How Car Dealers Appraise Cars at Auto Auctions

by Don Elliott on July 26, 2011

Car dealers get the majority of their used car inventory at wholesale auto auctions. They may attend 2 or 3 car auctions each week. Each auto auction may have 500 to more than 1,500 cars for sale. The car dealership’s wholesale buyer has to make quick decisions about which cars to buy.  They base their decision on the car’s condition, the price, and which cars are better than other cars. Each used car spends less than a minute on the auction block. Each auto auction has several auctioneers selling vehicles at the same time.

Preparation is the key to being successful at auto auctions. Before the buyer leaves the car dealership, he has already decided which cars and trucks are needed for his dealership’s inventory. This is the same first step you should take when shopping for your personal car. Narrow down the choices before leaving home and stick to your plan.

Most car dealers get a list of the vehicles running in the sale before the auto auction begins. The car dealer will make a quick appraisal of each car to establish an acceptable bid list. Looking over a car for wholesale used car value will only take a few minutes. Each auto dealer inspects a car differently, but the key areas to inspect are consistent.

Overall condition – The buyer takes a quick walk around the used car to get a feel for how the car has been maintained. They look for dents, dings, and scratches. They also deduct an amount for the cost to recondition the exterior to an acceptable level for retail sale.

Tires – The buyer will be looking for a matched set of 4 tires with more than 3/32” of tread. Any less tread or mismatched tires will require buying a new set of tires for $500 or more. Unusual wear patterns will be a sign of an alignment problem or poor vehicle maintenance.

Glass – Broken and pitted windshields are fairly common and easy to replace. A new windshield will cost $200-300 depending on the car model, but the cost comes off the price. If the windows are tinted, it may be necessary to remove the tint to make the car retail ready.

Interior – A quick look around the car interior will indicate how well the car was maintained. Stained seat and carpet fabric, scratched or cracked vinyl surfaces, and bad smells will detract from the ability to resell the vehicle.

Trunk Area – Much can be learned from the inside of the trunk. A wet trunk indicates possible prior damage. The buyer should pull off the trim panels to inspect for signs of collision damage. A missing spare tire will cost the dealer $50-100 to replace.

Engine Compartment – First, make a visual inspection to assure  all the original engine parts are where they should be. Modifications to the electrical system are always a red flag. Aftermarket security systems can affect the car’s computer module, often making the car less desirable to the buyer. Inspect sheet metal to find prior body damage. Hearing the engine run is the next step. The buyer should listen for clicks and rattles that could indicate an expensive visit to the auto repair shop. Finally, check the oil under the filler cap for milky oil, sludge, or unusual smells that indicate internal engine problems.

Test Drive – If everything else checks out and the auto auction hasn’t started, the wholesale buyer will take a short test drive. They will check the brakes, turn the wheel to check for suspension problems, check the air conditioning and sound systems, and run through all the gears to make sure the transmission is operating correctly.

If everything about the used car value checks out, it’s time to head inside the auto auction and start bidding!

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