What is an Auto Auction?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
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  • Last Modified Date: 28 February 2020
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Auto auctions are events where vehicles are sold to buyers who are willing to pay the highest price for a particular car or a group of motor vehicles. Auctions of this type are found around the world, although the specific process for holding an auto auction varies from place to place. Along with auctions held at specific geographic locations, the Internet has made it possible to conduct car auctions online.

In some cases, an auto auction is a closed event. Rather than being open to the general public, the auction can only be attended by those who are issued a formal invitation. For example, a used car auction may be open only to dealers who sell used cars. Other closed auctions may involve only people who pay a fee to be allowed to participate. This is sometimes the case when the auction is conducted by a government agency, or by a private liquidator.


Some car auctions are open to anyone who can prove they have the resources to bid on the different vehicles offered at the event. When this is the case, individuals may need to present proof of a bank line of credit, or some other document that indicates he or she has the resources on hand to pay for any vehicles they acquire as a result of the auction activity. Upon acceptance of this proof of eligibility, the individual is admitted to the auction and is free to bid on any vehicle presented by the auctioneer.

An auto auction can be conducted as a for-profit event, or as a means of raising money for a non-profit agency. With the former, the goal is usually to create revenue for a business or government agency. In the latter scenario, the auction may be conducted by silent ballot, with the highest submitted bid declared the winner. All the proceeds from a charitable auto auction then go to the non-profit agency and can be used to support their continued operation in the community.

Today, the online auto auction has gained a great deal of attention. Individuals with a vehicle to sell can create an auction at any one of the several bidding sites currently in operation. Often, the site will receive a percentage of the final sale price. As is true with most auctions, there is a minimum bid that must be met in order for a winner to be declared. Auctions of this type are usually structured so that potential bidders know in advance if the vehicle will be delivered by the original owner, or if the winning bidder must make arrangements to collect the vehicle.


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Post 1

A surplus auto auction is also referred to as a government auto auction in which the government has to get rid of cars because the owners were charged with criminal dealings and thus the property must be liquidated.

The case of Bernie Madoff is an example. He was charged with defrauding investors and all of his assets were seized. The government, in order to help the victims had a seized auto auction.

This government auto auction sold all of his cars and boats to the highest bidders. All of his assets were eventually sold at the federal auto auction.

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