Selling a vehicle at an auto auction isn’t a simple process. You have to go through the registration, check the condition of your vehicle, and, most importantly, price your vehicle. With the variety of auto auctions out there, it's easy to feel overwhelmed when it comes to knowing exactly how to price your vehicles for a specific auction. If this is your first time selling, you may not know exactly how much money you should list your vehicles for.
Selling a vehicle at an unreasonable price doesn’t make this process any easier. In fact, one of the main factors that makes or breaks a sale is its price. You can’t just show up and say “I want to sell this vehicle for $10,000.” Pricing a vehicle is like selling a house. You want to get the best, and highest offer possible. But, how do you get the price you’re looking for?
Big Valley Auto Auction has helped price vehicles of all makes, models, and conditions since 2008. We know what buyers look for when purchasing a vehicle, and we’ll cover the top 3 factors you should consider when setting your vehicle’s price, to get the most out of your investment.
Top 3 Factors to Consider When Pricing Your Vehicles for an Auto Auction
Although not all auto auctions are the same, there are 3 factors that play a role in determining your vehicle’s price, no matter where you go.
- Condition
- Supply and Demand
- Used Car Market
Factor #1: Condition
One of the factors that determine the worth of your investment is its condition. Have you ever heard the saying, “Never judge a book by its cover”? Well, that isn’t always the case here. Oftentimes, a buyer’s purchase is based on what a vehicle looks like. If your vehicle is beaten up or broken down, its chances of selling might be lower.
“Beaten up” doesn’t specifically mean dented or missing pieces. It could also apply to the look of a vehicle. If your vehicle has a dirty exterior, it could turn customers away. Investing in reconditioning your vehicle before sale day could help its chances of selling.
However, that doesn’t mean beaten up or dirty vehicles won’t sell. Some buyers don’t care about the condition when they can fix it themselves and resell it. But don’t be fooled. Just because a car looks good, doesn’t necessarily mean it’s in good condition. There are cases where some vehicles look great, but have bad internal issues. On the other hand, there are cars that might not be cosmetically pleasing, but run smoothly. In those instances, it’s based on the buyer’s personal preference.
Factor #2: Supply & Demand
Just as vehicle condition is based on preference, so is the type of vehicle. Supply and demand determines the popularity of a vehicle and whether or not it’s in high demand. You have to consider if your used Porsche or Jeep Wrangler is desirable to current day buyers.
Auto auctions also have a variety of customers with different interests and not all buyers are interested in one specific model. A type of vehicle that might be in demand for one group of buyers could be totally different than what another group is looking for.
You also have to look at your lot. Do you have a wide array of vehicles? Does your lot have enough diversity to where if one group of vehicles doesn’t sell, another group will? If you do, are used vehicles, in general, just as favorable as new? Are more people willing to pay for a used car than a new one? If they are, do you have a large enough inventory to meet your customers' needs?
Factor #3: Used Car Market
Good conditions and high demand aren’t as beneficial if the used car market isn’t hot. You have to factor in if more people are buying used cars than new. Not everyone is interested in saving money or willing to put the time and effort into fixing a used car. Sometimes, buyers are more interested in purchasing the latest model of vehicle. Brand new Nissan’s might entice customers more than a 10 year old model, regardless of price.
Buyers may also not be willing to take the risk of spending more than expected. In some instances, bids will go higher than retail price, which goes against people’s perception of used cars being cheaper than new.
The used car market is always fluctuating, meaning used cars could be hot this week, but not next week. Like the seasons, people’s needs change. In this case, you would have to stay up to date with the state of the used car market.
What Assistance is Available to Help me Price My Vehicle?
If you need assistance in keeping up to date with the used car market, or the pricing process in general, there are a few tools and apps that can help you along the way. Here are a few we recommend:
- Manheim Market Report (MMR) gives you pricing calculations, based on recent transactions in the market. This gives you an idea of what vehicles are currently in demand.
- National Automobile Dealers Association (NADA) promotes the benefits of local dealerships
- Autoniq gives you loan market value, which is what banks use when making loans and how much they can loan on a car.
These 3 tools are not only helpful, but are heavily relied upon in the auto auction industry, by buyers and sellers.
Auctioneers are also helpful, as they set your vehicle’s starting bid at around $1,000 - $2,000 higher than the asking price. (If your vehicle is priced at $10,000, the auctioneer will start the bid at $12,000 and go down.) This gives you a free, easily accessible advantage in the pricing process.
Common Auto Auction Vehicle Pricing Mistakes
Although apps like MMR, NADA, and Autoniq are accessible for assistance in the pricing process, sellers can still make mistakes.
- Asking for too much
- Paying more than worth
- Pricing too low
Asking For Too Much
One common mistake is asking for too much. For example, you bought a vehicle for $10,000 and want to sell it for that price (or higher), but it’s not worth that price anymore. This is called “depreciation” and it occurs quite frequently.
Paying More Than Worth
Another common mistake is paying more for a vehicle than it’s actually worth. You may have paid too much for a vehicle, when its value is less than what you spent.
Pricing Too Low
A third common mistake is pricing too low. Believe it or not, some sellers underestimate the value of their vehicle. Just as overpricing can cost you a sale, underpricing can cost you a profit.
How Do I Avoid These Pricing Mistakes?
One way to avoid these mistakes is to be realistic with the market value. Market value always changes, so what’s popular right now might not be popular next week. Likewise, people's interest in used cars is constantly changing.
Another way to avoid these mistakes is to buy cheap and sell high. If your goal is to make a profit, you’ll want to buy a vehicle for as cheap as you can, then sell high to get more out of spending less. However, selling high would work best if you keep your vehicle clean.
Finally, once you’re prepared to sell, it’s best to do so as soon as you can, because the market changes and the value of your vehicle could decrease as time goes on, leading to a bigger loss.
The last thing you want is to take a huge loss on your investment. Pricing accordingly helps reduce a loss, but factors like condition, supply and demand, and the used car market should always be considered. Also, even though you’d like to make a huge profit, don’t set an unreasonably high price for your vehicles. Just like you, customers view pricing as an important factor.
Am I Ready to Price My Vehicles for an Auto Auction?
Pricing your vehicle is just one of the biggest factors to keep in mind when selling your vehicle at an auto auction. The price you set on your vehicle determines whether or not your sale day goes successful.
Whether you're new to auto auctions or you're preparing to sell at your next auto auction, you can use this article as a guide to help you set a price for your vehicle.
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