Inside the car auction – dealer part-exchanges

In the last article in this series we talked about the lease/company car section of the auction halls, to continue on our trade tour inside the car auction we’re going to explore what’s going on in other areas. We’ll be leaving the rows of clean and prepared lease cars and heading towards the main dealer part exchanges. This will take you worryingly close to a section of cars called the “dark side”. We won’t be entering the dark side itself this week, that will be covered at a later date but here we are looking at the so called “part-exchanges from main dealership” section. After reading the first instalments you may have a hankering to pop down and have a go. Well, it’s advisable not to jump in and start waving your arms around just yet. If you have been following this series of answering the question “shall I buy my next car at auction?” and feel tempted now to bid just hold on for one moment. It’s worth waiting until the end as since the last article; these chaotic times have dictated an average value drop of a further 4%. Motor Trade Insider has saved you a fortune already.

Last time I mentioned ex-rentals which interestingly actually aren’t as common in the auction houses as they used to be. To explain briefly, the main reason is that the car rental market has changed in the UK. Many tourists shy away from picking up a Mondeo at Heathrow, as for many visitors especially to our capital there is still ambiguity over our congestion charges and expensive and complicated parking rules. More tourists, once in the vortex are choosing our world famous black cabs as their chosen method of transport. Having said that, the car rental companies do still exist and register plenty of cars but the length of time these cars are used has also changed to fall in line with our European counterparts. Have you turned up at Geneva airport recently to pick up a hatchback to whizz you across the continent? If you have its more than probable that the car you drove was nearly new if not a brand spanker. It’s the same here, nice new car (but more expensive!) Rental companies here rarely keep their cars for more than a year. These year old and less cars do not usually end up at public auction only to “closed” auctions which are invite only. Instead they will be fed back usually via the manufacturer straight onto the used car stock lists of the main dealers. This is one reason why there are so many 6 month and 12 month old cars for sale on main dealer forecourts, usually masquerading as ‘demonstrators’ (how many cars do they need to do test drives in?) Main dealers like to stock these cars because they’re such a safe bet as they still have plenty of manufacturer’s warranty left to run.
So back to the main dealer part exchanges section, this is a fairly mixed bag. They consist mainly of cars that have been given into the dealer as part exchange with the odd over age unit (a car that has been sitting on the forecourt too long). One plus point is variety. The age, mileage, make, model and specification compared to the fleet/company car section is totally random, for instance there will be a Mondeo hatchback that is nestled next to something as far reaching as a 1972 Morris Minor or a barely used but scruffy 5 year old Mini One next to an mint Mercedes Estate with intergalactic mileage.

There is no doubt that there are some absolute gems here, the biggest profits I’ve made with the smallest outlay have been from purchases within this section. The unavoidable downside is that there is a greater exposure to the risk. It is a reasonable rule of thumb to consider that anyone who can afford to walk into a main dealer and accept the relatively low part exchange price for their car and buy a new one from them should have been able to afford to maintain their previous car correctly. The service history books on these cars often speak for themselves as the stamps and history over the years point to the fact that more money is spent in the service department than in the showroom. Having said that, there will be the car that slips through that has not had the same love or the car that was only part exchanged because the service department managed to finally come up with an estimated bill so gargantuan that it finally broke the owners impeccable resolve and forced them into agreeing to buy a new one. The major gearbox work was not carried out and the car got sent straight to auction as a main dealer part exchange. You may well end up kangarooing home in this very car.
So how does one avoid this rather embarrassing journey? Well we’re flirting with the crux here; I mean this is what you need to know isn’t it? Professional buyers surely have the edge with certain knowledge and techniques, that’s why everyone doesn’t buy auction you’ve got to know what you’re doing. Yes all true but there is not one answer to completely guarantee that the car you buy from auction will not have a major problem, particularly from this section. The good news is that you can do plenty to greatly reduce your chances of the worst happening. If you’ve stumbled across the perfect car and it happens to be in this section then you need to be equipped and that doesn’t mean a magnet to check for filler or this month’s Parkers guide.

Next time as well as discussing the “dark side” we will start giving you some tools and armour in preparation to enter into the ring itself. And be patient! By the time you read the next instalment do you think cars are going to be cheaper or more expensive?

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