Inside the car auction – let the bidding commence

The car auction is one of the few ‘open cry’ markets that are left, gone are the days of the city bear pits where stocks were traded by young men screaming orders across an already noisy and seemingly disordered forum. That old school approach to shifting commodities has in the main been replaced by real time, screen based trading methodology and if you talk to any city trader who was worth his salt in 80’s he will reminisce of those times with affection. The reason for this is that being part of a live environment where currency and stock is changing hands is basically exciting.

The auction differs of course in that there are a whole bunch of potential buyers but just a few, maybe three, well practised sellers who are the auctioneers. Over the next two articles we are going to look at the actual process of bidding for a car at auction. For those of you that have read the previous articles in this series you will see that we have given an overview to the various different types of vehicles found on offer in answer to the question “should I buy my next car at auction?”. Having information on what is for sale is extremely useful but the execution of the actual purchase has its own set of chasm-like pitfalls.

Auctioneers are sales people – they want to sell you a car. This may sound obvious to some but if it doesn’t, don’t let this bombshell worry you. You are after all here to buy one so someone has to sell to you and that person will be the fast talking mildly aggressive chap (or more rarely chapess) behind the microphone on a raised area in the auction hall. Like almost all of us in this world, the results he has produced for his company is reflected on his pay slip, and the results being the revenue that is generated from car sales.

Auction houses earn their money from two main areas, sales fees and purchase fees. The sales fees are what the auction house charges the vendor for conducting the sale and the purchase fees are made up from the final fees that the buyer pays on every car purchased. Although the auction house earns on every car that goes through the hall by way of the entrance fee, the real money is earned on sales and every auctioneer attends sales meetings in the morning and is given a target just like at any car dealership. Yes you’ve got it, it’s the same thing as buying from a dealer, the big difference is that you’ll be buying your own cup of coffee and you’ll never say hello or even shake hands with the seller. Some who may feel intimidated by a one to one bout with a used car salesman may say that this lack of interaction is a definite advantage and will focus on the other big difference which is, of course the difference in price.

If you’ve been trawling around the used car forecourts the prices shouted out by the auctioneers can look tantalisingly cheap, but it is also the case that if you don’t know roughly what you’re doing you can find yourself foregoing the helpful fellow who tells you what button does what on the sunny test drive and still end up paying nigh on the forecourt price, especially after the auction fees are added on to your fever driven final price.

It all happens rather quickly and there are reasons for this. Yes there are many cars that the auctioneer needs to get through in a day but there is some advantage that can be taken from the chaos. At every auction that I have attended (three to five a week for the past 15 years) there have been cars that have been ‘run’. This is where the auctioneer will have the lot in the hall and will be calling out bids received even though there is no-one bidding. It’s all rather ambiguous and can be confusing for a buyer who is unfamiliar. It’s like a mad carousel and if this is going on when the car you have been pouring over for the last two hours is in the hall, defining the best moment to catch the auctioneers eye can be tricky. Before you know it you can be looking at the back end of the car that ticked every box as the build up of adrenalin drains into your fingertips.

A good auctioneer will be able to appear as though there are genuine bidders when in fact there is no-one, and this is particularly apparent when the hall is empty of people! Even then the auction keeps rolling. The auctioneer will hope to hook someone on to the bidding, he may start the bids at a low enough price to make potential buyers interested and in the hope of getting someone to outbid his made up “bid”. Sometimes if the auctioneer gets a genuine bid and he feels that the price is still too low he may outbid that bidder by appearing to take a bid from elsewhere with the hope that the genuine bidder will bid more. This practice does not happen on every car and varies from one lot to another and also from one auctioneer to another.

Some days most of the cars will be “run” in some way or another and on others – usually busier days – this won’t happen as much. On some busy days auctioneers will be running cars anyway to take advantage of the headcount in the hall and drive the sale prices up. The auctioneer will have a feel for the attendance and will know how many trade buyers and how many retail buyers there are present and adjust his approach accordingly. Generally this technique of pushing prices up is not used so much if the auctioneer knows the highest bid in the hall is from a trade bidder. It’s quite a simple system to work around and involves you knowing what you want to pay for the car in question. In a way it doesn’t actually matter if the the bidding pattern involves just you and the auctioneer, as long as your final bid falls within what you were hoping to pay.

So step into the hall, don’t be shy. If it’s busy find a reasonably prominent position, if it’s quiet don’t make it totally obvious to the auctioneer that you’ll be bidding on the next car by standing in front of him and hopping from foot to foot, he may decide to take you to the cleaners just for the sport. And while the Parkers guide or similar non-trade publications can be invaluable help when deciding the price you want to pay for a car its best you put these books out of site when you decide to bid, the auctioneer will see it or worse still you may find yourself bidding against a motor trader who’s having a bad day and will do anything to make sure the car your trying to act cool over will end up on his forecourt or failing that totally cleans you out.

The auctioneer may invite an initial bid or make one up himself, if it falls within a palatable price range stare at the auctioneer and raise your hand above your head until he looks in your direction. He will see you, he stands there every auction looking for bidders, he may have only given you a cursory glance and carried on calling out bids but don’t expect him to single you out by acknowledging your bid. He may have up to 10 other bidders that he has already spotted but he will come back to you. If you happen to be bidding on a fairly mundane car it’s likely that it will be just you and a couple of other people bidding particularly in this economic climate.

Once you have raised your arm and placed your first bid, put it back down again or better still in your pocket. You do not need to wave your arms around again for your next bid a simple positive nod will suffice. I buy most of my cars with my eyebrows, when the bidding gets close to the auctioneer he will be able to pick up on the slightest positive nuance or facial expression and accept it as a bid. Inappropriate flailing arm movements are amateurish and dangerous in the auction hall; you will be eaten alive if you do this.

As the bidding goes higher we come to the most crucial point of the auction, this bit is really important and is the crux to buying a car at the right price. If the bidding goes beyond your guestimated value you must stop bidding. Obviously! I hear you say, but the reality is very different. The analogy is sitting in front of the box watching ‘The Weakest Link’ and guffawing at the wrongly answered question- Which P is the European city famous for romantic weekends? Now how could anyone answer that question with Prague? No matter how devoid you consider yourself of boyish excitement, buying a car is an emotional experience and human nature plays a big part in pushing up prices in the auction hall. There are a lot of ego’s flying around and it’s important that you don’t get sucked in under pressure. Whether you like it or not your heart will be beating faster when you’re bidding, mine still does after all these years. Just be cool, remember that there are 100’s of auctions around the country every week all offering 100’s of car and there will be a different batch next week. If you’re going to buy your next car at auction be prepared to miss out on a few to get the right one at a fair price, if you buy the first one you bid on you’ll either be very lucky or an auction fool of which we’ve seen many.

Still unsure what to do? Next time we will be rounding up the information given thus far in order to help you decide to head for either the car auction or the car dealer.

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