Is selling your car on auction a good idea?

By Chad Lückhoff

We weigh up the pros and cons of selling your car on auction and conclude that it will work under certain conditions.

The allure of selling your car on auction can sometimes be too good to resist. The pros are certainly appealing, especially in South Africa where the second-hand market is flooded with similar vehicles.

There are a few pros and some cons to selling your car on auction, and these need to be factored in before you ring up the auction house and set the ball in motion. Let's look at these so that you can make an informed decision.

Pros

- Auctions can be quick

Provided your vehicle is priced really well, an auction sale could take less than a week to see you paid out and on your merry way. The inverse applies if your pricing is wrong though, but we will discuss that in the cons.

- Auctions are fuss-free

Selling your car on auction may appeal to you if you're not a fan of the paperwork and admin that goes with selling a car – and let's be honest – not many of us are. Auction houses will handle the transaction and all the gritty paperwork that goes with it, leaving you to only sign a few papers. This comes at a price though, which we will also address later.

- Auctions are safer

It's rather sad that this needs to be a selling point for auctions, but it's the reality of the times we live in. Unscrupulous individuals sometimes take advantage of classified vehicle sales to deceive, steal or do worse. Selling the vehicle on auction does away with these risks and provides a transparency that puts the mind at ease.

- The audience is in the market to buy

Persons attending auctions are there to buy cars. They may be private buyers but many are dealerships looking for additional stock that they can sell. This means that they have approved budgets that they can use – it's a captive audience and no time-wasters.

Cons

- Pricing is key

While we did say that it can be a rather quick process, the buyers that attend auctions know the market values of the cars they are interested in will very seldom spend more than that amount. Placing too high a reserve will see your car going unsold and will mean that it will have to wait for the next auction to come around.

- The costs involved

Having someone handle the paperwork and admin comes at a price. The process of selling the car on auction costs money as well and this is claimed in the form of a sales commission that can range anywhere from 6% upwards. That will mean that you will be receiving less than the sales price once the car is sold. The more expensive the car is, the more you lose.

- Sitting without your car

Because the auction house has to have your car on the lot for presenting to the audience and prospective buyers, you will be sitting without your car for a little while. Depending on how fast it sells, you could be sitting without a means of transport for a few weeks. This is fine if you are selling a second car or have already bought your new one, but for many of us, we need to go from one, into another.

Conclusion

Provided you are aware of the potential pitfalls, selling your car on auction can help you move the vehicle with reduced stress and fuss. We wouldn't recommend it if you're looking to get the best price for your car – with the exception of rare, collectors cars. There is possibly more money to be had from using services like We Buy Cars or Autotrader's own We Sell option. While there are still costs involved, they are usually fixed and will see you getting closer to the market value than what you would at auction.