Let’s look at current practices in place at the Salvage Auctions we attend. Vehicles are put up for auction on the sale date. Now, these auctions are live, online-only. You can, of course, preview these vehicles before the sale, but you have a limited amount of time to do so.
Who are the buyers at salvage auctions?
- Rebuilders and High-End Buyers
- Scrap Processers
- Auto Recyclers
Let’s concentrate on the Auto Recyclers and the type of cars that we all buy. These are, for the most part, the non-rebuildable, late-model, as well as higher-quality older vehicles. The issues that we all have are threefold. The first of which is the limited disclosure of the sellers. With most vehicles being viewed online now, it is critical that we know who the seller is. Is it an Insurance Company, or a Dealer, or someone else? The second issue is the sale status, i.e. on reserve or no reserve. The third, issue, is the “if” or counter-bid.
When you are looking for a particular piece of salvage to either restock your inventory or cover a sale, it is very frustrating that after you have been the high bidder at the auction, the vehicle is now on “hold” or sold on an “if.”
So, now you have two options. You can either try to buy another vehicle to make sure that you get at least one of them. Then you find out, usually the next day, whether you got your “call cars” or not. If I am high bidder on ten vehicles, nowadays, all ten can be sold on “hold.” This means that I could either get all ten, or I could get none. So, what happens to my plan and need to fill an order, and not to mention my budget?
If a vehicle is going to be sold on reserve, it needs to be announced before the sale. This will give us the opportunity to bid on the same type of vehicle that has no reserve. If this vehicle is sold on an “if,” which means that we did not meet the minimum, we should have the option as a buyer, to withdraw our high bid.
These online auctions now have a very high level of participation. There is a huge audience at any given auction. I have recently seen 4500 participants at one auction alone. Didn’t this same, huge audience have the opportunity to bid on and buy this vehicle? So, you were the high bidder. Isn’t it fair to say that the market has spoken, and the vehicle has sold for what the market would bear at this time? That would mean there is no reason for a counter bid. Personally speaking, I do not “up” my bids on vehicles that I have won that are placed on a “pending” status. My bid is my bid! They can either accept it, or they can rerun the vehicle.
With all of that being said, why should you now have an auction after the auction with you bidding yourself up? This makes no sense whatsoever for the buyer. Personally speaking, I do not “up” my bids on vehicles that I have won that are placed on a “pending” status. My bid is my bid! They can either accept it, or they can rerun the vehicle.
We are our own worst enemies.
Why do they have a counter-bid in the first place? They do it because they can and because we have enabled them to do it. Let me ask you this question: How many times have you bought a vehicle and the Auction/Insurance company told you, “Your bid was a lot more than we expected, so we are going to give you some of your money back”? As buyers, if we all looked at this from a practical standpoint, these “if” bids, or counter-bids would go away. I do realize that for most of us, the Insurance Salvage Auctions are the main source for our product, and they play a key role in supplying the Automotive Recycling Industry, as well as the Insurance Industry. As they are important to us, we should be important to them. Without our participation as the buyers of the “parts” cars, they will realize less in returns.
So, what are the solutions to these problems?
- The Auction Companies need to manage seller expectations. The Auctions need to work with the sellers to assess the true value of salvage vehicles. There are more important factors than just the percentage of ACV (Actual Cash Value). Unfortunately, some sellers only look at that. What they should be considering is: type of loss, severity, year, carline, and mileage. The major Auction companies have all of this data to provide current, accurate, reasonable appraisals. The Auctions sell and have the ability to appraise salvage. Let them do what they do best.
- Buyer Fees: Instead of having a “laundry list” of individual fees, why not just figure out a percentage of sale price as a buyer premium, which is what most other major Auction Houses do? There is one major International Auction House in particular that does things this way. Every item in their auction is unreserved. Owners are forbidden from bidding on items that they are selling, and bids are irrevocable, and all sales are final. If you are the high bidder, you are the new owner of this item. Oh, and by the way, everything sold for $10,000 and less has a 10% transaction fee, and they also charge a fee to the seller. It would be nice if our auctions would do the same. The end result of this would be better relationships between the buyers, the sellers, and the auctions. This would mean a better future for continued business for all parties involved.
We all need to work with and support our State and National Associations. They represent the best interests of this industry, and together we can speak with one, loud, clear voice. Remember, there is strength in numbers.
Support your State and National Associations. Support ARA, the only real Association for Auto Recyclers.
ARA Secretary · Northlake Auto Recyclers — Hammond, IN
Hollingshead has been in the professional automotive recycling industry for 45 years, including 34 years as President/Owner of Northlake Auto Recyclers, one of the industry’s leading facilities. Hollingshead prides himself on taking a hands-on approach in the business, employing the use of checks and balances for quality control to ensure customers only receive the highest quality parts. Northlake was one of the first automotive recycling facilities in the state of Indiana to receive from the Indiana Department of Environmental Management the Indiana Clean Yard – Gold Level Certification in 2009. Northlake was certified as one of the Indiana Certified Automotive Recycler Exemplary Standards (INCARES) program’s inaugural medalists and was the highest scoring facility in Indiana in 2014, 2015, 2016, 2017, and tied for first place in 2018. Northlake was also the recipient of the 2016 ARA Certified Automotive Recycler of the Year award, having been nominated by his peers in the industry.