Car dealer auctions are some of the most important secrets of the auto dealer industry. At these auctions, dealers take their pick from a huge range of vehicles, often at a substantially below-market price.
Auctions are a significant source of stock for many smaller used vehicle dealers, but they can also potentially provide a source of quality vehicles for private individuals who are able to access them.
Thus, both dealerships and private buyers may be interested in learning how to get car dealership auction access.
This article will:
- Look at how dealership auctions work
- How dealers can get dealership auction access
- Dealership auction tips
- Techniques that private buyers sometimes use to get access to dealership auctions
What Is a Car Dealership Auction?
For the most part, an auto auction works like any other kind of auction. An auction company puts hundreds of vehicles from various sources up for sale to the highest bidder. Dealers and other buyers examine the vehicles they’re interested in, and then wait for the auction personnel to drive the car into the auction lane so they can place a bid.
Dealers auto auctions get their stock of vehicles from a wide variety of sources, including:
- Trade-ins from dealerships
- Vehicles repossessed by lenders
- Vehicles returned at the end of a lease
- Fleet vehicles from rental agencies
- Salvage title vehicles
- Vehicles impounded by law enforcement
- Government surplus stock
Auctions are a significant source of stock for many smaller used vehicle dealers and auto wholesalers. They can also potentially provide a source of quality vehicles for private individuals who are able to access them.
Auto dealers can typically access an auto auction through a standard application process as dealer only auto actions are close to the public or any individual without a dealers license.
How Can My Dealership Get Access to a Dealership Auction?
Dealer only auctions require a dealers license in the given state to participate in dealer only auctions in that state. If you want to participate in dealer only auctions in other states you will have to:
- Work with a licensed dealer in that state
- Obtain your license in that state
Some states have reciprocal agreements allows licensed dealers from neighboring states to purchase in their states. Check with the states Department of Motor Vehicles and the specific auction to see if this is an opportunity in your state.
Auto dealers and wholesalers will find it much easier to gain access to dealership auctions, so long as they can supply all of the correct dealership credentials, including a surety bond, that their state's Department of Motor Vehicles require.
Even if you’re getting your auto dealer’s license for the sole purpose of accessing dealership auctions you’ll need to fulfill all licensing requirements for that given state.
Getting your motor vehicle dealer license means going through the auto dealer license application process mandated by the states Department of Motor Vehicles.
Obtaining your auto dealers license requires:
- Submitting application paperwork, including a business plan and financial documentation, to your state’s DMV or other licensing agency
- Choosing and leasing a dealership lot (although it’s possible to get a car dealer’s license without a lot)
- Meeting any special requirements imposed by your state government, such as a pre-licensing education class or background check
- Obtaining the correct type of motor vehicle dealer surety bond
Every state has a similar list of steps for obtaining an auto dealer license. There are state specific requirements when it comes to:
- Application and other fees
- Education requirements
- Surety bond amounts
- Dealership property requirements
- Photo requirements
- Dealership types and activities
Visit the local Department of Motor Vehicles to learn the full range of steps required to get an auto dealers license.
Learn more about what is a surety bond because it can potentially be one of the larger expenses when obtaining an auto dealer license.
Once your dealership is licensed, you’ll need to contact auction companies directly to register for auction access. Most of today’s large dealer auctions have websites for applying, but some smaller local auctions may require a phone call or paper application.
Dealer Only Auto Auction Tips
Know The Auction Inventory
Get to the auction site early and start examining the vehicles you’re interested in. Many auctions will list their inventory online before the auction, which offers a great opportunity to do research.
Get To Know The Auctioneer
If you’re new to auctions, spend some time listening to the auctioneer and learning to understand their “chant” before placing a bid.
Test Drive And/Or Inspect The Vehicle Before Bidding
If possible, test-drive and/or inspect the vehicle before you place a bid on it. Not every auction allows test drives, so be aware of common signs of a lemon, and don’t assume that a good-looking vehicle runs well.
Know Your Bid Ceilings
The most desirable stock at an auction comes from banks selling repossessed vehicles. The least desirable stock is typically from other dealers unloading low-quality trade-ins. During your research, establish a maximum bid you’ll pay for a certain vehicle and don’t go above it.
The buyer who places the winning bid also often has to pay auction fees, taxes, and other additional costs. Be aware of these costs and figure them into your calculations when setting a maximum bid.
Can a Private Individual Get Car Dealership Auction Access?
With quality vehicles available at wholesale prices, it’s easy to see why the idea of buying from a dealer auction is tempting for many vehicle buyers. However, private individual without a dealer’s license cannot access dealer only auctions.
For individuals who want to regularly visit dealer auctions and purchase multiple vehicles, the best option may be to obtain a vehicle dealer’s license from that states Department of Motor Vehicles. Getting an auto dealer’s license can be a long, expensive, and somewhat complex process. Plus many expenses like renewing the surety bond often happen on a yearly basis.
On the other hand, private buyers who only want to buy one or two vehicles are usually best served by working through an auto auction broker. Auto auction brokers have dealer credentials that allow them to access dealer auctions, and they often work with private buyers who want access to this deeper pool of reasonably priced vehicles. For buyers who are determined to get dealer auction access, working with an auction broker is usually the best choice other than getting an auto dealer’s license yourself.
Ready To Get Access To Dealers Only Auto Actions?
Does your auto dealership business need a motor vehicle dealer surety bond to get car dealership auction access?
Are you a private buyer seeking to apply for a dealership license?
Surety Bonds Direct will be glad to help. Our surety bond specialists offer free auto bond quotes in a matter of minutes. Use our surety bond quote request form or call 1-800-608-9950 for more assistance.
