How to Buy a Car at Auction in Australia
Every day thousands of vehicles of all shapes and sizes go under the hammer in Australia, it’s where used car dealers buy a lot of their stock and it’s where you can buy your next car too. There is the potential to save thousands, but there are few gotchas too, so, here’s our guide to buying a great car at auction.
What are the different types of car auctions?
For starters, there are online and onsite auctions, this article is going to focus on onsite auctions, see here for our article on online car auctions.
At many of the major auto auction centres you will find a few different sale types, often broken into different lanes, which may include ‘Dealer Only‘ where you will probably require a dealer license to participate, and public sales which are open to all. The public sales are often split into categories based on either where the vehicle came from, the type of vehicle, its estimated value or condition, for example:
Ex-Government Car Auctions – as you would expect from the name, feature vehicles that have come from either local council, state or federal government. Some vehicles may be specialised, such as police interceptors, emergency services vehicles, ambulances and so on depending on the sale. These auctions may also include ex-lease vehicles which generally feature less than 50,000 km on average, although it is not unusual to see cars with only 10,000 km or some with over 100,000 km especially if it’s a specialised vehicle.
Ex-Lease – most large corporations in Australia lease their vehicles from a finance company, dedicated vehicle leasing company and even direct from the manufacturer. These vehicles usually stick to the logbook maintenance schedule and are sold off usually around the time the warranty ends, or the lease contract terminates, etc. It’s common to come across vehicles that still have factory warranty remaining, and this category, like ex-gov sales above, is popular with people looking for savings on a near-new vehicle.
Finance Repossession – cars that are repossessed by finance companies from people or companies who have defaulted on their loan. The finance company auctions the vehicle to recoup the money (or part of) which they have lent.
4WD and Commercials – if there is a large number of a certain vehicle type sometimes they’ll have their own special lane, a good example is 4WD and Commercial vehicle sales, other examples include classic car, prestige, and luxury car auctions etc.etc.
‘Clearance Lane’, ‘Value Cars’ or ‘Under 10,000 lane’ – vehicles in this lane or category can come from just about anywhere including finance repo, seized vehicles, private sellers and dealer trade-ins, etc.. From my experience cars in these types of lanes go anywhere from $100 to well under $10,000.
Damaged and Salvage Auctions – vehicles here are generally cars that have been written off by insurance companies. They can be written off due to accident damage, flood damage, hail damage or as a stolen and recovered vehicle. Vehicles can be deemed ‘repairable write-offs’ or ’statutory write-offs’ with the later unable to be re-registered, more here.
Why do cars end up at auction?
Here’s a question you should always ask, why is this car here? In some cases, it’s obvious, like a repo car or ex-government car, but it gets a little more difficult with general sales. Sometimes people use general sales as a dumping ground for problem cars, so don’t make it your own unless you know what the problem is and how to solve it.
Pay extra attention on repo cars, they are generally poorly maintained and there are plenty of stories of owners adding a surprise before the lease company took the vehicle back such as throwing a lump of sand in the fuel tank.
Ex-government cars and ex-lease cars with low km are generally safe buying with few surprises and many may still have some factory warranty remaining.
Exotic and luxury cars require a huge amount of attention to detail not limited to making sure the vehicle is able to be registered (imports may not meet Australian Standards), the vehicle was built from used parts (backyard repaired insurance claim), has the wrong engine for the model, is a mock-up of an a high-value model variant and the list goes on.
Where to buy a car at auction?
Used car auctions can usually be found in every major city and most large regional centres. Two of the larger names in the industry are Manheim motor auctions and Pickles Motor Auctions, which have sales in every state, and sell vehicles on behalf of government, police, defense, ex-lease, insurance companies, and major corporations. There are also many other dedicated vehicle auctioneers which hold regular sales for all vehicle types.
Keep an eye on Saturday’s paper for notices and, of course, check the auction centre list for your state, and if you know what type of vehicle you are after, you can look for it via the auction search engine.
