By Grant Yoxon
Fees include a 3 per cent buyers premium (minimum $119.00) applied to the bid price and a $95 administration fee. Extended warranties are available.
Fees include a 3 per cent buyers premium (minimum $119.00) applied to the bid price and a $95 administration fee.
Extended warranties are available.
It is a strange sight. Unlike any ordinary used car lot, most of which are closed on a Sunday, this lot is crowded with shoppers – over 200 in all. There are balloons for the children and a bar-b-que cooking up free hotdogs. The atmosphere is almost festive.
People move from car to car, looking under hoods and into trunks, listening to motors for tell-tale signs of wear, and peering into wheel wells and under rocker panels for evidence of rust or damage. Some just sit in the drivers seat getting a feel for what might, at the end of the day, be their very own car. Many pause to make detailed notes.
But this is no ordinary used car lot. It is the display area of CARS, Canada’s Automotive Resale Service, the only public used car auction in Eastern Ontario. Over 60 cars, vans and light trucks are about to be sold at auction to the highest bidder.
The people who have come here today, to the former new car dealership at the corner of Carp and Hazeldean Roads, just west of the Stittsville Flea Market, are not only looking for a good car, they are looking for a good deal.
Buying a used car is an expensive proposition. Demand for used vehicles in good condition is high and so are prices. CARS is attracting a growing number of people to its weekly auctions, people who are seeking an alternative to paying high retail prices at used car lots.
Can consumers expect to save money at a public used car auction? “Absolutely,” says General Manager Joe Graziano, who started CARS in March.
But savings, though possible, are not guaranteed. To get the best deal, people should know what kind of vehicle they want, have a good understanding of its value and, above all, use their common sense.
The used car auction is not a new idea. Car dealers, rental companies, fleets, manufacturers and financial institutions routinely use auctions to dispose of vehicles. But those auctions sell exclusively to dealers.
Public car auctions are more common in Western Canada and a Toronto auction has been operating for six years. The concept has been less successful in the Ottawa area. IRS auctions, which operated in Ottawa’s east end, closed it’s doors in January following a dispute with its landlord over rent. Mr. Graziano, who worked for IRS, believed the concept was viable and worth trying again.
“I think it’s something that’s come of age,” he says.
At a little after one o’clock, the well-dressed auctioneer, John Jardin, calls people to gather inside the building. The bidders gather around, some sitting on a small wooden bleacher, but most stand, clutching blue bidder’s cards with numbers printed on them. Bidders are issued the cards when they register for the auction.
Mr. Jardin begins by slowly and clearly explaining how the auction will work. He points out three lighted signs behind him which tell bidders whether a vehicle is certified or if there is something they should be aware of, such as known accident damage or unknown mileage. He encourages people to pay attention and to listen carefully to him when a vehicle is introduced. It is good advice.
He explains the purchasing fees and other charges that successful bidders must pay over and above their purchase price. These include a three per cent buyers premium (minimum $119.00) and a $95 administration fee which covers the cost of lien searches, title clearance, document processing and ownership transfer. As well, purchasers must pay PST and GST.
Sellers also pay a fee, but Mr. Graziano would not reveal how much. “We take cars only on consignment and only from commercial outlets like car dealers, banks, finance companies, trust companies and leasing companies.” Privately owned vehicles are not sold at CARS.
All vehicles sold at CARS are guaranteed for two days. Buyers have 48 hours from Monday morning to have their vehicle examined and if there is any problem with the engine or transmission, the deal is cancelled.
“We have had situations where the vehicle we thought was in good condition went out and came back with a knock in the engine,” says Mr. Graziano. “We refund the money right away.”
If there are problems with any other part of the car, repairs are the purchaser’s responsibility.
The announcements over, the first car, a 1989 Mazda 323, is brought in front of the bidders. It is uncertified and there is no reserve bid. With the enthusiasm and rapid banter well-known to anyone who has attended an auction, Mr. Jardin seeks a bid and finally finds one at $300. He is assisted by two helpers who move about the crowd spotting the bidders and calling out the numbers when the bid goes up. The Mazda sells for $800. A good deal.
Most of the cars sold this Sunday at CARS are certified by their owners. Most will also have reserve bids, or a minimum acceptable price specified by the owner.
