in a video game, but there is a real art to doing it right to avoid paying too much for a car – or equally letting it get away by holding back too much.

Sometimes cars will fail to meet their reserve price and bidding is stopped. It is then possible to make offers to the seller under the auspices of the car auction. Fewer cars sell in negotiation like this than are sold in live bidding. A good Japanese car exporter will handle the process of live bidding and negotiation seamlessly to get the best deals for his customers.

What happens after the car is won at auction?

After a car is bought at a Japanese car auction, the first thing that happens is that it is moved by car transporter to the port. Once at the port, the car waits to be loaded onto a RORO ship, or waits to be loaded into a container.

While the car is in transit from the auction, the car exporter will immediately start looking for bookings on the earliest ship, as well as doing paperwork to de-register the car and pass it through Japan-side customs.

Once on a ship, the car will take anything from a few days to over a month to reach its destination. This is mainly dependent on the distance of the destination country from Japan.

The car exporter will send the end customer the Bill of Lading, invoices, the de-registration document and any other documents that the customer requires for importing the car into his or her country. These import regulations vary from country to country so it is vital to check them before buying anything.

Conclusion

Car auctions in Japan can be a great place for car dealers and car importers around the world to find really good quality used vehicles at lower prices than they would expect to be able to find locally. The huge numbers of used cars in the Japanese car auctions that can be viewed online is another great plus.