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Dealer owned car at salvage auto auction. Buy or Avoid?

Last edit: March 02 2024 • 359 view

Salvage auto auctions are great for buying insurance-owned cars where you can save 50% on the purchase. But, are salvage auto auctions a good place to purchase a dealer-owned car? This question often sparks curiosity and debate among Autohackers. In this article, I ask myself, “Would I buy a dealer-owned car at a salvage auto auction?”

What’s up, Autohackers?! Andrew ‘Autohacker’ Ivanov here. If you’ve gone through my free mini-course and have been part of the Autohackers community, you know that I don’t like and advise against buying cars that belong to car dealers. As the saying goes, ‘not every car is bad at the car auction, but every bad car goes to the auto auction.’ Unfortunately, car dealers often use the salvage auction platform to their advantage.

Dealers take advantage of platforms

Why do I dislike dealer-owned cars? There are two reasons: 1. They typically sell bad cars. 2. Valuable parts might be missing.

This is a topic worthy of a separate article, but let’s put it this way: car dealers know that cars at salvage auto auctions are sold AS IS WHERE IS, without warranty. If you buy it, there’s no way to return it. Auto auctions also attract many international buyers who ship cars overseas and won’t see their purchase for months, and car dealers love this. That’s why I usually advise against buying these cars.

But with that said, I would still buy a dealer-owned car if all of the following conditions were met:

1. It is not a staged car flip

The car should not be a flip, meaning it was bought from one auction and sold at another within weeks. Car dealers practice this all the time, buying at one acution, like IAAI, and selling at other, like Copart, or vice versa. Usually, they make the car cosmetically more attractive while simultaneously removing valuable components. This is called “staging the car”. I despise this practice and have actually made many videos exposing it, like this one featuring a Toyota Highlander.

2. Decent prior damage

Previous damage should be tolerable. If the prior condition shocks me, I’ll pass. I usually avoid widespread, burnt, and extremely severe damages.

3. Repairs Done

Everything must be fixed properly. All panels should be in place, gaps between panels should be consistent throughout the car, airbags should be intact, and there should be no warnings or errors on the dashboard.

4. Mileage Difference

In auctions, there should be a significant difference in mileage, as I want to see that the car has been used and driven. If there is no damage, or just a few miles difference – this is not good enough. A significant difference in mileage indicates that the car has undergone active use and driving, serving as a positive indicator of its roadworthiness and reliability.

Inspection is a must

Once you meet these prerequisites, the next step is to order a professional car inspection. This step is non-negotiable, as it provides crucial insights into the vehicle’s condition, uncovering any hidden issues or missing components that could impact its value and performance.

Ford F-150 as example

Let’s consider a real-world example: a 2022 Ford F-150 Lightning Lariat EV listed for sale at Copart:

1. Originally purchased in November 2022 for $50,500 and put back for sale in 2024, this vehicle demonstrates promising signs of authenticity and history. It is not a staged car flip.
2. While it had sustained front-end damage with deployed airbags, if properly repaired, these issues should not pose a significant concern. I am ok with previous damage.
3. Visually, the truck appears to be in good condition, so repairs were done.
4. It has a substantial difference in mileage (1,202 miles vs 8,900) indicating active usage.

I am okay with what I see right now. If interested, I would conduct further research following Steps I outlined how to buy cars Autohacker way and, of course, order an inspection to verify that the vehicle has been properly repaired.

Conclusion

Purchasing a dealer car at a salvage auto auction can be a rewarding endeavor for advanced salvage auction buyers willing to navigate the complexities of the process, but for novices I highly recommend to avoid dealer owned cars all together.

The best way to master it and avoid mistakes at salvage auto auctions is by joining my free Autohacker’s facebook community. You gain access to the best supportive community out there with 500+ members and you get my free mini-course that can make you a PRO salvage buyer within one hour.