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Auction Tips

How Much Cheaper Are Cars at Dealer Auctions?

Regina Minton
Auto Blogger
Last Updated 24.03.23

Part of shopping for a new car involves the goal of saving money, often leading buyers to auto auctions. With the proper knowledge, shopping for the best deal can happen at a car auction.

But how much cheaper are cars at dealer auctions? It’s a valid question that most people purchasing cars want to know. Read on as we check out auto auction prices and how auctions work.

How Much Do Cars Sell for at Auctions?

Dealer auctions are wholesale auctions with dealer auction prices. Naturally, any vehicle bought at this type of auction will be cheaper than at a dealership (that’s what wholesale prices mean). But how does this impact the numbers? Typically, but not always, dealer auctions sell vehicles for 10% to 20% less than private sellers and 15% to 30% lower than retail used car dealers. 

Keep in mind that used car prices are volatile due to pandemic-related supply chain issues affecting new cars and dealer profits. So informed bidding and buying are always the way to go. Using two publicly accessible data sources (AuctionTime and KBB), we analyzed recent used car auctions to see how the pricing stacks up against private sale and retail dealership prices. 

In one example, a 2016 Chevrolet Malibu with 105,000 miles and all other factors being equal sold at auction for $5,830 versus an estimated private sale transaction of $7,412. That same vehicle would sell for $8,524 at a dealer, a 46% premium over a car auction. You can see where the profits come from.

Meanwhile, a 2020 Ford F-150 XLT with 69,000 miles sold for $30,000, almost identical to what KBB estimates it would sell for in a private trade. However, this pickup would head out the door at a dealer for $34,492, 15% more than at an auction (which creates dealer profit).

Here are some other examples:



Dealer Auction $

Private Party $

% Above Auction

Dealer Retail $

% Above Auction

2016 Dodge Charger







2019 GMC Sierra 2500HD







2017 Lincoln MKZ







2018 Nissan Altima







2020 Nissan Armada







2018 RAM 1500 Sport








You’ll see that in a few cases, the auction and private sales prices are similar. But, in all instances, the dealer retail price is always more than the dealer auction “sold for” price.

How Does a Car Auction Work?

Car auctions are an efficient and money-saving way of purchasing used vehicles. The auction process happens in a few steps:

  • Before car auctions begin, buyers can inspect the vehicle(s) (in-person or online, depending on the auction). 
  • The seller will often set a reserve price (the minimum they are willing to accept), but some car auctions occur without price restrictions. 
  • Registered buyers bid against each other, which drives up the price. The person with the highest bid wins the vehicle (assuming the reserve price has been met) and is obligated to pay the final price.
  • The winning bidder pays for the vehicle, including any auction fees like processing charges and a buyer’s premium (a percentage or flat rate added to the final price). The winner also arranges pick up of the vehicle to have it delivered. 
  • Depending on the auction you choose to buy from, it can occur in person, online, or over the phone (or through a combination of these methods). 

What Types of Vehicles Are Available at Auctions?

Auto auctions (including online car auctions) offer numerous vehicle types:

  • Trade-Ins: Dealerships will often turn to car auctions to off-load excess inventory or sell recent trade-ins that don’t match their particular selling approach. For example, a Porsche dealer probably won’t stock a Hyundai trade-in in inventory. They’ll let other dealers handle these types of cars. 
  • Lease Returns: Leasing companies sell returned vehicles at the end of the term (usually three years). 
  • Repossessions: Lending institutions sell cars recovered due to failed financing.
  • Salvage Cars: Insurance companies sell totaled cars to recover some money from an accident. These cars are either restored to roadworthy condition or dismantled for parts. 

Some auctions may specialize in a specific vehicle type, like salvage cars.

Who Can Buy at Dealer Auctions?

As the name implies, dealer auctions are strictly for those licensed to be in the automotive trade. The general public cannot attend these dealer-only auctions. Becoming a licensed dealer is expensive and time consuming. In other words, it’s likely not worth the effort to bid on the occasional car or two. However, those who regularly flip cars may find a dealer’s license worthwhile.