“Most of them, the more expensive cars, have a reserve. It depends on the value of the vehicle, how much (the owners) have in it or how quickly they want to turn over their inventory,” says Mr. Graziano.
For the most part they will also be high mileage vehicles for their model years, but there are a few gems.
Stewart Weatherbee travelled from Embrun to attend the auction. He successfully bid on a 1992 Aerostar van, certified with 137 000 kilometres, average mileage for a six year old vehicle.
Mr. Weatherbee paid $4,750 plus fees and taxes for a van that the Complete Price Guide (available at most book stores) lists a trade-in value of $5,200 and a retail price of $8,200. The trade-in value is what you could expect to get, while retail is what you would expect to pay at a dealership or used car lot. Such values are rough estimates only and are influenced by many factors including location, supply and demand and optional equipment.
“We had been looking around, so we had a fair idea of what cars were selling for. Buying it for less than $5000, we feel we did okay.”
This was the second vehicle Mr. Weatherbee had purchased at an auction, having bought another at IRS.
Overall, he found the buying experience satisfying. “You weren’t intimidated into bidding. You were encouraged to bid of course, but they don’t intimidate you.”
Mr. Graziano says, “There’s no pressure here at all. We don’t have anything to sell. We’re here to help people to buy. What we’re interested in is the customer getting a good car and getting a good deal.”
To make sure CARS clients understand the value of the cars they are bidding on, both the Black Book and the Red Book (used car price guides) are available. And customers are encouraged to consult the staff at CARS or “bring a mechanic or anyone else who could advise them on the vehicle.”
Gatineau Residents Brian and Beth Whelan approached the auction cautiously. “Brian came here the last two weeks, just to check the prices and to compare them to what we knew them to be,” said Mrs. Whelan.
The Whelan’s bid successfully on a 1996 Chevrolet Lumina APV. The van was certified and had just over 100 000 kilometres on the odometer. While the kilometres were high, the two year old van appeared clean and in good shape. Based on the Complete Price Guide, the Van would be worth somewhere between a trade-in value of about $10,800 and a retail value of $14,300.
The Whelan’s paid $10,950. Based on their research Mr. Whelan estimates they saved between $3,000 and $3,500.
The Whelan’s came to the auction knowing their prices and setting a price above which they would not go. “$11,000, that was pretty much our break point. That’s where we would put the brakes on,” says Mr. Whelan.
Mr. Graziano agrees with the Whelan’s approach. “Know the value of the vehicle. If you don’t know the value, ask us and we’ll help you to determine the value of the vehicle.”
It is important to adhere to this advice. Do your research. Know the kind of vehicle you want to buy and know what it is worth. Set a limit and stick to it. Not only will this practice keep you from getting carried away. It will protect you. It is not unheard of for owners to place bidders in the crowd whose sole purpose is to bid up the price of a vehicle.
“There’s not much you can do,” says Mr. Graziano. “We don’t know everybody. There’s going to be 300 people here… But as far as someone bringing in a friend and having that friend bid the vehicle up, we don’t allow it, but once again, we don’t know everybody that’s here.”
Not all the vehicles sold at CARS this Sunday are good deals. It is just as easy to get carried away and when two excited buyers start competing for a car they want, the result can be expensive.
Mr. Graziano’s advice. “Know the value of the vehicle.” Set a limit and don’t go over it.
The Whelan’s almost didn’t get the van they won in bidding. There was a reserve bid on the Lumina and it was higher than their successful bid. But a phone call was made to the owner, who agreed to drop the reserve.
“Some will be sold right there on the block. Some will be sold with a telephone call. And some won’t be sold,” says Mr. Graziano, adding later that 40 per cent of the cars brought to the auction this day were sold.
If a car isn’t sold because the bidding stops well below the reserve price, there is still an opportunity for an interested buyer to purchase the vehicle. CARS will contact the buyer and help negotiate a higher price.
Similarly, a car can be purchased before the auction. Most of the vehicles are on the lot by Friday evening. They can be viewed and, if staff is available, test driven. If a purchaser wishes to make a realistic bid ahead of the auction, CARS will call it to the owner and a deal could be struck.
Grant Yoxon is an automotive writer and editor of Autos. This article first appeared in the Ottawa Citizen, May 8, 1998.