Car auctions are an important part of the automotive sales industry. Automotive dealerships frequently use wholesale auctions to purchase used vehicles that they then resell to retail customers. The major wholesale auto auction companies include Manheim, ADESA, and Copart. These large auction chains own dozens of auction sites across the U.S. and facilitate the trade of millions of vehicles each year.
The volume and diversity of vehicles available at wholesale auctions provide dealers with an excellent selection. They can find almost any make, model, year, trim level, mileage, and condition they are looking for to suit their particular sales strategies. Some dealers specialize in low-mileage luxury vehicles while others focus on high-volume economy cars. The auctions allow them to essentially shop from a giant inventory to build their lots.
Once dealers source the vehicles they want to purchase, negotiations and bidding begin. Skilled auctioneers rapidly recount bids, often creating an atmosphere of competitive excitement.
Dealers have to carefully monitor values and know when to drop out of bidding to avoid getting caught up and paying too much for a vehicle. Establishing good relationships with auctioneers and gaining experience at the auctions helps dealers become stronger bidders over time.
After the auction, the vehicles are transported from the auction location to the dealership lots. At this point, any necessary repairs, reconditioning, detailing or other investments are made to prepare the vehicles for sale to retail customers. The goal is to turn over the inventory as quickly as possible to generate new cash flow through additional wholesale purchases and sales. It is a continual cycle of buying low at auction and selling high to individual buyers.
In summary, car auctions play a crucial role in facilitating the movement of significant volumes of used vehicles between wholesalers and retailers. Automotive dealers rely on auctions as their primary source for inventory to keep their lots stocked and meet the demands of consumers in local communities. Wholesale auctions have evolved into large, efficient markets that provide a platform for dealers and overall industry progress. While sales trends continue to shift, car auctions will likely remain instrumental for the foreseeable future.
