The Role of Vehicle Auctions

The auction sector has for many years been a major contributory factor to the success of the used car trade in the UK. Auctions provide an important wholesale function to the trade, selling in excess of one million vehicles each year. They provide a fast and cost-effective option for selling vehicles, providing buyers with ready access to large numbers of cars. Vehicles are drawn from a wide variety of sources including fleet and leasing companies, local authorities and dealer part exchanges. Auctions act as agents, using their skill and expertise to bring buyer and seller together. Although primarily fulfilling a trade function many sales are open to the general public. This leaflet is intended to provide guidance to private buyers at auction.

Why buy from auction?

Over the last ten years car auctions have become much more popular with private buyers as organisations such as the Society of Motor Auctions have sought to raise the profile of the sector. There's no better way to save money on the price of a car and it's great fun and surprisingly simple to take part. Auctions offer a large selection of vehicles to suit everyone's budget. Often these are well maintained ex company cars complete with full service history and warranties. And for the convenience of the buyer, most auction companies segregate different vehicles into specific types of auction sale.

It can also be safer than buying privately where the legal redress is minimal. Vehicles at auction are checked with HPI Ltd or Experian's Car Data Check subsequent to sale to seek to ensure that good title is being passed and that there are no outstanding financial agreements against them. Auctions are increasingly modern and well equipped, with undercover viewing, restaurants and other facilities.

How to choose an auction?

When choosing an auction to buy a car, it makes sense to choose one that is a member of The Society of Motor Auctions, a division of the Retail Motor Industry Federation (RMI). Established in 1969, the Society represents a broad mix of membership from the smaller family businesses to the larger national companies.

The Society has its own Code of Practice and Customer Charter, and only accepts into membership financially viable companies which can provide evidence of sound and accepted trading practice.

Its members are dedicated to providing a high standard of service to their customers whether corporate, trade, or the motoring public, and to providing a safe and professional alternative for customers wishing to buy or sell vehicles.

Buyers purchasing from a member can also benefit from the Federation's Arbitration and Conciliation Service in the unlikely event of a disagreement.

The RMI MOTORLINE - 08457 58 53 50 (a local call rate from anywhere in the country) - will help you find a member auction house in your area. Most auctions also produce a monthly guide giving details of forthcoming sales.

Essential information

The Basics

The process of buying a car through auctions is very straightforward. Cars are displayed before the auction, and then driven in front of the rostrum. An auctioneer takes bids from the hall and cars are sold to the highest bidder. The sale is complete when the auctioneer announces completion with his hammer. Until then a bid may be withdrawn. If your bid is successful you will need to go immediately to the rostrum to sign to confirm your purchase, to give your name and address and lodge a deposit. Proof of identity may be required.

With or without a warranty

To help the buyer, cars sold through auctions are generally described in two ways, either 'sold as seen' or as 'all good'.

'Sold as seen' simply means that the seller may not have sufficient information to make a full declaration of the vehicle's background and does not necessarily mean that there is anything wrong with the car. However it is important to realise there is no redress once purchased. Older low value vehicles are likely to come within this category.

'All good', on the other hand, refers to a vehicle that has a 'warranty'. This is usually a one-hour major mechanical warranty covering drive items such as the engine, gearbox and steering. It does not cover exterior bodywork and trim, interior fitting and tyres. This gives the buyer time to take the vehicle for a full test drive to check that it is mechanically sound. Such vehicles are sometimes referred to as being sold "with trial" or "with no major mechanical faults." However the seller may advise there is a specific fault in which case the description will be modified to include details of that fault.

Odometer readings

Odometer readings are only warranted as accurate if so announced by the auctioneer at time of sale. In all other cases odometer readings are not WARRANTED or INCORRECT and should not be relied upon.

Purchase Protection

When buying a car through a motor auction, it is very important to study the Terms and Conditions of Sale as these may vary from one auction to another. Although the contract is between the buyer and seller, most auction companies may provide some protection for the buyer in the event that a vehicle is not 'sold as seen' and is subsequently found to have been misrepresented before the rostrum in terms of a warranted mileage or age. The contract of sale can generally be rescinded under these conditions, but only subject to written notification of a claim within a specific timescale.

Although members will do their utmost to protect your purchase against any defect in title by checking with an appropriate data reference agency at the time of sale, very occasionally a vehicle may subsequently prove to be stolen property or subject to outstanding hire purchase. SMA members give protection against such an eventuality and may make a charge to protect against such risks. The details of the protection can be obtained from the auctioneer's Terms and Conditions of Sale. The charges vary so you should always enquire before buying if you are not sure.

Provisional Bids

Most cars are sold with a reserve (minimum) price that the seller is prepared to accept. If your bid is less than the reserve but fairly close, your bid may be accepted provisionally. The auction will then contact the seller to see if he will accept your offer. It is important not to bid for any other vehicle while the seller's decision is awaited.

How to pay

Have your deposit ready. The balance will need to be paid by cash, cheque or banker's draft the next day as space at auction sites is limited. You may be charged storage if a vehicle is not collected. Most auction companies accept debit cards (Switch. Delta, Solo) and a few accept credit cards but subject to a fee.

VAT

Although all used cars bear VAT it is not usually accounted for separately and VAT is not generally added to the hammer price. Vehicles referred to as "Qualifying Cars" and announced as such by the auctioneer will have VAT accounted for separately within the hammer price to enable a VAT registered buyer purchasing the vehicle for a qualifying purpose to recover the VAT. Commercial vehicles are subject to VAT on top of the hammer price at the standard rate unless otherwise stated.

Insurance

From the fall of the hammer, or the acceptance of your bid in a provisional sale, the responsibility for the vehicle is yours. Accordingly you must usually effect the necessary insurance arrangements even while the vehicle remains on site unless otherwise stated in the Terms and Conditions.

The Law

It is an offence to drive a vehicle on the road without a valid insurance, a current Vehicle Excise Licence, and MOT Certificate if applicable

Tips for buying at auction

1. Arrive at the auction in good time and check out the vehicles in the compound to see which meet your requirements. Always try to give yourself a choice of vehicles.

2. Go with a knowledgeable friend if you have little product knowledge. There is not much time to check the car and no road test is possible prior to purchase.

3. Check the auction's terms and conditions of trade as these may vary between different auctions. Some companies read out a synopsis of the main conditions and auction procedures prior to each auction.

4. Decide in advance how much you are prepared to pay and remember to take the buyer's premium or fee into account.

5. Never bid over your budgeted amount - there will be plenty of other cars from which you can choose. Buy a model you know, since you will need to make an on the spot decision. You will usually be able to view cars beforehand but can examine the engine only when a car is started up and driven into the auction area.

6. Read the notice on the windscreen. All the relevant information will be on it. Year of manufacture, make, model, if there is any MOT, road tax, what the mileage is and whether 'it is warranted or not. In particular check that the vehicle has not been an insurance total loss. Some vehicles come with an Engineer's Report on the mechanical condition of the vehicle, a copy of which is affixed to the windscreen at the time of sale.

7. Auctioneers do not always spot unfamiliar bidders so make sure that your bid is noticed.

8. When the car comes into the hall to be auctioned, ask the driver to open the bonnet and check the boot for signs of rust or damage.

Customer Charter

Members of the society of Motor Auctions pledge the following to their customers

  • To promote 'best practice' in the industry
  • To be fair to both seller and buyer
  • To protect the buyer against defect in title
  • To commit to the SMA code of practice
  • To ensure all staff are familiar with customers' rights under the code
  • To have an easily identifiable procedure for the handling of complaints
  • To provide access to an independent arbitration facility