6:54 am, March 29, 2024
Just how easy is it to buy used cars at a trade auction? Well, that all depends on how fussy you are – and it turns out, I’m rather fussy.
In our latest video (above) you join me as I spend the day at Manheim’s Colchester auction where I attempt to buy some stock for our AI Car Dealership Project – the Clever Car Collection.
You might remember a few weeks back I got some solid advice on how to buy in the busy lanes of a used car trade auction from dealer Jamie Caple, who runs Car Quay, in Derby.
That time, we went along to observe only, but now – armed with his words of wisdom – we wanted to find some fresh stock for ourselves, and that meant bidding.
The Manheim Colchester site holds a busy trade sale on a Thursday evening where large numbers of cars in my price range – currently up to around £8,000 retail – go under the hammer.
The vehicles are mostly part exchanges from dealer groups including lots of rejects from Big Wants Your Car.
On the night we attended, hundreds of vehicles were set to head through four lanes, running simultaneously. It was certainly going to be a daunting experience.
To set me up for the main event, we spent the day with the senior team at the Manheim site to guide us through the checks they make on cars, how the sale would run and to get some tips for bidding.
We learned about the National Association of Motor Auctions (NAMA) grading that all cars go through, the assured checks the auction house offers and what exactly they cover.
So far on my car buying journey I’ve been purchasing from the likes of Carwow and Motorway. While I love the ease of these sites and the fact that many cars can be picked up on your doorstep, I have found consumers’ ability to accurately describe their cars somewhat lacking.
Every car I have bought from these two online auctions have had additional problems or damage not listed on the auction profiles, so it was nice to see the stark difference at a physical sale.
Hearing about the NAMA grading and reading the reports produced on the cars in advance of the sale certainly helps you assess your bidding strategy more accurately.
We spent the day using our AI-generated shortlisting system to highlight the cars in the sale we wanted to bid on. This takes the catalogue and Auto Trader’s data and shortlists the cars that are in demand and will sell quickly.
We particularly looking for relatively low mileage, well maintained cars with minimal levels of prep needed – obviously, the same stock every dealer wants.
From a list of more than 300 cars we got down to about six and then went off to examine them. That’s the other nice thing about a physical sale over virtual listings – the fact you get plenty of time to look around the cars before bidding.
Time to bid
By hammer time, we’d had plenty of opportunity to look over the cars and were down to a shortlist of three – a Ford Fiesta, Kia Ceed and Toyota Aygo.
Frustratingly they were due through different lanes at roughly the same time which was going to make my first bidding experience rather hectic.
The halls were incredibly busy and I was amazed at how many traders were attending the sale. Competition was fierce, but I took some solace in the fact a few cars before those I was keen on didn’t make CAP clean prices.
By the time the Fiesta rolled into lane two I was a bag of nerves. The auctioneers earlier in the day had told me to set a limit and stick to it.
‘It’s very easy to get swept up in the excitement of the sale,’ warned Richard Hicks, group auctioneer.
I’d set a limit of £4,100 on the Fiesta. That was the maximum that would give me a return after fees, transport and prep.
It started at around £3k and I got involved in the bidding. By £4k I was up against one other in the hall and one online and at £4,050 it went once, then twice – before the other trader in the lanes increased it to £4,100 and I caved in. Much to his delight.
There was no time for the disappointment to sink in as I spun around and the Kia was already £4k into its sale. By the time I found my place in the catalogue where I’d written down my maximum price it had already exceeded it – eventually going for £600 more than my top bid.
A few minutes later the Aygo rolled in. Again I got involved, placing at least four bids before it approached my maximum of £3,150. It eventually sold for £3,300. Annoying.
- Episode 1: I’m starting my own used car dealer with the help of AI
- Episode 2: I pitch my AI used car dealership idea to Mike Brewer
- Episode 3: Why do banks hate used car dealers so much?
- Episode 4: We get a crash course in running a used car dealership…
- Episode 5: Here’s what I learned about buying used cars at auction
- Episode 6: Everything we’ve learned so far setting up an AI car dealer
- Episode 7: Can AI help me buy used cars?
- Episode 8: What I learned when I met a used car dealer professional
A little disheartened, we retreated. Earlier in the day, Hicks had told me that success at my first few physical sales would be walking away with nothing, so if he’s right I had a corker of a night – but it certainly didn’t feel like it.
So what did I learn? Well, firstly it’s vital to do your research. I spent hours with our AI-assisted stock selector and then delved into each of the shortlisted cars’ listings in detail. I found the NAMA reports very useful and the assurance checks that Manheim offers were also a nice bonus. It’s the consistency of the listings that are particularly pleasing.
It was also far more efficient walking around a hall of cars for an hour or so and looking at all my potential purchases and assessing the prep costs needed, rather than trawling through hundreds of mixed-quality listings online.
What’s more, if I’d bought all three cars I would have only needed to pay one firm and could have had them bulk delivered on a transporter soon after the sale.
But it sure is competitive. There are lots of traders in one place all trying to do the same thing and the nice stock makes good money – sometimes as much as £600 over CAP clean, like that Kia.
Would I do it again? Definitely. But I think I need to attend a sale with slightly more expensive stock. I was hamstrung a little by not wanting to ‘buy work’ and a lot of the cars in this Thursday night sale were in need of quite a bit of prep.
I can see why bigger used car dealers like an auction. It’s ruthlessly efficient, especially when you want to buy lots of cars at once. Caple told me it’s not unusual for him to buy 40 cars at one sale and when you’ve buying on those numbers only physical auctions are set up for it.
It also made me realise how wet behind the ears I really am in this game. Every step of this journey gives me new found respect for those of you who do it on a daily basis – especially those who manage to run successful businesses turning hundreds of cars a month.
The complexities of those operations are not to be underestimated and if I am to grow the Clever Car Collection, I need to learn – and learn fast.