Lucky for you, A Better Bid is open to the public making it possible for you to buy vehicles from dealer auctions without a dealer’s license. As a registered Copart broker we offer over 300,000 vehicles for sale daily.

How Much Do Dealers Markup Cars at Auctions?

Bidding determines the final selling price of an auction car, but expect to pay 20% to 30% more for a vehicle at a dealer than an auction. However, the above examples show the gap can be higher or lower. Factors like vehicle condition and market demand impact the prices at an auction and on a dealer’s lot.

How to Buy Cars at Auctions

While there’s no secret to bidding on and buying an auction car, there are a few steps to know before jumping into the action.

Auction Match: Identify the best auction that matches the vehicle type you’re interested in. For example, an auction focusing on classic cars may not be the best place to find a salvage vehicle.

Research: Take the time to study the market for a few cars you’re considering. You’ll want to look at what similar vehicles are selling for. In addition, get a handle on trade-in and private sale values using KBB. Having this research at your fingertips will help you determine a bidding goal at the auction.

Inspect: Determining an auction car’s condition is essential to successful bidding. In-person and online bidding can involve an up-close inspection (consider bringing along a mechanic). Look at things like the engine and brake discs. Additionally, examine photos and check out a vehicle history report for another perspective.

Register: Your auction bidding can’t begin until you register. Do this as soon as you’ve identified which auction you want to participate in. Prompt action can help avoid delays or roadblocks. Use this sign-up time to review the auction fees and rules so there is no misunderstanding later. You’ll also need to leave a refundable deposit before bidding on a particular vehicle.

Bid: Bidding is the core of every auction. But you’ll want to temper your participation to avoid overpaying or making a mistake. Don’t hesitate to put ego or the competitive spirit aside if the bidding gets too heated. It’s OK to walk away.

Pay: Upon winning an auction, you’ll need to make payment arrangements. Each auction firm spells out how it wants to be paid, usually by wire or ACH transfer (but some will accept cash or credit cards). Most auctions require payment to be made within one or two business days of the auction close. Once the money details are finalized, you’ll need to arrange pick up and delivery of the vehicle.

Car Auction Tips

Car Auction Tips

Here are a few auto auction hacks to consider before bidding:

  • Set a Budget: If there’s one piece of advice to follow, it’s setting a budget before bidding on any vehicle. Your research will help create this cap and prevent you from getting caught up in a bidding frenzy. Other costs, like auction fees and repair expenses, should be included in the total.
  • Seek Out Less Popular Cars: The more in-demand an auction car is, the higher the bidding. If your primary purpose for buying an auction car is to get a good deal, search for a less-popular automobile. This could involve a sedan over an SUV or a car with a few minor dents instead of a showroom-worthy body.
  • Practice Is Wise: Before getting neck-deep into an auction, think about joining an auction as an observer only. It’s an ideal way to get experience and build confidence before placing bids.

Final Thoughts: How Much Cheaper Are Cars at Dealer Auctions

As we’ve shown, used cars are less expensive at an auction than at dealerships and an excellent way to save thousands. Car shoppers can find the right auction and learn how to purchase a vehicle for less. A few valuable measures to consider are gaining auction experience and setting a budget.

Frequently Asked Questions: How Much Cheaper Are Cars at Dealer Auctions

What are the pros and cons of buying a car from an auction?

Buying a used car at an auction is a sure way to save money compared to dealer prices. But you’ll need to research the market and inspect the vehicle to be confident you’re getting a good deal.

Why are cars so cheap at auctions?

Low car auction prices come from cutting out retail dealers from the process. There are no profit requirements or the need to pay for showroom overhead.

How much canI save at a car auction?

Individual auction results can vary, but expect to pay 20% to 30% less for a car at an auction than through a dealer.

Is it a good idea to buy a car from a car auction?

Yes. Thorough research, thoughtful planning, and careful bidding can make a car auction an excellent way to buy your next vehicle.

How much does a car auction license cost?

Securing a car auction license means getting into the motor vehicle business and having a dealer’s license. Costs start in the tens-of-thousands-of-dollars range and go up from there.

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