Auto Auctions in the United States
Auto auctions, in the United States, are not well known to the public at the present time, but they play a huge role in the second-hand, wholesale vehicle market.  The majority of auto auctions remain closed auctions, simply meaning that currently only dealers can use them.  Today, there are auctions that are available to the public, but for the most part these auctions are a financial services outlet for firms to dispose of big volume lease returns for leasing, rental, and other companies to dispose, sell off, aging fleet vehicles, or for automobile dealerships to unload, sell off, trade-ins or aging and unwanted inventory.  In the U.S., some auctions are used by the IRS, banks, and other government firms to unload vehicle which have been repossessed for failure to pay, or for failure to pay taxes, or that were seized in illegal actions by the DEA, FBI, or other policing agencies or U.S. government vehicles. Lastly, some auctions cater to the salvage vehicle market enabling insurance companies to sell off totalled vehicles.  Today, online auctions are becoming more popular, with one of the most popular salvage vehicle auctions being Copart Auto Auction.  To use these online auctions, all you have to do is register and begin bidding on the vehicles you desire.  Although some vehicles have ‘reserve price’, a minimum price which the seller agrees to accept, if the ‘reserve price’ is not reached, the vehicle is considered unsold and remains for sale.

Car Dealer Auctions are specialized types of auctions.
Vehicles, by the million, are sold at auto dealer auctions each year, with these auctions being restricted to the general public where only licensed dealers are allowed to participate.  Prices at these dealer auctions have a tendency to be lower than advertised prices on dealer’s lots for vehicles on sale.  When purchasing inventory at dealer auctions, the seller takes a lower sticker price for a number of reasons, and passes on making thousands more. 

Some of the reasons for this include selling off aging inventory, which cost the dealers money when sitting on the lot, plus most vehicles in these auctions are lease returns, company cars, vehicles that have been repossessed, trade-ins, and replaced fleet rental vehicles.

Generally speaking, off-lease vehicles are vehicles that have been returned to a financial institution when the lease term expires and closed auctions are generally the only option open for these financial institutions to unload, sell off, their large volumes of off-lease returns.  Since most leases have mileage restrictions on them and have regular maintenance, plus mileage penalties for excessive usage, normally off-lease automobiles are returned within two to three years, generally before the original warranty from the factory expires. 

Off-rental Vehicles
As a rule, off-rental companies generally replace fleet vehicles once a year, sending a stream of late-model cars into the secondary markets. Just as the big financial firms, ones that underwrite car leases, rental companies rely on selling off their inventory through auto auctions, and just like leases, these vehicles are well maintained, although mileage seems to be greater, accumulating much quicker, on rental vehicles.  These vehicles have limited features such as air conditioning, automatic transmissions, and are generally as close to basic models as you can get.  Rental car usage is generally rough and these vehicles each year are driven by various drivers in all types of conditions from mild to extreme.

Fleet and Company Vehicles
Various size companies own or lease vans, trucks, and cars and generally keep them for two or more years, although under some circumstances you will see the current model year sold through the auctions.  Normally, these vehicles received proper maintenance, are in large volumes, and have the same characteristics.  As with rental vehicles, fleet vehicles are generally basic models with few additional features, plus they are generally used on a daily basis with usage ranging from occasionally slow and careful, in luxury executive models, to city abuse and curb jumping, in many delivery truck models.

Repossessed Vehicles
Financial institutes can voluntarily or involuntarily repossess vehicles for delinquent payments or any other reason for a recall, while auto auctions are a banks only option for deliverance.  Because financial institutions are only seeking to offset any losses, as well as federal regulation restrictions, repossessed vehicles can be sold for less, while condition on these cars could be suspect due to neglect, especially when the owner cannot pay his loan, let alone make necessary repairs to the vehicle.  Sabotage, extensive keying or tearing of interior, is also another consideration from previous users.

Trade-In Vehicles
Aging dealer inventory that doesn’t meet the dealers current requirements is found in these auctions.  For example, an old Toyota model that was traded in for a new Cabriolet at a Mercedes dealership would be considered a aging inventory item.  These trade in models may have many useful features and may even have after market modifications, but the overall condition of these vehicles varies greatly with some being much older without any warranty.

Salvage Vehicles
Salvage vehicles are vehicles which have been damaged in floods, fires, accidents, or may have been recovered from a theft situation, which have been purchased through insurance companies.  These vehicles are sold, by the insurance companies, to body shops, auto recyclers, and/or dealers who then fix them up and resell them to the public or strip them for good parts, which are then sold to the public.  Usually there are a number of these vehicles that still have quality and are made ready to market.  Finding late models that still have some factory warranty is not uncommon.  Listing dealers, by law, must disclose large mechanical problems that may void the vehicle manufacturer’s warrant and then classify the vehicle to be junk, salvage, consumer buy-back, a lemon, etc.  Special auctions, salvage, rebuilt, or junk vehicles, are held for this type of vehicle, especially when sold by insurance companies; whereas, other styles of auctions specialize in the sale of government or police vehicles with some providing public access.

Vehicle Pricing
No matter where a vehicle comes from, they are all sent to the auctions to be hassle-free quick sales, which happen when a dealer recoups his costs plus a little profit from the sale.  Unlike the public believes, vehicles seldom sell at unreasonable low prices, even at the dealer auctions, which generally only happens if the vehicle is extremely ugly or there are not enough interested bidders.  Therefore, this should never be taken for granted, as many sellers place ‘reserve prices’ on their vehicles to prevent this from happening.  Reserved prices are not disclosed to the public and the vehicle is only sold if the bid is higher than the reserve price.  If the vehicle doesn’t sell, the seller has the option to list it for auction again.

Vehicles Condition
Like all used vehicles, the condition of the vehicle varies greatly with many vehicles appearing to have suffered due to everyday use which often results in the following damages:  scratches, dents, chips to the paint; stained upholstery or torn leatherwork; scraped bumpers, and dented panels and while most of these can be repaired, scraped wheels or worn tires could cost much more to repair than to replace.

Vehicles Inspection
At some auctions, test driving and pre-sale inspections are not allowed and mechanics and/or guests are not allowed to view the cars until the sale is finalized.  If a dealer chooses, some auction locations prepare and inspect the car, at a premium, and more extensive reconditioning is available with other auctions allowing post sale inspections.  These inspections are usually designed to signify any mechanical or frame issues, which allow the purchasing dealer the option of backing out of the sale.  Sellers can also exercise this option, for a fee, which provides the opportunity for a buying dealer to have confidence in the vehicle knowing it is free of frame and mechanical problems.