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You are here: Home / Featured Articles / Why are Cars Auctioned?

Why are Cars Auctioned?

November 24, 2022 By Rick LeBlanc

car auction, auto auction
Photo by ryan hurley on Unsplash

Car auctions are used by car dealers, insurance companies, finance companies, and municipalities like local government agencies that need to get rid of a surplus of vehicles or other equipment. There are many reasons a vehicle is sent to an insurance auto auction like SCA, where you can buy auction cars from insurance auto auctions. SCA is one of many insurance auto auctions across the United States where you can bid on a salvage car.  

Top Reasons Cars are Taken to Auto Auctions

Here are some of the most common reasons you will find a vehicle at a car auction.

The Cost of Repairs

A trade-in at the dealership may need work on it before it can be put out on the lot to sell. It may need repairs or reconditioning that would cost more than the dealership wants to spend to get the car ready for sale. So, the dealership auctions the car off as-is. 

It is an Older Model

Cars and trucks that are older do not do well on a car lot. They are hard to finance, and they may cost a lot of money to recondition. Many times those vehicles also have very high miles on them. It is easier for the dealership to take the cars to the auction rather than leave them on the lot hoping they will sell. 

Repossessions

Banks and finance companies use auto auctions to sell repossessions. When a buyer defaults on a loan, there is a balance left that needs to be paid. The car is sold as-is and whatever money the bank can get from the sale goes towards satisfying that balance.

Insurance Loss

Insurance companies take their cars to the auction when the repairs are more expensive than the car is worth. When they sell them at the auction, they might be able to recoup some of their losses.

Other Vehicle Auctions to Consider

  • Government agencies that have a fleet of vehicles may sell their old cars at the auction when they replace the old vehicles. Other agencies like police departments may have confiscated vehicles, so they sell those at the auction too.
  • Rental car companies also sell their older stock at auto auctions. These may be high-mileage cars, but they have been serviced regularly by the rental company, so they could be a good deal for you.

Types of Car Auctions

Online Auto Auctions

Online auctions are a convenient way to buy cars where you never need to leave your home. It is easier to see all the available cars online, as well as the condition reports and other documentation about the vehicle. With online auctions, the site puts the vehicles up in advance, so you can see the car from all angles and read up on its history. Some sites let you bid in advance, and others may have a ‘Buy It Now’ price. 

Closed Auctions

Dealer-only auctions are closed auctions. These types of auctions, as well as private listings, are usually where car dealers go to buy or sell their used cars. When it is a closed auction, the price paid for the cars, SUVs, and trucks is not public knowledge, which helps the dealership make more of a profit. 

Public Auctions

There are a lot of public auctions where finance companies and insurance companies come to sell their vehicles. You will find repossessed cars, cars that have salvage titles, and even cars with very few problems.

Government Auctions

When government agencies decide to get rid of excess vehicles or impounded cars, trucks, and even merchandise, they hold a government auction. You never know what will come up for sale at an auction like this, because they are not only cars. You might find bicycles, motorcycles, heavy-duty equipment, tools, parts, and other surplus items.

If you are interested in buying a car from an auto auction, here are a few places that have regular auctions:

SCA

SCA is open to the public, and no dealer license is required. They usually have over 300,000 clean and salvage title cars at wholesale prices. They run 150-plus live internet auctions a week. You can bid from the comfort of your own home, and you can make preliminary bids or bid live. There are also some “Buy It Now” deals.

Richmond Auto Auction

Richmond Auto Auction holds auctions every Friday at 8:30 a.m. EST, where you will find hundreds of autos to choose from. They are open to the public and are located in Richmond, VA, on Deepwater Terminal Road. Dealer-only auctions are held at 10:00 a.m.

Backs Auto Auction, Inc.

Backs Auto Auction, Inc. has been serving the Bluegrass State since 1979. Located in Mt. Sterling, KY, they went from a small auction named Fairground Auto Auction in a small downtown building to a large auction with a lot of room. They are a dealer-only auction where you will find cars, trucks, and SUVs..

Adesa

Adesa is a wholesale auto auction that services professional buyers and sellers. It is not open to the public. They have 56 locations and sell topline luxury, heavy-duty trucks and equipment, boats and motorcycles, RVs, and salvage cars.

In addition to these auctions, you may find what you are looking for at places like IAAI, Direct Auto, Barrett Jackson, Mecum, Capital, or Manheim. 

As you can see, there are several reasons a car goes to auction. Many of these cars are salvageable and, with the proper repairs, can be made road-worthy again. If you shop around, you might find the exact car you are looking for at a wholesale price that you can afford.

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