Most Vancouverites do not think of an auctioneer’s gavel when it comes to purchasing a vehicle, but the cultural unfamiliarity of a public auction is fading as consumers increasingly scrutinize costs related to major purchases.
Business has been excellent for Ableauctions.com Inc., according to company president and owner Jeremy Dodd, who also sells office furnishings and renovation materials at auction, along with previously owned government vehicles.
Government-owned vehicles in B.C., including those from the RCMP, the Department of National Defence and local municipalities, are auctioned off on a monthly basis.
“We have had a real increase in buyers as far as the general public because they know they are quality cars,” said Dodd. “They have been on regular maintenance and what they are going to buy is a good vehicle.”
Dodd said the government informs the company of any outstanding issues related to the vehicles, which, as long as Able Auction knows about it, are passed on to buyers. Able Auction does not sell any vehicles from dealers, he added.
Customers have an opportunity to preview the vehicles a day before the auction. An auctioneer starts the bidding off by dropping the price until it attracts a bid – there is no minimum price, he said – and then the price increases until only a single bid remains. Payment can be made in a variety of ways, including cash, certified cheque, bank draft and credit card.
According to Dodd, Able-auctions.com sells 80 to 100 vehicles per month, including recent trucks and cars of all makes and models.
“In B.C., especially in the Lower Mainland, auctions are just not a way of life,” he said.
“There are probably four times as many auction companies in Calgary as there are in the Lower Mainland. … We didn’t grow up with that standard cattle auction mentality that they have in Calgary.”
Property values can make public auctions and their accompanying warehouse and storage yard requirements a prohibitively expensive proposition in the Lower Mainland, he added.
“As people eventually start to realize what deals you can get on vehicles and they are actually good-quality vehicles, it will definitely pick up as a way of buying vehicles,” said Dodd. “It is a slow haul in the Lower Mainland because it is not a given way of buying anything.”
Dodd recommends that those people interested in buying vehicles at auction take advantage of the preview beforehand and come to the auction prepared by knowing the approximate values of any vehicles that may be purchased.
“Make sure you know what you are buying and make sure you know what a fair price is,” he said.
About 300 to 600 people, a mix of the general public and dealers, typically attend the average auto auction.
While his supply of cars is constrained by how many government vehicles are available, Dodd said his strategy to grow the segment is not to sell more vehicles, but to attract more people out to auctions.
According to Blair Qualey, president and CEO of the New Car Dealers Association of British Columbia, auctions are an integral part of the automotive sector as venues for his members and their respective manufacturers to sell both new and used vehicles.
“Some may think [auctions] are competition to our members but our new-car dealers welcome good competition,” Qualey said. “It makes everyone sharp and is good for our common customers.”
The main caution for consumers around auctions versus dealing with an association member is making sure to do due diligence on the vehicle, he said.“Our members would be pleased to search out a vehicle for you that you might be interested in and save you the hassle of going to an auction.”
For John MacDonald, general manager of Adesa Vancouver, which operates Adesa Richmond Public Auction, business has been stable through the downturn.
“Auctions are somewhat isolated from the downturns and upturns in the economy,” he said. “When the economy is great, there are lots of extra cars, and people need to sell their surplus. When the economy is not so great and they are not selling retail then they need to sell the cars that they need to keep the money moving through their dealerships.”
Adesa Richmond annually holds 90 wholesale auctions that are open only to auto dealers and 110 auctions for the general public. That represents about 80,000 vehicles, MacDonald said.
Auction vehicles come from two sources primarily: manufacturers and dealerships.
Vehicles from manufacturers generally consist of lease returns, repossessions, factory buyback vehicles and former rental cars. According to MacDonald, about 30% of vehicles at auction come from dealer trade-ins. A high percentage of vehicles are sold with a reserve price, he confirmed. The public generally purchases 40% to 50% of the vehicles sold at public auction, while out-of-province dealers buy 10% to 20% of vehicles purchased at wholesale auctions.
“They are used automobiles so you need to know the options and the condition that you are comfortable with,” he said, recommending people take advantage of the vehicle preview the day before an auction to familiarize themselves with any potential purchases.
“If there are any declarations on the car, they are made known to you,” he said, adding that extended warranty programs are available and a buyer protection plan is in place.
British Columbians’ unfamiliarity with buying at auction has limited public participation.
“I come from Saskatchewan, and we pretty much are comfortable buying anything at an auction, whether it is a couch, a cow or a car,” said MacDonald, adding that individual households here have never embraced buying at auction.
Auctions are one of the best ways for companies and individuals to buy or sell items, he added. “It is the easiest way and the most transparent way to remarket and liquidate assets. That’s a very big deal because it is direct to the open market. A lot of companies have no idea.”