Why Do Dealers Put Clean/Original Title Cars on Auction?

When it comes to the belief that only "trash cars" are sold at auctions, this myth is debunked. The reality is that dealers put a variety of cars, including clean/original title cars, on auction for numerous reasons. Here are some key insights into why dealers sell their clean/original title cars on auction platforms, including popular ones like Manheim and insurance company auctions.

Reasons Dealers Auction Cars

There are several reasons why dealers opt to auction their cars. Some common scenarios include:

Time Constraints: Dealerships may not be able to sell a car within a reasonable timeframe, leading to the decision to auction it. Financing Issues: A base lender may tell the dealership that they have held the car long enough, and it's time to dispose of it to stop paying interest on the loan. Unsightly Condition: These cars may have unseen issues like engine, transmission, or electrical problems that the dealership wants to get rid of quickly.

Auction Houses and Car Types

The type of cars available at an auction largely depends on the auction house. For instance:

Manheim Auctions: These auctions offer a mixed bag of vehicles, ranging from brand-new cars with just a few thousand miles to vintage cars. Insurance Company Auctions: These auctions specialize in selling damaged or banged-up cars that will eventually need a rebuilt title.

Which Cars Are Auctioned?

Traditionally, dealers would send cars that did not fit their criteria for resale, including:

Older models with age beyond their prime. High-mileage vehicles that are hard to sell. Cars with necessary repairs that are too expensive for the value of the vehicle.

However, as we approach August 2020 and the arrival of new 2021 models, the scenario changes. Now, dealerships are aggressively clearing out their inventory of older models, such as 2018 or 2019. These models may not have been popular originally, and the dealers hope to recoup some value by selling them at auction, rather than seeing them sit unsold on their lots.

Write-Offs and Taxes

For dealerships, selling off older models can be seen as a business decision. In cases where the car is written off, it can also serve as a tax write-off. This allows the dealership to offset other business expenses and reduce their taxable income.

Conclusion

It is important to understand that clean/original title cars can be found at auctions, often due to dealership needs or market conditions. As the automotive industry evolves, the types of cars auctioned can vary, so it's always a good idea to research specific auction houses and their offerings.