Buying a car at auction

The reward of an auction is the potential to purchase an absolute gem of a vehicle for a lower price than you’d pay privately, let alone through a dealer.

Auction house Pickles estimates your savings could be up to 30 per cent. But the risk of an auction is buying a dud and then being saddled with potentially expensive problems. That’s because you can’t test drive a vehicle before bidding on it at auction, although you might at least be able to start the engine.

Static inspections are also approved, but unless you’re an expert on the vehicle you’re interested in, or you’re a mechanic, or you have a friend who is and is willing to help out, then raising your hand or clicking the button and making a bid is definitely a leap into the unknown.

In Western Australia, if the vehicle you’re interested in is being auctioned on behalf of a private seller, there’s no statutory warranty as there would be if it was being sold by a licensed dealer.

In fact, your new pride and joy might not even be sold to you with a Roadworthy Certificate.

One piece of good news is the auction houses do have to make sure there are no financial encumbrances on the vehicles they are selling.

Where do you find cars up for auction?

In WA, the big auction players include Pickles and Manheim, which both operate nationally and have Perth offices. Pickles is the official auctioneer for the Western Australian government, where it sells off its SUVs, passenger cars, and commercial vehicles, including utes.

Manheim is a division of the global business Cox Automotive and has recently moved into a new facility near Perth Airport. Other auctioneers in Perth include Aberdeen, Grays, and Slatterys. There are also specialists such as Lloyds and Donington that focus on classic cars. The latter doesn’t have a Perth location.

A local option is Smith Broughton Auctioneers, which was established in Perth and now has branches in Midland and the Pilbara. Its primary focuses are commercial vehicles and industrial equipment.

Many auctions are now conducted exclusively online – a trend encouraged by COVID – and can be live or time-based. Physical auctions are still conducted by some operators at some sites. Bidders at auctions can include both private buyers and dealers, although there are specific dealer-only auctions as well.

What vehicles are on offer?

There is a huge selection on offer. Manheim, for instance, sells vehicles at public auctions that are sourced from dealers (surplus trade-ins), fleet and lease companies (novated leases, operating leases), government bodies (including councils), corporate fleets, banks and lenders (repossessions), insurers (often damaged, or ‘salvage’ as they are referred to in the trade), and rental companies.

Manheim also sells company fleet vehicles for automotive brands, usually but not always at dealer-only auctions. It also has a car buying service called Sell My Car that helps drive volume to its clearance lanes for cheaper cars. All up, Manheim alone sells tens of thousands of vehicles at auctions nationwide every year.

It’s a big business. But as Cox Automotive Australia and New Zealand corporate affairs manager and analyst Mike Costello warns, there are things about this highly varied fleet to be aware of. “While we offer services including vehicle rectification, detailing, inspections, etcetera, and while we disclose any issues we see with a vehicle, we are selling cars wholesale on behalf of a vendor,” he explains.

“Therefore, some vehicles will not be detailed, some won’t have a Roadworthy Certificate, some have 12 months rego and others little to none. “We are not a traditional retail car dealer, so we aren’t selling only vehicles that are ready to roll onto a dealer’s forecourt immediately.

“In fact, often dealers prefer vehicles that need some rectification, as this is baked into their business model. “That’s not to say we don’t sell a wide number of cars in perfect condition with low kilometres. We do, but it’s a broad spread of vehicles.”

How do you bid on a car at auction?

People looking to buy a used car at auction need to register as a buyer, which is done via an auctioneer’s website. Usually, an email address, Australian mobile number, and an Australian driver’s licence or passport are required.

Members are usually required to be at least 18 years old. Vehicles are lined up by lot number before every auction and can be inspected by interested buyers. Auction houses usually offer condition reports and visual gradings. The bidding process is simple, both in-person via a bidding number or card, and online where you bid with the click of a mouse.

A simulcast online auction contains a livestreamed video feed of the event showing the vehicle and the auctioneer in action. Silent, time-based auctions do not. If the winning bid meets the seller’s pre-supplied reserve price, then the car is sold.

Once the funds clear, the car, the keys, and the books are able to be picked up. Leading auction houses such as Manheim can also arrange nationwide transport. If the highest bidder fails to hit the reserve, the auction house can facilitate a negotiation between the seller and the highest bidder.

Then, it’s a matter of paying a deposit and transferring the agreed selling amount plus buyer fees via the auction house’s online bidding portal.

“We are very open about the upsides of buying at auction but also try to be as transparent as possible with buyers,” says Costello.

“Vehicles are sold at wholesale prices, so you should expect to pay under retail, and the sheer breadth of those offered means you’re often spoiled for choice. “We also place no pressure on buyers, since we aren’t liaising with them one-on-one.”

However, what all that also means is that, compared to buying from a traditional dealer, auction buyers carry more risk and may be required to resolve issues such as the vehicle’s Roadworthy Certificate and any maintenance issues that may otherwise be addressed by a dealer before sale. Examples are paint issues, tyres, lights, and detailing.

How to improve your chances of success

Research, research, research. That’s the best way to ensure you reduce risk and increase your chances of reward when bidding for a used vehicle at auction.

Firstly, zero in on the type of vehicle you want. Brand, model, drivetrain, year, kilometres. Find out what the potential issues are to look out for with such a vehicle. Are there leaks that are a sign of known problems? Is it prone to rust in a specific area? Find examples and physically inspect them yourself.

Drive a good example if possible, just to make sure this is really the type of vehicle for you. Try and get a feel for what you’ll pay for a used example. Scrolling through an online marketplace is a good way to do that.

Then get online and watch a few auctions to see how they play out. Or go along to a physical auction so you better understand the processes. And make sure you understand what your rights and responsibilities are. Costello says it is important for buyers to inspect the vehicle if they can, to read all the supplied information, and have a look at vehicle asking prices in the classifieds to get a sense of vehicle values.