Find Local Auction Centers near you:
Not to be forgotten are smaller local auctions which may be for business closure or grouped sales. Often they are a mixed bag of items and there may be less bidding competition for vehicles. The downside is you may be bidding against people who are not so car savvy and unknowingly bid beyond a realistic value, you only find out these things by going. Again, keep your eye on auction notices in your paper, at auction houses in your area, in our upcoming sale notices, and so on.
How to buy a car at auction
There are some auctions that are open only to dealers but most auctions are open to public and it is simply a matter of registering which may require some ID, sometimes paying a small registration fee, and getting your bidders number.
DO, read the conditions of sale closely and ask any questions prior to bidding. This is a really important point. You need to be aware of
- Buyer fees – many auction houses will either charge a flat fee or a percentage of the final sale price
- How and when payment needs to be made
- The requirements for removing the vehicle – some auctions may only the vehicle to be towed, and the hauler will be required to show paperwork etc.
Inspecting vehicles prior to auction
Most auction centres allow some kind of pre-inspection prior to auction, so, make the most of this time. Check out our guide to inspecting vehicles at auction.
Many larger dedicated vehicle auction houses do offer in-house inspection services and some cars may offer a vehicle report which can be used as a guide. Note, that the report doesn’t make auction house responsible if you, for example, drive out the door and find the transmission slips. It’s just a guide.
Before going to the auction make sure you know your budget and allow for costs like repairs, roadworthy and registration.
Vehicles are generally not sold with any registration, so check with your local registration office if a permit can be obtained to drive the vehicle, otherwise, vehicle cartage operators are generally not to far away on auction day. Towing the vehicle is another cost you should factor into your purchase price.
- READ THE CONDITIONS OF SALE, read through and ask questions if unsure, be aware of the fees and taxes that may be added to the final price and listen to the auctioneer when they mention terms or conditions etc..
- Prior to going to auctions, visit car yards and dealers to see what the type of car you’re interested in sells for, what to expect condition-wise, and determine the yard value of the vehicle. Also, check what the vehicle sells for privately via classified sites etc.
- Get a feel for things, go to a few car auctions, without your wallet, and get comfortable with how things flow.
- Most auction centres offer prior inspection, so if possible visit the auction site with a mechanic.
- Know what you are bidding on, ask the auctioneer questions prior to auction.
- Keep in mind any possible reconditioning that needs to be done, remember little things add up, like new brake pads, an oil seal, a muffler etc. so allow for the things you cant see.
- On auction day get a feel for who’s who at the auction, are you bidding against dealers, wholesalers or public.
- There are many strategies that people use at auction, some may bid aggressively to scare off other bidders and make the auction move fast, and some may sit in the background and pounce when the hammers near to fall.
- If you’re successful, you may have to make a deposit on the fall of the hammer and arrange for final payment to take place, which is usually required within 24 hours. You’ll also need to arrange towing.
- Be wary of ‘import’ vehicles and why they are at auction, try to get confirmation from the auctioneer as to whether it can be re-registered.
Am I guaranteed a bargain?
Personally I often see people pay way too much for items, and quite often I see things go really cheap, but like they say things are only worth what someone is willing to pay. At the end of the day, it’s your money and you have to establish what the value of that item is in your eyes. A sensible approach is to base that on market value, which you can establish via research of what certain model cars are selling for.
That said, sometimes establishing market value isn’t as easy as it sounds, as you have to take into account the condition of the vehicle, kilometers, and options and try to compare apples against apples. Remembering also, that the car bought at auction will not include a warranty (unless there is a factory warranty remaining) and plus there are the costs to get the vehicle on the road and registered.
Also be aware of model peculiarities, for example in Toyota Landcruiser, a petrol engine version is generally cheaper than a diesel engine version, you may think you are getting a cheap Landcruiser but you may actually not be! In other vehicles, a model with the 1.8 L engine may be worth more than the 1.6L etc. etc. I think you get the idea, do your research!
The key takeaway here is due diligence and research.
This article was originally published on Apr 21, 2010 and updated Feb 2020.